[TEMP CHECK] Native Cardano Integration of frxUSD

Governance Proposals
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Summary: This TEMP CHECK aims to gauge community interest in the potential native integration of frxUSD into the Cardano blockchain. Cardano has a plethora of developers and a vibrant DeFi ecosystem. However, due to several reasons, USDT has been kept away from Cardano. Additionally, Coinbase outright refuses to launch USDC on Cardano unless paid a hefty sum. The community has also been quite resistant to the integration of stablecoins with freeze functions.

Current Cardano Stablecoins:

https://defillama.com/stablecoins/Cardano

There are several stablecoins on Cardano, all of which are quite small and lack the reputation, interoperability and deep liquidity that frxUSD can offer. The main players are:

  • USDM: Has a circulating supply of 10.37 million and over 2000 holders. Similar to frxUSD, it has institutional reserve backing but lacks the household name recognition of frxUSD.
  • Djed: Has a circulating supply of 2.29 million. Its implementation is fascinating (for those interested, look into the ageUSD and sigUSD papers) but very hard to scale.
  • iUSD: Your standard CDP based stablecoin with circulating supply of about 8 million. It is highly collateralized but again… Very hard to scale.
  • USDA: Recently launched by Emurgo via the Anzens platform

This presents a huge opportunity for Frax, as we have already shown that we can compete with the biggest in the industry (our Sonic launch demonstrates this).

Objective: To explore the feasibility and community support for integrating frxUSD as a native asset on the Cardano blockchain.

Rationale and Potential Benefits:

  • For Frax: Increased monetary premium of frxUSD and potential new partnerships in the optics of mutual growth and positive sum.
  • For Cardano: Enhanced DeFi capabilities and increased liquidity. frxUSD would be highly interoperable and does not have a freeze function, making it an attractive and reliable option for users and developers within the Cardano ecosystem.

Cardano’s Current Landscape:

  • Developer and Protocol Rich: Cardano demonstrated strong developer activity on GitHub with 20,154 GitHub commits across 550 core repositories in the last year. This earned the project a ranking of 2nd place behind Ethereum with 21,386 commits. This shows that Cardano is still strong and ready to explode and frxUSD could be the ignition to the rocket engine. The stablecoin market is still sleeping on this ecosystem, we could swoop in and capitalize on it.
  • Stablecoin Liquidity Challenges: As for the reasons already stated in the summary section, Cardano lacks deep stablecoin liquidity. Again, I would like to stress that the community has been resistant to the integration of stablecoins with freeze functions. frxUSD has none and this presents a unique opportunity for us to fill this gap and become the main stablecoin within the Cardano ecosystem.

Hybrid Integration Approach: The integration could be a hybrid one, involving an institution natively issuing and redeeming frxUSD on Cardano. Layer Zero could enable seamless bridging between EVM chains and Cardano for users. Both Layer Zero and native emissions/redemptions can help strengthen the frxUSD peg on Cardano and facilitate the rapid expansion of frxUSD supply.

If the community responds positively, I could personally take on these challenges and leverage my connections in the Cardano ecosystem to:

  • Try to Secure a Grant: Obtain a grant from Intersect, as they are actively seeking to attract stablecoin liquidity. This grant would likely cover any costs associated with the integration.
  • Engage with Market Makers: Initiate talks with a potential market maker or institution to be the first actor able to mint or redeem frxUSD natively on Cardano, ensuring a tight peg and deep pool liquidity.
  • Collaborate with Lending Protocols: Discuss with Cardano lending protocols to integrate frxUSD as collateral for lending and borrowing (e.g. FluidTokens, Liqwid).
  • Engage with Layer Zero: Add a Cardano OFT endpoint to facilitate seamless bridging between EVM chains and Cardano.

Please share your thoughts and any potential concerns or ideas for improvement. If the developers would like me to drop this initiative and take it on themselves, I would happily back down and support them to the best of my capabilities to achieve this goal.

Cheers,
MabMiche

2 Likes
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Great initiative, MabMiche! I fully support exploring the integration of frxUSD into the Cardano ecosystem. Your analysis hits the nail on the head—Cardano’s vibrant developer community and growing DeFi potential are primed for a stablecoin like frxUSD that brings deep liquidity, interoperability, and no freeze function, addressing the community’s key concerns. The current stablecoin options on Cardano, while innovative, lack the scale and recognition that Frax has already proven and it can deliver.

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I think this is a great initiative, however I miss a few points.

  • Have you been in talks with relevant DEXs? There should be one or more team we could engage with to make it easier for the team to work on getting to Cardano. If you like a project on Cardano, you can already now probe interest from them, ask if they have incentives etc.
  • Key part of the proposal is the bridge. Cardano should also be interested in this to get more value. Have you brought up Layer 0 to them? To try and get Cardano to fund the development of that bridge?
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To answer your first question, the main Cardano DEX is Minswap. And if there happens to be a launch, it would probably happen there.

To answer your second, I’ll get in contact with Layer Zero and Intersect in the coming days, yes they absolutely might be interested in integrating us and probably finance the whole operation.

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Then I will challenge you to take contact with MinSwap on Cardano, and create a contact there and get more information to build your case here even more. Laying the groundwork is important, even for us as community members.

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