Frax Finance to Allocate $250M Ethena's USDe to a New Liquidity Pool

Reported by Cointelegraph, decentralized finance (DeFi) lending protocol Frax Finance has recently passed a community governance proposal that greenlights a $250 million allocation of Ethena Labs’ USDe to a new liquidity pool.

As part of Frax’s Singularity Roadmap, the proposal enables the creation of an automated market operation (AMO) that will allow the minting of new FRAX tokens backed by overcollateralized debt. The proposal was approved on April 5.

The proposal will create one of the deepest liquidity pools in the DeFi space and enable Frax to diversify its backing yield, according to Ethena Labs, which wrote in an April 8 X post:

“As of yesterday, FRAX has begun adding USDe POL which will create one of the deepest pools of dollar liquidity on-chain, and enable FRAX to diversify their source of backing yield.”