The proposal could give rise to one of the largest liquidity pools in DeFi, according to Ethena Labs.
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, while enabling Frax to diversify its backing yield, according to Ethena Labs, which wrote in an April 8 X post:
