- Binance emphasized that BFUSD is a reward-bearing margin asset for futures trading.
- Binance promises to clarify BFUSD’s mechanics and APY generation soon.
Binance’s announcement of a new asset, BFUSD, has sparked intense discussions in the crypto community. Although the platform advertised BFUSD as a high-yield margin asset with a 19.55% annual percentage yield (APY), many initially mistook it for a stablecoin due to its name and promotional comparisons to similar assets. Binance has since clarified that BFUSD is not a stablecoin and has not yet officially launched.
BFUSD is not yet launched.
— Binance Customer Support (@BinanceHelpDesk) November 18, 2024
To be clear, it is not a stablecoin but a reward-bearing margin asset for futures trading.
We are glad to see the community's interest and will be sharing more details soon including how APY is determined
The asset, described as a “reward-bearing margin product for futures trading,” allows users to hold it in a UM Wallet and earn daily airdrops. Binance has highlighted its flexibility, noting that users are not required to lock up their funds to participate. Instead, hourly snapshots of holdings determine rewards, which are deposited into UM Futures Wallets. However, users can only hold limited amounts of BFUSD, depending on their VIP level on the platform.
Questions Arise Over BFUSD Yields
Confusion arose from promotional materials comparing BFUSD’s yield to those of traditional stablecoins. Some users recalled the collapse of TerraLUNA, whose stablecoin UST offered similar yields through the Anchor Protocol before its dramatic implosion in 2022. The fallout from that event wiped out billions in value, raising skepticism about the feasibility of BFUSD’s high APY. As of now, Binance has stated that the asset boasts a 105.54% collateralization ratio, backed by 1.1 million USDT.
BFUSD’s introduction follows Binance’s decision to phase out its stablecoin, BUSD, in February 2024 due to mounting regulatory pressures. Binance encouraged users to migrate to First Digital USD (FDUSD), an alternative stablecoin. It positioned BFUSD as trading collateral with an additional reward mechanism, unlike fiat-pegged stablecoins. Other examples include BlackRock’s BUIDL token and Ethena’s USDe, both of which use non-traditional strategies to generate returns.
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