Key Takeaways
BFUSD is a special asset on Binance designed for Futures traders. It works as collateral for trades while offering daily USDT rewards.
By holding BFUSD, users can earn daily rewards in USDT, with additional rewards available for those actively trading USDⓈ-M Futures using BFUSD as collateral. These rewards are powered by Binance’s strategies like delta-neutral hedging and Ethereum staking.
To ensure stability during tough market conditions, a Reserve Fund—initially funded with 1 million USDT—supports BFUSD’s hedging mechanism, offering protection against negative funding rates.
What Is BFUSD?
BFUSD is a reward-earning asset designed exclusively for Binance Futures users. It’s a special tool that allows traders to earn extra rewards when using it as margin for futures trading. But what exactly is BFUSD and how does it work?
How Does BFUSD Work?
Binance Futures users can buy BFUSD to boost their trading power and earn passive income. In other words, when you buy BFUSD, you’re essentially converting your USDT into an asset that works as trading collateral while also generating rewards.
Users can qualify for daily USDT rewards by simply holding BFUSD in their Binance USDⓈ-M Futures wallet. In addition, if they use BFUSD for futures trading, they can get even higher USDT rewards.
BFUSD Rewards
BFUSD rewards are based on Binance’s investment and hedging strategies, which consist mostly of delta hedging and ether (ETH) staking.
Delta hedging is a strategy that involves hedging ETH and other cryptocurrencies between the spot and futures markets. The idea is to collect funding fees by opening trading positions that offset each other and greatly reduce risks.
The ETH staking strategy involves using the funds collected from BFUSD sales to buy and stake ETH. The staking rewards are then used to fund the rewards given to BFUSD holders.
The Daily Reward Rates are calculated daily, but the exact rate varies depending on how much Binance earns from its hedging and staking activities.
Base Rate and Boosted Rate
Binance splits rewards into two categories:
Base Rate: USDT rewards for simply holding BFUSD in your Binance USDⓈ-M Futures wallet.
Boosted Rate: Higher reward rate for those who actively trade using BFUSD as collateral.
Reserve Fund
The BFUSD Reserve Fund is a special fund created by Binance to protect users from the potential impact of negative funding rates. The fund started with 1 million USDT, but it has grown over time as a portion of the income generated by Binance’s investment and hedging strategies are allocated to it.
How to Use BFUSD
BFUSD can be used as margin in Binance Futures markets, enabling traders to increase their leverage and trading power. You can start using BFUSD in a few simple steps:
Log in to your Binance account.
Navigate to the Futures page and find the BFUSD section.
Click [Buy] BFUSD, enter the amount of USDT you want to convert and click [Confirm].
Enable Multi-Asset Mode: This allows BFUSD to be used as margin in your trades.
Start earning: You can hold your BFUSD for passive earnings or boost your rewards by using BFUSD as margin when trading futures.
Redeeming BFUSD
If you decide you no longer want to hold BFUSD, you can redeem it back into USDT at a 1:1 ratio. Follow these steps to redeem your BFUSD:
Go to your Binance account, navigate to the Futures page, and find the BFUSD section.
Click [Redeem].
Enter the amount of BFUSD you want to convert and confirm.
Keep in mind, there are small fees for both buying and redeeming BFUSD. Also, in rare cases of high demand, Binance might delay redemptions for up to seven days.
Why Should You Use BFUSD?
Benefits for Traders
Earn passive rewards: You can earn USDT rewards every day by simply holding BFUSD in your Binance Futures wallet.
Boost your trading: By using BFUSD as margin, you can access more capital for your trades.
Flexibility: You can redeem BFUSD for USDT in just a few simple steps.
Protection from risks: Binance has set up a Reserve Fund to reduce risks and keep rewards relatively stable.
Things to Consider When Using BFUSD
While BFUSD is a great tool for futures traders, there are a few things to keep in mind:
Fees: Each time you buy or redeem BFUSD, there’s a small fee (usually 0.1%).
Market risk: Your rewards depend on market conditions. On bad days, you might earn less than expected.
Redemption delays: If lots of people try to redeem BFUSD at the same time, you might have to wait a few days for Binance to process it.
Closing Thoughts
BFUSD is a great tool for Binance Futures traders who want to maximize their trading potential while earning some extra income. It’s flexible, easy to use, and backed by solid investment strategies. Whether you’re a passive HODLer or an active trader, BFUSD can be a valuable addition to your trading toolkit.
That said, always keep an eye on fees, market risks, and Binance’s terms. If you’re ready to give BFUSD a try, head over to the Binance Futures section and start exploring its benefits today!
Further Reading
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