Binance announced last week that it will launch a new product "BFUSD", claiming that "annualized income (APY) is up to 19.55%", which reminds people of the collapsed TerraUSD (UST), which once caused an uproar in the currency community. , and Binance hurriedly jumped out to clarify that "BFUSD is not a stable currency." A week later, Binance officially announced today (26th) that BFUSD will be launched tomorrow (27th) and released a more detailed product introduction.
Introducing BFUSD!
Our new reward-bearing asset built for Futures users is available now.
BFUSD purchase will open on Nov 27, 2am UTC.
Try now https://t.co/W0WvVrdYpz pic.twitter.com/0ZrEsM9wGE
— Binance (@binance) November 26, 2024
According to Binance’s official description, BFUSD is an “interest-raising margin asset” that not only allows users to use it as margin in U-standard contract transactions, but also allows users to earn passive income by simply holding BFUSD in a contract account.
Built for contract traders
Binance pointed out that the core design of BFUSD is to allow users to enjoy both a stable "Basic Annualized Yield Reward (Base APY)" and a higher "Boosted Annualized Yield Reward (Boosted APY)". The announcement reads:
Users holding BFUSD in the Binance Futures wallet will be eligible for "daily rewards of USD stablecoins calculated at the daily base rate";
If users actively trade U-standard (USDC, USDT) contracts every day, they will be eligible to receive higher daily interest rate rewards.
The highlight of this product is not only stable income, but also combined with the flexibility of contract trading. For users who are accustomed to trading U-based contracts on Binance, BFUSD will become an efficient asset allocation tool, allowing funds to be used while trading. Being able to "earn money easily while lying down".
According to Binance’s historical data, between November 20 and 25, BFUSD’s basic annualized return ranged from 12% to 35%; while the increased annualized return was as high as 15% to 47%. However, as BFUSD has not yet been officially launched, these data have not yet been verified by third parties.
It is worth noting that Binance has made it clear that "BFUSD is not a stable currency." It can neither be withdrawn from the Binance Futures wallet nor freely traded in the market. It can only be used as a margin for contract transactions, but it can be exchanged for USDT at any time. .
BFUSD Reserve Fund
In order to cope with market fluctuations, Binance has specially established a "BFUSD Reserve Fund" with an initial capital of 1 million USDT to serve as a buffer fund and play a role in adverse market conditions such as negative funding rates.
The reserve will receive a portion of BFUSD's daily rewards, continuously replenish funds, and grow in proportion to BFUSD's investment and hedging strategies, ensuring that users are protected from negative funding rates.
Source of award funds
Rewards generated by BFUSD are funded by Binance’s investing and hedging strategies, which primarily include Delta hedging and Ethereum (ETH) staking. These investing and hedging strategies create passive income and provide rewards to BFUSD holders.
Delta Hedging: Binance uses a delta neutral strategy to hedge crypto assets (such as Ethereum) between spot and contract markets, including by offsetting positions to minimize the impact of price fluctuations when market risk is low. Get Funding Fees.
Staking ETH: Binance uses proceeds from BFUSD sales to purchase crypto assets such as ETH and then stakes that asset to earn yield. This staking proceeds will be used to provide rewards to BFUSD holders.
Bull market support: income potential greatly increased
Citing data from the past year, Binance pointed out that the ETH/USDT trading pair has had 350 days of positive funding rates, and since the launch of the Binance Futures platform in 2019, the quarterly funding rates have also been mostly positive. Such a market environment provides BFUSD with a strong foundation for stable returns.
The current bull market has further pushed up funding rates. Binance stated that during bull markets, the funding rates for longs to pay shorts tend to be higher, which in turn drives up the income levels of BFUSD holders. This is undoubtedly a big plus for investors looking to obtain higher returns in a stable environment.
To celebrate the launch of BFUSD, Binance launches a limited-time event
The purchase and redemption fee of BFUSD is currently set at 0.1%, but during the event period from November 27 to December 26, all users will be free of charge when purchasing BFUSD; holding BFUSD and trading contracts can enjoy an additional 10% Annualized rate of return; in addition, the first 9,000 qualified users who register to participate in the event and meet the minimum BFUSD holding requirements will be eligible to participate in sharing the reward of 60,000 USDT.
"Binance's new product BFUSD will be launched tomorrow! Can it be used as a "margin" for a contract or can it be "earned while lying down"? "This article was first published on (Block Guest).
