Binance Quells BFUSD Stablecoin Rumours
Binance has addressed concerns surrounding its forthcoming "BFUSD" token, emphasizing that it is neither a stablecoin nor has it been officially launched.
The clarification follows a 17 November post by crypto news aggregator Zoomerfied on X (formerly known as Twitter), which suggested Binance was introducing a stablecoin with an annual yield of 19.55%.
[ ZOOMER ]
BINANCE TO LAUNCH NEW STABLECOIN WITH 19.55% APY: BLOG
— zoomer (@zoomerfied) November 18, 2024
This sparked comparisons to Terraform Labs' failed algorithmic stablecoin, TerraClassicUSD.
In response, Binance confirmed on X that BFUSD is a reward-bearing margin trading product, not a stablecoin.
BFUSD is not yet launched.
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
— Binance Customer Support (@BinanceHelpDesk) November 18, 2024
According to Binance's official launch page, BFUSD will allow traders to use it as collateral without the need for staking or locking up funds.
Instead, users will hold BFUSD in a "UM Wallet" and receive daily airdrops to their "UM Futures Wallet" based on snapshots of their holdings.
Access to BFUSD will also be limited by users' social ranking, known as their "VIP level," on the Binance platform.
Community Makes Comparisons to Terra's Failed Stablecoin, Expressing Concern
Before Binance's clarification, comparisons quickly surfaced between BFUSD and Do Kwon's collapsed algorithmic stablecoin, TerraUSD (UST).
how...how much did Anchor... did.... yield?
— RunnerXBT (@RunnerXBT) November 18, 2024
Like UST, which once promised a 20% yield via the Anchor protocol, the speculation surrounding BFUSD's high returns raised alarms.
Binance announced this shit and market farts gg
— RunnerXBT (@RunnerXBT) November 18, 2024
Terra's downfall in May 2022 remains one of the most infamous failures in decentralised finance (DeFi).
UST, then valued at $18 billion, depegged from its $1 value, plunging below $0.01 in under a month as users scrambled to withdraw funds in a DeFi "bank run."
Terra (LUNA), the companion asset designed to stabilise UST, followed suit, crashing from $80 to less than $0.001 in just days.
The echoes of lofty yield promises triggered unease among the crypto community, with many recalling the devastation caused by UST's collapse.
As always with these things, ask yourself pic.twitter.com/f0chLCp5iy
— Yunt (@TraderYunt) November 18, 2024
The initial post about BFUSD also caught the attention of prominent Bitcoin advocate Jameson Lopp, further amplifying scepticism.
Binance announces BFUSD, a yield-bearing stablecoin offering 19.55% APY that can also be used as collateral. 🧐 pic.twitter.com/2siqlqBtdK
— Jameson Lopp (@lopp) November 18, 2024
