What is BFUSD?
(1) BFUSD is an internal asset launched by Binance that comes with its own yield capability.
1* BFUSD can be used as margin for contract transactions in multi-asset mode
2* BFUSD can be exchanged or redeemed for stablecoins such as USDT
3* BFUSD can receive daily rewards in USDT according to the applicable reward rate of its eligible balance
(II) BFUSD has two sources of rewards:
1. Funding income: Binance will adopt a delta-neutral strategy to hedge futures positions with spot positions to collect funding fees;
2. Staking rewards: Binance stakes crypto assets to generate staking rewards. For example, you can stake ETH through Binance Wealth Management to get WBETH staking rewards.
(III) BFUSD Reserve Fund
It is a balance maintained by Binance specifically for BFUSD, extracted from the portion of Binance's passive income that is not allocated to the reward rate, used to pay the potential cost of funding fees, and support the maintenance of the BFUSD collateral pool and BFUSD hedging portfolio.
(IV) Operation of the Reserve Fund
In a positive funding rate, funding fees provide income, a portion of which is allocated to the BFUSD reserve fund.
When funding is negative, funding costs are incurred and the reserve fund will pay the funding costs to maintain the hedge position in the collateral portfolio.
During periods of sustained negative funding rates, Binance may adjust its hedging and investment positions, including reducing USD stablecoins.
5. What are the benefits of holding BFUSD?
After enabling multi-asset mode, you can use BFUSD as margin to trade U-margin contracts.
Whether the BFUSD holder's contract account has qualified U-standard trading activities. There are two reward rates every day:
-Base rate: Applicable to BFUSD holders who have no U-margin contract trading activities
- Increase interest rate: For BFUSD holders with qualified U-margin contract trading activities, the interest rate is relatively high.