TL;DR
Binance has introduced BFUSD, a reward-bearing margin asset launched on November 27, 2024, offering users the opportunity to earn passive rewards by holding the asset or using it for futures trading.
BFUSD can be purchased and redeemed at a 1:1 ratio with USDT, has a high collateralization value, and provides daily rewards in USDT through Binance’s delta hedging strategy and staking activities.
BFUSD offers two types of APY: a Base APY for holding the asset and a Boosted APY for engaging in USDⓈ-Margined Futures trading, with a dedicated Reserve Fund ensuring the APY never goes below zero.
Binance has unveiled its latest innovation: BFUSD, a reward-bearing margin asset designed to enhance the trading experience for futures traders. Launched on November 27, 2024, BFUSD offers users the opportunity to earn passive rewards simply by holding the asset or by using it for futures trading on the Binance platform.
Key Features of BFUSD
BFUSD is not a stablecoin but a unique margin asset that can be purchased and redeemed at a 1:1 ratio with USDT, subject to applicable fees. One of the standout features of BFUSD is its high collateralization value, nearly 100%, making it an attractive choice for margin trading.
Users holding BFUSD in their futures accounts can earn daily rewards in the form of USDT, with the reward rates determined by Binance’s innovative delta hedging strategy and staking activities.
Daily Passive Income and Boosted Rewards
BFUSD holders benefit from two types of Annual Percentage Yield (APY): a Base APY for simply holding the asset and a Boosted APY for those who engage in USDⓈ-Margined Futures trading. The Base APY accrues daily, providing a steady stream of passive income, while the Boosted APY offers higher rewards for active traders.
Binance has assured users that the APY for BFUSD will never go below zero, thanks to a dedicated Reserve Fund initially seeded with 1 million USDT. This fund is designed to cover potential negative funding rates, ensuring consistent returns even during market downturns.
How Rewards Are Generated
The rewards for BFUSD are generated through a combination of delta hedging and staking. Delta hedging involves balancing assets between spot and futures markets to collect funding fees while staking rewards contribute to the pool of passive income distributed to BFUSD holders.
This dual strategy ensures that BFUSD remains a sustainable and attractive option for traders looking to maximize their returns. With the introduction of BFUSD, Binance continues to lead the market in providing innovative solutions for its users. The new margin asset not only enhances the trading experience but also offers a reliable source of passive income.