Introducing BFUSD: Binance’s Exclusive Reward-Bearing Margin Asset for Futures Traders
Main Takeaways
BFUSD is Binance’s new and exclusive reward-bearing asset that offers flexible margin for futures trading.
Hold BFUSD to earn daily USDT rewards, and boost your rewards by trading USDⓈ-M Futures with BFUSD as margin — all funded by Binance’s delta hedging and ETH staking strategies.
A Reserve Fund, initially backed by 1 million USDT, protects the BFUSD hedging strategy from negative Funding Rates during challenging market conditions.
This is a general announcement. Products and services referred to here may not be available in your region.
Introducing BFUSD, Binance’s exclusive reward-bearing margin asset designed to support your futures trades while earning extra rewards. Available only on Binance, BFUSD provides a unique way to maximize your trading capital by offering daily USDT rewards. The daily rewards are funded by income made by Binance’s hedging and investment strategies. BFUSD enables you to receive passive income simply by holding it in your USDⓈ-M Futures wallet. Those who trade using BFUSD on USDⓈ-M Futures will receive boosted rewards. Read on to explore how BFUSD works and how best to use it.
What Is BFUSD?
BFUSD is a reward-bearing margin asset created exclusively for Binance Futures users.
Purchased with USDT, BFUSD allows you to earn passive income while using it as margin in USDⓈ-M Futures trading. By simply holding it in your USDⓈ-M Futures wallet you can qualify for daily USDT rewards, while trading with BFUSD on USDⓈ-M Futures qualifies you for boosted daily USDT rewards.
BFUSD is redeemable for USD stablecoin. Binance uses a delta-neutral strategy to maintain the investment and hedging strategy supporting BFUSD, making it a stable component of your margin. This provides flexibility and reassurance.
How Does BFUSD Work?
BFUSD generates rewards funded by Binance’s investment and hedging strategies, primarily involving delta hedging and staking Ethereum (ETH). These investments and hedging strategies produce passive income, which funds rewards to BFUSD holders.
Reward Funding
Delta Hedging: Binance employs a delta-neutral strategy by hedging crypto assets (such as Ethereum) between the spot and futures markets. This involves taking offsetting positions to minimize exposure to price movements, aiming to collect Funding Fees without significant market risk.
Staking ETH: Binance uses the proceeds of sale of BFUSD to buy crypto assets (such as ETH), which is then staked to earn rewards. Those staking rewards contribute to the income available to fund rewards for BFUSD holders.
Daily Reward Rate
Each day, Binance calculates Daily Reward Rates based on the income generated from the previous day’s investment activities (net of costs and charges).
Distribution: A portion of the daily reward is distributed as USDT rewards to BFUSD holders. An additional portion is distributed to BFUSD holders who have actively traded USDⓈ-M Futures that day. The remaining portion of the daily reward is allocated to the Reserve Fund (see below).
Reserve Fund
To protect users from negative funding rates, Binance has established a Reserve Fund, initially funded with 1 million USDT. This fund serves as a buffer to cover unfavorable market conditions, such as negative Funding Rates. The Reserve Fund is continuously replenished with a share of the daily reward from BFUSD, growing in proportion to BFUSD’s investment and hedging strategies and ensuring protection from negative Funding Rates.
Please note that the rate of funding of the reserve fund will be adjusted by Binance from time to time.
How to Purchase BFUSD
Purchasing BFUSD is a simple process:
Log In: Access your Binance account.
Navigate: Go to the Futures section and select BFUSD Reward.
Buy: Enter the amount of USDT you wish to convert into BFUSD, ensuring you have sufficient USDT balance in your USDⓈ-M Futures wallet.
Confirm: Review the terms and conditions, then confirm the transaction.
Please note that, currently, USDT is the only supported currency for purchasing BFUSD, so make sure your USDⓈ-M Futures wallet has enough USDT available. Also, to use BFUSD as margin, you’ll need to enable Multi-Asset Mode, which allows you to use multiple assets as margin and enhances your trading flexibility.
Your maximum BFUSD purchase limit is determined by your Binance VIP level, so check that your intended purchase amount aligns with this level. Transaction fees for purchases and redemptions of BFUSD may apply, which will be incorporated in the conversion quote displayed to you before you confirm the transaction.
How to Use BFUSD
BFUSD is more than just a reward-bearing asset — it’s a powerful addition to your trading toolkit. With BFUSD, you have the flexibility to use it as margin, allowing you to amplify your trading while earning daily rewards. From setting it up as margin to redeeming it back into USD stablecoin, here’s a closer look at how to make it work for you.
Using BFUSD as Margin in Futures Trading. Think of BFUSD as the foundation of your trading power. It can be used as margin, directly supporting your futures positions without needing any conversions. To unlock this potential, just ensure that Multi-Asset Mode is enabled in your account settings — this allows BFUSD to be recognized as margin, making your capital work harder for you.
Earning Daily Rewards with BFUSD. Turn your trades into an opportunity for passive income. By simply holding BFUSD in your USDⓈ-M Futures wallet you’ll qualify for daily USD stablecoin rewards at the Base Rate. If you complete at least one USDⓈ-M Futures trade each day, you’ll qualify for the Boosted Rate instead. These rewards are automatically credited to your Futures wallet the following day, so every trading day can lead to a new reward boost.
Redeeming BFUSD for USD stablecoin. Ready to convert back? Redeeming BFUSD is just as straightforward. Log into your account, navigate to the Futures section, and select BFUSD Reward. From there, click on the Redeem option, enter the amount of BFUSD you want to convert back into USD stablecoin, review any associated costs, accept the terms, and confirm. USD stablecoin will be credited to your USDⓈ-M Futures wallet.
Please note that, on launch, only USDT is supported for purchases and redemptions.
Final Thoughts
BFUSD presents an opportunity for Futures users on Binance to enhance their trading experience. By integrating BFUSD into your strategy, you can utilize it as a reward-bearing margin asset, earn daily USD stablecoin rewards, and maintain full flexibility with your funds. The ability to use BFUSD as margin allows you to maximize your trading capacity while benefiting from an additional passive income stream.
Remember, BFUSD is exclusively available on Binance, the world’s leading crypto derivatives platform. This offering underscores our commitment to innovation and providing users with more options to optimize their trading. Explore the advantages of BFUSD and see how it can contribute to your futures trading experience on Binance!
Further Reading
Disclaimer: You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. The reward rates (including the Base Rate and the Boosted Rate) are calculated daily, and are expressed as an annualised percentage yield (APY) for illustrative purposes only. Each reward rate is not representative of the performance of BFUSD for any period other than the particular date specified and is not indicative of future results. The reward rates are likely to fluctuate day-to-day. Past performance is not a reliable predictor of future performance. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. BFUSD cannot be withdrawn or used for any purpose other than as margin in a Binance Futures Account. Redemption restrictions may apply, which may affect your ability to redeem BFUSD for a supported USD stablecoin. This material should not be construed as financial advice. For more information, see our Terms of Use, the BFUSD Terms and our Risk Warning. To learn more about how to protect yourself, visit our Responsible Trading page.