BFUSD, the first reward-bearing margin asset issued by a cryptocurrency exchange, was unveiled by Binance, the global blockchain ecosystem that powers the biggest cryptocurrency exchange in the world by both trading volume and users. This cutting-edge margin asset significantly improves users’ experience on the biggest and most liquid cryptocurrency derivatives platform by enabling them to benefit from a greater reward rate when trading futures while holding the margin asset or a source of passive income while holding BFUSD.
With a nearly 100% collateral value ratio, users may use BFUSD as leverage and exchange it for USD stablecoin with Binance 1:1, subject to appropriate buy and redemption fees. This makes BFUSD a compelling new option for futures trading margin.
In order to collect funding fees and staking incentives, Binance funds BFUSD generates passive revenue by delta hedging cryptocurrency assets between spot and futures markets.
Binance will compute and release two BFUSD Reward Rates (APY%) every day:
BFUSD holders with qualified USDⓈ-M Futures trading activity on that day will get a higher APY.
A Base APY for holders of BFUSD who did not engage in eligible USDⓈ-M Futures trading that day.
The reward rates, which never go below zero, are set by Binance based on the revenue from its investment and hedging strategy the day before.
A dedicated BFUSD Reserve Fund will receive the remaining portion of the generated income, which will support the investment and hedging strategy by covering potential negative Funding Rates. The majority of the income will be distributed by Binance as a daily reward in the form of USDT, to be shared among BFUSD holders. Binance will use one million USDT to launch the Reserve Fund.
Jeff Li, VP of Product at Binance stated:
“As the global leader in crypto derivatives products, we are always looking to innovate for our users and provide them with more utility on our platform. BFUSD is a user-friendly and exciting addition to our wide range of offerings, enabling users to enjoy daily rewards when they trade futures.”
Li added:
“BFUSD demonstrates how Binance continues to lead the market and care for users by making trading more engaging for them. Users enjoy the deepest liquidity and a wide range of offerings on our platform, and we will continue to explore more ways to enhance the user journey on Binance.”
BFUSD provides customers with the following advantages:
Passive income when holding BFUSD in a futures account: To generate daily passive income, users may buy and hold BFUSD in their futures account.
Increased reward rate for holding BFUSD and trading futures: Every day that users hold BFUSD and trade USDⓈ-M Futures, they get a higher Boosted APY.
Easily buy and redeem BFUSD for USD stablecoin: Because BFUSD may be redeem for USD stablecoin, Binance customers have additional options.
Preserve capital efficiency: With a collateral value ratio of about 100%, users may buy, redeem, and use BFUSD as margin.
Protected against negative funding rates: Binance’s investing and hedging strategy, which provides the revenue needed to support incentives, is shielded against negative funding rates via a special BFUSD Reserve support and other precautions.
With the Funding Rate Arbitrate Bot, which automates a delta-neutral approach for users in a handy single trade order, Binance first made delta-hedging available to users earlier this year. This eliminates the need for users to manually execute two distinct spot and futures trades. Binance’s aggressive efforts to create new services and products that benefit users are expanded upon by BFUSD.
The purchase of BFUSD will begin on November 27, 2024, at 2:00 UTC. In honor of the introduction of BFUSD, Binance will run a promotion from November 27 to December 26, 2024, during which all users will be able to acquire BFUSD for zero fees and share 100,000 USDT in Bonus APY and Token Vouchers. To learn more about the campaign, please click here.
To learn more about BFUSD, click here.