Key Points
BFUSD is an exclusive income-generating asset newly launched by Binance, providing flexible margin for contract trading.
Holding BFUSD can earn you daily USDT rewards, and BFUSD can be used as margin to trade U-based contracts for more profits. All rewards are provided by Binance's Delta hedging and ETH staking strategies.
The reserve was initially backed by 1 million USDT to protect the BFUSD hedging strategy from negative funding rates during challenging market conditions.
This is a general announcement. The products and services mentioned in this article may not be available in your region.
Binance has launched an exclusive income-generating margin asset BFUSD, supporting you to earn additional rewards while trading contracts. BFUSD is exclusively available on the Binance platform, providing daily USDT rewards to help you maximize the profit potential of your trading capital. Daily rewards come from the income generated by Binance's hedging and investment strategies. You simply need to deposit BFUSD into your U-based contract account to earn passive income. Using BFUSD in U-based contract trading also qualifies you for upgraded rewards. Continue reading to understand how BFUSD works and how to use it.
What is BFUSD?
BFUSD is a revenue-generating margin asset specially designed by Binance for Binance contract traders.
Users can purchase BFUSD with USDT, using it as margin for U-based contract trading while also earning passive income. Just hold it in your U-based contract account to receive daily USDT rewards, and using BFUSD in U-based contract trading can also bring you additional daily USDT rewards.
BFUSD can be redeemed for stablecoins. Binance employs a Delta neutral strategy to maintain investment and hedging schemes, supporting BFUSD and making it a stable component of your margin while providing flexibility and security.
How does BFUSD work?
The rewards generated by BFUSD are funded by Binance's investment and hedging strategies, primarily including Delta hedging and staking of Ether (ETH). These investment and hedging strategies create passive income and provide rewards for BFUSD holders.
Funding sources for rewards
Delta Hedging: Binance employs a Delta neutral strategy to hedge crypto assets (such as Ether) between the spot and contract markets, including offsetting positions to minimize the impact of price fluctuations and obtaining funding fees in lower market risk conditions.
Staking ETH: Binance uses the proceeds from the sale of BFUSD to purchase crypto assets (such as ETH) and then stakes that asset to earn returns. The staking returns will be used to provide rewards for BFUSD holders.
Daily reward rate
Binance calculates the daily reward rate based on the income generated from investment activities on the previous day (after deducting costs and other expenses).
Distribution: A portion of the daily rewards will be distributed to BFUSD holders as USDT rewards. Another portion will be distributed to BFUSD holders actively trading U-based contracts that day. The remaining portion will be allocated to reserves (see below).
Reserve fund
To protect users from negative funding rates, Binance has established a reserve fund with an initial amount of 1 million USDT. This fund serves as a buffer against unfavorable market conditions such as negative funding rates. The reserve fund will receive a portion of BFUSD's daily rewards, continually replenishing the fund, growing in proportion to BFUSD's investment and hedging strategies, ensuring users are protected from negative funding rates.
Please note that Binance will adjust the financing rate of the reserve fund based on actual conditions.
How to purchase BFUSD
Purchasing BFUSD is simple:
Log in: Log into your Binance account.
Navigation: Go to the contract page and select BFUSD rewards.
Purchase: Enter the amount of USDT you wish to exchange for BFUSD, ensuring you have sufficient USDT balance in your U-based contract account.
Confirm: Review the terms and conditions, then confirm the transaction.
Please note that currently, USDT is the only currency available for purchasing BFUSD, so make sure you have enough available USDT in your U-based contract account. Additionally, to use BFUSD as margin, you need to enable the cross margin mode to use multiple assets as margin and enhance trading flexibility.
The BFUSD purchase limit is determined by your Binance VIP level, so please check if the amount you plan to purchase aligns with your level standards. Purchasing and redeeming BFUSD may incur transaction fees, which will be included in the exchange quote displayed before confirming the transaction.
How to use BFUSD
BFUSD not only brings substantial returns but also serves as a powerful trading tool. It can be used as flexible margin to help you earn daily rewards while expanding your trading scale. The following details its usage, including how to set it as margin or redeem it back to stablecoins.
Using BFUSD as margin in contract trading: You can view BFUSD as a cornerstone of your trading capability. It can be used as margin, directly supporting your contract positions without any conversion process. To unlock this feature, simply enable the cross margin mode in your account settings to use BFUSD as margin and easily earn more profits.
Earning daily rewards with BFUSD: Executing trades gives you the opportunity to earn passive income. Simply holding BFUSD in your U-based contract account qualifies you for daily stablecoin rewards at the base interest rate. If you complete at least one U-based contract trade each day, you are also eligible for interest upgrades. Rewards will be automatically deposited into your contract account the next day, with new rewards available every trading day.
Redeeming BFUSD for stablecoins: The process to redeem BFUSD is equally simple. Log into your Binance account, go to the contract page, and then select 'BFUSD rewards'. Click the 'Redeem' option here, enter the amount of BFUSD you wish to exchange for stablecoins, review associated fees, then accept the terms and confirm. The redeemed stablecoins will be deposited into your U-based contract account.
Please note that BFUSD was initially only supported for purchase and redemption with USDT.
Conclusion
BFUSD offers contract users on Binance the opportunity to optimize their trading experience. By integrating BFUSD into your trading strategy, you can use it as an income-generating margin asset, earning daily stablecoin rewards while maintaining complete flexibility of funds. Using BFUSD as margin maximizes trading capability and allows for additional passive income.
Please note that BFUSD is exclusively available on Binance, a leading global cryptocurrency derivatives platform. This product exemplifies our commitment to continuous innovation, proving that Binance is dedicated to providing users with more choices to enhance their trading experience. Explore the advantages of BFUSD now and experience the benefits it brings to Binance contract trading!
Further reading
Disclaimer: You are solely responsible for your investment decisions, and Binance is not liable for any losses you may incur. The reward rate (including base and upgraded rates) is calculated daily and expressed as an annual percentage yield (APY) for reference only. The reward rate does not represent the performance of BFUSD at any time other than the specified date, nor does it represent future performance. Reward rates may fluctuate daily. Past performance is not indicative of future results. Investors should only invest in products they are familiar with and understand the associated risks. Investors should carefully consider their personal investment experience, financial situation, investment goals, and risk tolerance. Please consult an independent financial advisor before investing. BFUSD cannot be withdrawn or used for any purpose other than margin for Binance contract accounts. BFUSD may have redemption restrictions, which could prevent you from redeeming BFUSD for supported stablecoins. This article should not be construed as financial advice. For more details, please refer to (Terms of Use), (BFUSD Terms), and (Risk Warning). For more information on how to protect yourself, please visit Binance's Responsible Trading page.
