Binance launches BFUSD and offers this annual yield
Each user of the exchange will hold a limit share of the asset. The value will depend on each ranking within people's accounts.
Binance, one of the most important cryptocurrency exchanges in the world, launched its new BFUSD coin that offers interest. The system allows for the purchase and redemption of the token.
Along with its launch, a base annual yield of 14% was announced, although it is unknown whether this value will be maintained in the future.
BFUSD maintains parity with the US dollar. However, the firm indicated that it will not be considered a stablecoin as the use of the token is limited on the platform.
The token "is designed as a margin asset for futures trading while offering passive rewards," detailed Binance.
In addition, the company indicated that asset holders will be able to take advantage of a base annual yield rate (APY) that "accumulates directly, even if they do not trade futures."
An important clarification is that those who engage in qualified activities in futures with stablecoin margin will receive an increased APY that day. The exchange has taken measures to ensure that the APY is never negative. For example, the creation of the Reserve Fund, which holds part of the profits to cover future losses.
This is BFUSD, the new star of the crypto market
Regarding the paid interests, the yield will come from "delta hedging" and staking ether, the digital currency of Ethereum.
Regarding the first, it is a technique that reduces the risk of fluctuations in the spot market, where assets are bought and sold at the current price, and futures. This balances price differences between markets.
According to the official website, each Binance user holds "a limit share of BFUSD, and the size of the share is based on the user's VIP level."
BFUSD takes advantage of financing fees, which are payments made between traders with long and short positions in futures contracts.
Finally, the firm indicated that the only asset admitted for BFUSD transactions will be USDT. This means that all purchases, rewards, and redemptions will be paid in that asset.
