Binance Launches Reward-Bearing BFUSD for Futures Traders

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As a seasoned researcher with years of experience navigating the dynamic landscape of cryptocurrencies, I find myself intrigued by Binance’s latest offering, BFUSD. The promise of earning passive revenue while trading futures is undeniably enticing, and the high APY rates certainly catch the eye. However, my skepticism glands are twitching a bit.

Binance, the globally recognized cryptocurrency trading platform, has introduced a debated financial product called BFUSD. This innovative asset, designed for futures traders, provides a chance to potentially collect passive income of up to 38%, simply by owning the token.

As stated in a press release sent to CryptoPotato, traders will be able to buy BFUSD from 2:00 UTC on November 27. This is followed by a promotional event by Binance, running from November 27 to December 26, which celebrates the launch of BFUSD. During this period, there will be no charges for purchasing the token, and users stand a chance to earn up to 100,000 Tether (USDT) in bonus annual percentage yield (APY).

Binance Launches BFUSD

On Binance’s website, it is clear that BFUSD provides a basic annual percentage yield (APY) of 29.18% and a boosted APY of 38.98%. Users who simply hold the token without participating in futures trading receive the base APY, while those involved in USDⓈ-M Futures trading can enjoy the higher boosted APY. The BFUSD token has a total supply of 120 million and a collateral value ratio of 101.32%.

On Binance, users have the option to swap BFUSD for USDT at a 1:1 ratio, minus any transaction charges. The platform computes and posts two reward rates every day based on the minimum BFUSD balance recorded in each user’s account from hourly checks taken throughout the day. The smallest hourly check determines the daily BFUSD balance for calculating rewards.

The system will finance the rewards using earnings generated through staking and fees charged for delta-hedging cryptocurrencies in both spot and futures markets. A substantial amount of these earnings will be distributed to users daily as USDT, while the rest will be set aside in a BFUSD Reserve Fund. Binance has initiated this reserve fund with an initial investment of 1.7 million USDT, with the intention of safeguarding BFUSD from potential negative funding rates.

Jeff Li, Vice President of Product at Binance, stated: “Being the world’s top crypto derivatives provider, we are consistently seeking new ways to enhance user experience and increase platform functionality. BFUSD is an intuitive and thrilling feature added to our diverse offerings, allowing users to earn daily rewards when they engage in futures trading.

BFUSD Reliability Concerns

As an analyst, I find it intriguing to note that Binance guarantees the return rates of BFUSD will remain above zero. This digital asset, distinct from traditional stablecoins, serves as collateral for futures trading within their platform.

Regardless, market participants have expressed skepticism about BFUSD’s reliability due to its high APY, comparing it to the collapsed algorithmic stablecoin TerraUSD.

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2024-11-26 17:00