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Binance denies that BFUSD is a stablecoin and clarifies 19.55% APY
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Cryptocurrency exchange Binance has clarified concerns related to the BFUSD token, a high-yield product that has caught the attention of the crypto community. The company highlighted that the asset, which has not yet been launched, is not a stablecoin. Furthermore, he clarified that his objective is related to the futures market.
On November 17, crypto news aggregator Zoomerfied published on X that Binance would be launching a stablecoin with an annual yield of 19.55%. The publication generated a wave of comparisons with the algorithmic stablecoin TerraClassicUSD (USTC), whose crash in 2022 shook the cryptocurrency market.
In response, Binance used the same platform to deny that BFUSD is a stablecoin. According to the company’s customer support team, the asset will be a product aimed at margin trading. The token will offer rewards, but without requiring staking or locking funds.
According to the asset’s official launch page, users will be able to use BFUSD as collateral in the futures market. The balance will be in a wallet called “UM Wallet”. Additionally, Binance will distribute accumulated rewards as airdrops to the “UM Futures Wallet” daily.
How Binance BFUSD Works
Binance further revealed that there will be a limit to the amount of BFUSD available to each user, determined based on the VIP level, which reflects the social ranking of users on the platform.
Prior to Binance’s response, several members of the crypto community mentioned similarities between BFUSD and Anchor Protocol, the system that offered 20% yields on the Terra (LUNA) and TerraClassicUSD (USTC) ecosystem.
The collapse of the Terra ecosystem in 2022 began with the loss of USTC par value. The stablecoin fell from $1 to less than $0.01 in less than a month. This resulted in a bank run in the DeFi ecosystem. The LUNA token, which had the function of stabilizing USTC, plummeted from US$80 to less than US$0.001 in the same period.
Binance’s new proposal attracted comments from users who questioned the origin of the rewards offered by BFUSD. “Are we the source of income?” wrote one user on X.
Despite the criticism, Binance seeks to distance itself from associations with previous projects, highlighting the experimental nature of BFUSD as a futures market product and not a stablecoin.
Binance denies that BFUSD is a stablecoin and clarifies 19.55% APY
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Binance denies that BFUSD is a stablecoin and clarifies 19.55% APY
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Binance denies that BFUSD is a stablecoin and clarifies 19.55% APY
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Binance denies that BFUSD is a stablecoin and clarifies 19.55% APY
