Binance Launches BFUSD with Rewards for Futures Traders

The world’s largest crypto exchange, Binance, has launched its controversial reward-generating margin asset, BFUSD. This asset offers futures traders the opportunity to earn up to 38% passive income while holding the token.

According to a press release shared with CryptoPotato, traders can buy BFUSD starting at 02:00 UTC on November 27. From November 27 to December 26, Binance will run a promotional campaign to mark the launch of BFUSD, charging zero fees for token purchases and allowing users to share 100,000 Tether (USDT) in a bonus annual percentage return (APY).

Binance Launches BFUSD

Information on the Binance website reveals that BFUSD offers a base APY of 29.18% and a boosted APY of 38.98%. The base APY applies to users who hold the token without trading futures, while the boosted APY is for those who engage in USDⓈ-M futures trading activity. The token has a supply of 120 million and a collateral value ratio of 101.32%.

Binance users can buy and exchange BFUSD for USDT at 1:1, excluding transaction fees. The crypto exchange will calculate and publish two daily reward rates taking into account the lowest BFUSD balance recorded in the user’s account from the hourly snapshots taken throughout the day. The lowest hourly snapshot determines the daily balance of BFUSD.

The platform will fund rewards with passive income from participation activities and funding fees charged for delta hedging crypto assets between spot and futures markets. A significant portion of the revenue will go to users daily in the form of USDT, while the remaining portion will go to a dedicated BFUSD reserve fund. Binance has already launched this reserve fund with 1.7 million USDT, with the aim of protecting BFUSD from negative funding rates.

Jeff Li, Vice President of Product at Binance, said: “As a global leader in crypto derivatives products, we are always looking to innovate for our users and bring more utility to our platform. BFUSD is an easy-to-use addition and exciting addition to our wide range of offers, allowing users to enjoy daily rewards when trading futures.”

BFUSD reliability issues

Interestingly, Binance claims that BFUSD reward rates will never drop below zero. The crypto exchange has also clarified that BFUSD is not a stablecoin, but an asset that can be used as margin for futures trading on the platform.

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

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 on Binance (full details).

LIMITED OFFER for CryptoPotato Readers on Bybit – Use this link to register and open a FREE $500 position with any currency!