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    Binance reveals BFUSD token is for margin trading, not a stablecoin as speculated

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    30s Summary

    Binance clarified that its upcoming “BFUSD” token is not a stablecoin, contrary to rumors, but a reward-earning margin trading product. Users can use BFUSD as collateral without staking or locking their money up, and limit is based on user’s VIP level. Speculation about BFUSD arose after a post suggested it was a stablecoin with a 19.55% annual return, likening it to the failed Terraform Lab’s algorithmic stablecoin.

    Full Article

    Binance, a cryptocurrency exchange, has sought to clear up some confusion about its upcoming “BFUSD” token, emphasizing that it’s not a stablecoin and that it hasn’t been launched yet. There were rumours circulating about this token due to a Zoomerfied post claiming Binance was bringing out a stablecoin with an impressive yearly return of 19.55%. It led to speculation that Binance was about to follow the same path as Terraform Lab’s failed algorithmic stablecoin, now known as TerraClassicUSD (USTC).

    However, Binance clarified that BFUSD is actually a reward-earning margin trading product that hasn’t been released yet. According to its launch page on Binance, folks using the platform will be able to use BFUSD as collateral without staking or locking their money up. Instead, they’ll hold the BFUSD in a ‘UM wallet’ and collect daily airdrops sent to their ‘UM Futures Wallet’ based on snapshots. How much BFUSD users can have is limited by their social ranking, also referred to as their “VIP level” on Binance.

    Before Binance cleared the air, a lot of folks quickly started comparing BFUSD to Do Kwon’s now-closed algorithmic stablecoin, which also once offered a 20% yield yield.

    A 20% yield was also the protocol responsible for propelling the algorithmic Terra Luna’s stablecoin.

    Just a reminder, Terra’s USTC’s value fell greatly – from its stable $1 peg to less than $0.01 in less than a month in May 2022, as lots of users tried to withdraw their tokens all at once.

    With that in mind, some folks are probably understandably cautious about Binance’s new asset. After all, who wants to be the yield?

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