Binance Launches BFUSD Margin Coin

By Mark Hunter

1 week agoWed Nov 27 2024 07:47:06

Reading Time: 2 minutes

• Binance has introduced BFUSD, a reward-bearing margin asset for futures trading, offering an annual percentage yield of 19.55%
• The exchange has clarified that BFUSD is not a stablecoin, despite its “USD” suffix
• Users will be able to use BFUSD as collateral without staking or locking up funds, with daily airdrops based on hourly snapshots

Binance has announced the launch of BFUSD, a reward-bearing margin asset designed for futures trading, promising an attractive annual percentage yield (APY) of 19.55%. The exchange has emphasized that BFUSD is not a stablecoin, despite its name suggesting a U.S. dollar peg; instead it affords users the flexibility to use BFUSD as collateral without the need to stake or lock up their funds, receiving daily airdrops based on hourly snapshots. The coin is the first of its kind as Binance looks to cement its place as the world’s top crypto exchange at a time when innovation is starting to stagnate.

Not a Stablecoin

When BFUSD was first announced last week, users immediately suspected it was a stablecoin due to its ‘USD’ suffix. Binance clarified , however, that BFUSD is not a stablecoin but a reward-bearing margin asset for futures trading:

BFUSD is designed as a margin asset for futures trading while also providing passive rewards. BFUSD holders will enjoy a Base APY [annual percentage yield] that accrues on a daily basis even if they don’t trade futures, and those with qualifying USDⓈ-Margined Futures trading activity will enjoy a higher Boosted APY for that day instead.

The easiest way to think of BFUSD is as a cryptocurrency that rewards you just for holding it in your account; simply having it in your Binance wallet will earn you daily payouts, like interest on a savings account, at a high annual rate of 19.55%. Margin traders can also use it as collateral for their activities, although the coin cannot leave the platform.

Finer Points Still Unknown

While the exact mechanism for BFUSD’s yield generation remains unspecified, Binance has indicated that more details would be shared soon, including how the APY is determined. 

This development follows Binance’s phase-out of its stablecoin, Binance USD (BUSD), earlier this year after regulatory pressures led issuer Paxos to halt new token minting . 

Binance has since encouraged users to transition to First Digital USD (FDUSD), a stablecoin launched by Hong Kong-based First Digital Group.

The introduction of BFUSD reflects Binance’s ongoing efforts to innovate within the digital asset space, offering users new opportunities for yield generation and collateral utilization. At a time when exchanges are stuck for innovation, Binance is trying to come up with new products to ensure customers remain interested.