On November 14, 2024, Binance came forward to clear the fog around ‘BFUSD’ after the details of its new asset launch leaked on X.
As per the report, the tweet was posted from Zoomer, claiming that Binance is planning to launch a new stablecoin with 19.55%. This viral post was time-sensitive as Bitcoin is currently sailing through one of the biggest rallies of its history.
BFUSD Recalls Memory of Terra
The guarantee of 19.55% APY has raised skepticism about BFUSD on X, recalling the memory of once the biggest stablecoin TerraLUNA, which turned out to be a disaster later.
https://x.com/RunnerXBT/status/1858581361864401141
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UST, the algorithmic stablecoin of the Terra ecosystem, was designed to maintain a 1:1 peg with the USD via LUNA, its companion currency. The 20% APY promise was a key part, which was maintained through the Anchor Protocol, a lending and borrowing platform.
However, panic selling and UST depeg created a failure in Terra’s algorithmic mechanism, forcing its project to wind up operations. This event has realized that the flowery promise of 20% APY is an unsustainable lure.
Soon after, Binance Customer Support responded to the post. Binance clarified that BFUSD is not yet launched and the project is still in the pipeline. Also, Binance has refused to call BFUSD a stablecoin, instead, claiming it to be a reward-bearing margin asset for futures trading.
Generally, a reward-bearing margin asset in crypto futures trading refers to a margin asset that not only leverages as collateral but also generates additional rewards, such as interest or staking yields. These assets allow traders to maximize their utility while enjoying future trading at the same time.
Based on users’ VIP level, users’ quota for BFUSD holdings will be decided. Users will be able to purchase BFUSD directly from the ‘UM wallet’ via USDT. Active traders will also get a chance to participate in daily airdrops sent to their “UM Futures Wallet” based on snapshots.
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Also Read: US DOJ Seeks to Seize $16 Million from Binance Account Linked to FTX
