Binance has addressed concerns about its new high-yield “BFUSD” token, emphasizing that it’s neither a stablecoin nor officially launched yet. On Nov. 17, crypto news aggregator Zoomerfied posted on X that Binance was planning to launch a stablecoin offering a 19.55% annual yield. The announcement sparked comparisons to Terraform Labs’ failed algorithmic stablecoin.
Binance clarified on X that BFUSD is an upcoming reward-based margin trading product, not a stablecoin. Binance Customer Support stated that they haven’t launched BFUSD yet. To be clear, it’s a reward-bearing margin asset designed for futures trading.
Binance clarifies BFUSD reward system
Binance’s official launch page explains that traders can use BFUSD as insurance without staking or locking up their funds. Instead, traders will keep the BFUSD in their “UM Wallet” and receive daily airdrops, which the system sends to their “UM Futures Wallet” based on regular snapshots. The BFUSD available to users will depend on their social ranking, referred to as their “VIP level” on the Binance platform.
Before Binance clarified, many people in the crypto community quickly compared the situation to Do Kwon’s failed stablecoin, which had once promised a 20% return. In May. 2022, the stablecoin USTC, valued at $18 billion, crashed from its $1 peg to less than a penny in just under a month.
This happened as the Terra Money ecosystem faced what was similar to a bank run, with thousands of users trying to withdraw their tokens simultaneously. UST was part of a larger ecosystem of tokens, including Terra, designed to help UST maintain its peg. However, things turned dramatically when LUNA crashed from $80 to less than $0.001 in just a week.
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