Binance stated that BFUSD is not a stablecoin and has not yet been launched, thereby dispelling misconceptions regarding its high annual percentage yield (APY) of 19.55%.
Binance has recently clarified the numerous misconceptions surrounding its new asset, BFUSD. The high annual percentage yield (APY) of 19.55% of BFUSD, which was announced on November 18, 2024, received substantial attention. Subsequently, Binance has clarified that BFUSD is not a stablecoin and has not yet emerged.
This clarification is in response to the initial reactions that incorrectly designated BFUSD as a high-yield stablecoin, despite its encouraging returns and the “USD” label.
Binance emphasized in a post on the social media platform X that BFUSD is a margin asset designed for futures trading that carries a reward, rather than a stablecoin. The organization declared:
“The British pound is not yet available for purchase. It is important to note that this is not a stablecoin; rather, it is a margin asset that provides a reward for futures trading. We are pleased to observe the community’s interest and will provide additional information in the near future, including the methodology used to determine the APY.”
The objective of this statement is to elucidate the nature of BFUSD and eliminate any ambiguity. BFUSD serves as collateral for margin trading, eliminating the necessity for fund pledging or lock-up periods. Users may acquire rewards through daily airdrops, which are contingent upon hourly snapshots of their BFUSD holdings in the UM wallet. The UM Futures Wallet is the subsequent recipient of these rewards.
Binance has yet to provide a comprehensive explanation of how BFUSD will generate its 19.55% APY, despite the high yield, which has left users speculating in the interim. The BFUSD product page’s fine print states, “Enjoy appealing high APY on your BFUSD holdings, surpassing the yields offered by many other stablecoins,” which has contributed to the initial confusion.
The introduction of BFUSD is indicative of a rising trend in the cryptocurrency sector, in which companies are providing high-yield tokens that are pegged to the US dollar but operate under the conventional stablecoin model.
For instance, BlackRock has implemented its BUIDL token. This on-chain money market fund invests in short-term US Treasury notes. In an effort to preserve its value, Ethena has implemented USDe, a synthetic dollar that employs an automated delta-hedging strategy.
Also Read: Japanese bribery accusations against BIT Mining settle for $10 million with DOJ, SEC
Wallets