Binance Launches BFUSD Stablecoin with Up to 19.55% Interest

Binance launches BFUSD, promising an attractive yield of 19.55% APY, although details on the source of the yield have not been released.

Azcnews Binance Launches Bfusd Stablecoin With Up To 19.55% Interest

Cryptocurrency exchange Binance has just introduced BFUSD, a new stablecoin with an expected yield of up to 19.55%/year. However, Binance said that BFUSD has not yet been officially deployed on the blockchain.

Unlike traditional stablecoins, BFUSD is designed as a yield-earning asset, pegged to the US dollar. Binance has pledged to provide specific information on how this impressive yield is achieved soon.

BFUSD: A Potential Competitor to Ethena USDe?

BFUSD is being compared to Ethena’s USDe, a yield-earning asset based on the Ethereum funding rate. Initially, BFUSD will only operate within the Binance ecosystem and act as collateral.

How BFUSD Works

Bfusd Stablecoin Parameters
Bfusd Stablecoin Parameters

Users can purchase a limited amount of BFUSD to earn passive rewards. Yields are calculated based on the lowest balance of the day, through an hourly snapshot mechanism. In addition, BFUSD can be used as collateral in yield pools or integrated on Binance Launchpad to support startups.

Binance aims to encourage users to hold BFUSD for more than 24 hours and at the same time provides flexible features to optimize the use of this asset.

Challenges and concerns

However, BFUSD is not compliant with the European Union’s MiCA regulation because it is collateralized by cryptocurrency, which means that users in this region cannot earn passive interest.

BFUSD’s high interest rate of up to 19.55% has also raised concerns in the community, with many comparing it to the failure of UST under the Luna ecosystem. Notably, Binance has not yet disclosed the source of this yield. Most likely, the attractive interest rate comes from the exchange’s marketing budget.

Binance To Launch Stablecoin Bfusd For Futures Trading, Paying 19.55% Annual Interest
Binance To Launch Stablecoin Bfusd For Futures Trading, Paying 19.55% Annual Interest

BFUSD is backed by a reserve fund of up to 1.1 million USDT, which acts as over-collateral to maintain stability. In the first phase, Binance plans to issue 20 million BFUSD to ensure the sustainable development of the project.

Challenging future

Currently, BFUSD is still awaiting approval from US regulators. The commitment to a high interest rate may be a major barrier to gaining market acceptance.

However, after Binance announced BFUSD, the price of BNB rose to $621.93 and remained above $600. Although Binance is considered the center of innovation in the cryptocurrency field, high-yield mechanisms like BFUSD still face a lot of doubts from the community.

(1 vote)

2.0/5

(1 vote)

Latest

Pump Token Soars 15% Thanks To Buyback

News | Editor Choice | Memecoin

PUMP Token Soars 15% Thanks to Buyback

The buyback wave is heating up the crypto market, and Pump.fun, one of the hottest names in recent months, has officially jumped on the bandwagon.

Bigone Crypto Exchange Hacked, Users Lose $27 Million

News | Editor Choice | Policy & Regulations

BigONE Crypto Exchange Hacked, Users Lose $27 Million

Crypto exchange BigONE has confirmed a serious security breach resulting in over $27 million in losses. The attacker gained unauthorized access to the platform’s hot wallets, siphoning off various assets including BTC, ETH, USDT, SHIB, SOL, and DOGE.

Trump Announces Congressional Breakthrough On Genius Act

News | Editor Choice | Policy & Regulations

Trump Announces Congressional Breakthrough on GENIUS Act

President Donald Trump announced that the GENIUS Act — the first federal framework for stablecoins — has gained key congressional support and will head to a vote, marking a surprising legislative turnaround.

Should You Dca Bitcoin At This Time

Bitcoin | Editor Choice

Should You DCA Bitcoin at This Time?

After Bitcoin reached an all-time high of over $120,000, many investors are questioning whether they should dollar-cost average (DCA) at this time.

Bitcoin Sees Sharp Correction Amid U.s. Inflation Concerns

News | Bitcoin | Editor Choice

Bitcoin Sees Sharp Correction Amid U.S. Inflation Concerns

After reaching a new high of $123,000, Bitcoin has pulled back to $116,800 as the market cools down and retail investors remain largely absent.