Binance has addressed concerns swirling around its upcoming “BFUSD” token, emphasizing that it is not a stablecoin nor has it been officially launched.
The confusion arose after a Nov. 17 post by crypto news aggregator Zoomerfied on X (formerly Twitter). The post claimed Binance was introducing a stablecoin with an annual yield of 19.55%, sparking comparisons to the disastrous collapse of Terraform Labs’ algorithmic stablecoin, TerraClassicUSD (USTC).
Responding to speculation, Binance clarified on X that BFUSD is not a stablecoin but a yet-to-be-released reward-bearing product for margin trading.
“BFUSD is not yet launched. To be clear, it is not a stablecoin but a reward-bearing margin asset for futures trading,” Binance Customer Support stated.
What is BFUSD?
According to Binance’s official launch page, BFUSD will function as collateral for futures trading without requiring traders to stake or lock up their funds. Instead, users will hold BFUSD in a “UM Wallet” and receive daily airdrops credited to their “UM Futures Wallet.” The eligibility and quota for BFUSD are linked to a user’s “VIP level,” based on their social ranking within the Binance platform.
Terra Comparisons Trigger Concerns
Before Binance’s clarification, some members of the crypto community were quick to draw parallels between BFUSD’s high-yield promise and Terraform Labs’ USTC. The latter, once touted for its 20% annual returns via the Anchor Protocol, infamously collapsed in 2022, wiping out billions in investor funds.
Pseudonymous trader RunnerXBT sarcastically noted the similarity, tweeting:
“How… how much did Anchor… did… Yield? Can we not?”
The Terra ecosystem faced a catastrophic failure when its UST stablecoin lost its dollar peg in May 2022, falling below $0.01. Terra’s companion token, LUNA, which was designed to stabilize UST, also crashed from $80 to virtually zero within days, devastating investors.
A Cautious Reception
The high-yield claims of BFUSD have reignited skepticism about unsustainable reward models in the crypto space. “Are we the yield?” one user quipped, echoing concerns about the risks of opaque reward structures.
Veteran Bitcoiner Jameson Lopp also weighed in on the discussion, signaling the ongoing scrutiny over high-yield crypto products in the wake of past failures.
By clarifying BFUSD’s purpose and design, Binance aims to reassure users that the product is fundamentally different from the algorithmic stablecoins that have caused turmoil in the crypto industry. Whether it will succeed in calming nerves remains to be seen.
For more news, find me on Twitter Giannis Andreou and subscribe to My channels Youtube and Rumble
What is your opinion on this particular topic? Leave us your comment below! We are always interested in your opinion!
