Yigit Taha OZTURK 
Binance has introduced BFUSD, an innovative product that allows users to earn passive rewards by holding or trading it on the platform. Unlike stablecoins, BFUSD is designed as a “reward-bearing margin asset” for Binance’s futures trading. This new asset aims to provide users with a way to earn rewards in both favorable and unfavorable market conditions.
One of the standout features of BFUSD is the promise that its APY (Annual Percentage Yield) “will never go below zero.” This is a crucial safeguard, especially in the volatile world of cryptocurrency, where negative returns are common. Binance ensures that even during bearish market conditions, BFUSD holders will be protected from losses by maintaining a BFUSD Reserve Fund. This fund accumulates profits during bullish times and is used to cover negative returns during market downturns.
BFUSD users can earn passive income through its base APY, which fluctuates daily. Historical data shows that, between November 20 and 25, the base APY ranged from 12% to 35%, with the boosted APY reaching up to 47%. Active traders can also boost their APY by participating in USDⓈ-Margined Futures.
To manage risks, BFUSD is supported by delta hedging strategies. This involves offsetting the price risk between spot and futures markets to gather funding fees. Additionally, Binance employs ether staking as another method to generate returns for BFUSD holders.
Despite its innovative features, BFUSD is not a stablecoin and cannot be used outside of Binance’s futures platform. It is only available to eligible users in certain regions, with restrictions in places like the U.S. Binance plans to expand BFUSD to increase trading volume on its futures platform while offering a new investment opportunity.
While BFUSD offers an exciting opportunity for crypto investors, users must understand the risks involved, especially given its reliance on market conditions. Binance‘s approach to protecting users during negative market periods sets a strong precedent in the industry and may prompt other platforms to adopt similar risk management strategies.
BFUSD and Binance stand out by offering a unique blend of reward-bearing features and market protection. However, for broader adoption, Binance may need to expand its reach and gain more regulatory approvals globally.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.