26 November 2024 – Binance, the global blockchain ecosystem behind the world’s largest cryptocurrency exchange by trading volume and users, has announced BFUSD – the first reward-bearing margin asset issued by a crypto exchange. This innovative margin asset allows users to enjoy a source of passive revenue when they hold BFUSD, or a higher reward rate when they trade futures whilst holding the margin asset, further enhancing their experience on the largest and most liquid crypto derivatives platform.
Users can purchase and redeem BFUSD for USD stablecoin with Binance 1:1 subject to applicable purchase and redemption fees, and utilize it as margin with near 100% collateral value ratio, making BFUSD an attractive new choice of margin for futures trading.
Binance funds BFUSD rewards with passive income generated by delta hedging crypto assets between spot and futures markets to collect funding fees, as well as rewards from staking.
Each day Binance will calculate and publish two BFUSD Reward Rates (APY%):
A Boosted APY for BFUSD holders with qualifying USDⓈ-M Futures trading activity for that day
A Base APY for BFUSD holders without qualifying USDⓈ-M Futures trading activity for that day
The reward rates are determined by Binance taking into account the income generated from its hedging and investment strategy on the previous day and will never go below zero.
Binance will distribute the majority of the income generated as a daily reward in the form of USDT, to be shared between BFUSD holders, and will allocate the remaining portion of the generated income to a dedicated BFUSD Reserve Fund, which will support the investment and hedging strategy by covering potential negative Funding Rates. Binance will kickstart the Reserve Fund with 1 million USDT.
“As the global leader in crypto derivatives products, we are always looking to innovate for our users and provide them with more utility on our platform. BFUSD is a user-friendly and exciting addition to our wide range of offerings, enabling users to enjoy daily rewards when they trade futures,” commented Jeff Li, VP of Product at Binance.
Li added, “BFUSD demonstrates how Binance continues to lead the market and care for users by making trading more engaging for them. Users enjoy the deepest liquidity and a wide range of offerings on our platform, and we will continue to explore more ways to enhance the user journey on Binance.”
BFUSD offers users the following benefits:
Passive revenue while holding BFUSD in their futures account: Users can purchase and hold BFUSD in their Futures account to earn daily passive income.
Boosted reward rate while holding BFUSD and trading futures: Users enjoy a higher Boosted APY for each day that they hold BFUSD and trade USDⓈ-M Futures.
Conveniently purchase and redeem BFUSD for USD stablecoin: BFUSD is redeemable for USD stablecoin, giving users more choice on Binance.
Maintain capital efficiency: Users can purchase, redeem, and utilize BFUSD as margin with near 100% collateral value ratio.
Protected from negative funding rates: The hedging and investment strategy used by Binance to generate the income to fund rewards is protected from experiencing negative Funding Rates through safeguards and a dedicated BFUSD Reserve Fund.
Binance first introduced delta-hedging to users earlier this year with the Funding Rate Arbitrate Bot, which automates a delta-neutral strategy for users in a convenient single trade order so they do not have to manually execute two separate spot and futures trades. BFUSD builds on Binance’s proactive efforts to develop new products and features that support users.
BFUSD will be available for purchase starting 27 November 2024 (02:00 UTC). To celebrate the launch of BFUSD, Binance will hold a promotional campaign where all users can enjoy zero fees on purchases of BFUSD and share 100,000 USDT in Bonus APY and Token Vouchers from 27 November to 26 December 2024. Please see here for more information on the campaign.
For more information about BFUSD, please see here.