Binance Launches BFUSD with Up to 38.98% APY for Futures Trading

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Binance, the biggest crypto exchange has officially launched BFUSD, a reward-bearing margin asset designed for users on its futures platform. Starting from 2 AM UTC on November 27, users can purchase BFUSD using USDT. With a base Annual Percentage Yield (APY) of 29.18% and the potential for a boosted APY of up to 38.98%, this new asset aims to offer impressive gains for those eyeing to maximize their profits in the futures market.

What Is BFUSD and How Does It Work?

BFUSD is a unique margin asset that provides users with returns on their qualifying balances within their future accounts. It works in Binance’s multi-asset mode, allowing trading of USD-M contracts and earning at the same time. Plus, it can be redeemed for USD stablecoin, making it a more stable choice.

Binance has capped the total supply of BFUSD at 120 million, with a collateralized percentage of 101.32%. To participate in the BFUSD program, users must transfer USDT to their UM wallet and ensure they’ve traded UM futures a day before being eligible for the boosted APY. Meanwhile, this measure is part of Binance’s strategy to reward its most active traders and encourage long-term participation in the futures market.

How to Purchase

To purchase BFUSD, log into your Binance account and go to the Futures section. Select the BFUSD Reward option, then enter the amount of USDT you want to convert into BFUSD, ensuring you have enough USDT in your USDⓈ-M Futures wallet. After reviewing the terms, confirm the transaction. Currently, USDT is the only currency accepted for BFUSD purchases.

If you want to use BFUSD as margin, enable Multi-Asset Mode for greater flexibility. Your purchase limit depends on your Binance VIP level, and transaction fees may apply, which will be shown before confirmation.

Benefits and Risk Factors of BFUSD

The main advantage of BFUSD is its potential to offer high yields while also being used as collateral in futures trades. However, Binance has pointed out several risks. Users may face negative funding rates and won’t have any claims to the collateral pool, reserve fund, or hedging portfolio. There’s also a risk of Binance’s credit issues and possible redemption failures.

On the flip side, to help manage these risks, Binance has created the BFUSD Reserve Fund. This fund will help maintain the collateral pool and hedging portfolio, offering some protection to users, but it doesn’t eliminate exposure to market volatility.

Early Adoption Incentives

For early adopters, Binance is offering zero fees on BFUSD purchases and 100,000 USDT in token vouchers. This promotion is aimed at attracting users to the new asset, encouraging them to explore its benefits while taking advantage of the low-cost entry.

The market is opening for futures trading and BFUSD is a hot choice for investors looking to divert their investment portfolio.