Binance logo displayed on a smartphone with candle sticks in the background. Source: photo_gonzo - stock.adobe.com

Key Takeaways:

Binance clarified that BFUSD is not a stablecoin but a reward-bearing margin asset for futures trading, currently unreleased.
BFUSD allows users to earn rewards without staking or locking funds, with rewards airdropped daily based on holdings.
Binance limits BFUSD quotas by VIP level to address concerns over high-yield offerings reminiscent of Terra’s collapse.

Binance has clarified that its upcoming asset, BFUSD, is not a stablecoin and has yet to be officially launched, addressing concerns sparked by speculation on social media.

On November 17, crypto news aggregator Zoomerfied claimed Binance would introduce a stablecoin with a 19.55% annual yield, drawing comparisons to TerraClassicUSD (USTC), the failed algorithmic stablecoin of Terraform Labs.

BFUSD is not yet launched.

To be clear, it is not a stablecoin but a reward-bearing margin asset for futures trading.

We are glad to see the community's interest and will be sharing more details soon including how APY is determined
— Binance Customer Support (@BinanceHelpDesk) November 18, 2024

Binance refuted the claims, stating that BFUSD is a reward-bearing margin trading asset for futures trading, not a stablecoin.

BFUSD will serve as collateral for futures trading, with users holding it in a UM Wallet and receiving daily airdrops in their UM Futures Wallet based on their holdings.

Unlike staking, this approach doesn’t require users to lock up funds.

Binance will also limit BFUSD allocations according to a user’s “VIP level”, reflecting their status on the platform.

The clarification aims to address concerns within the crypto community, especially given past failures of high-yield crypto assets like Terra’s ecosystem collapse, and ensure users understand the unique purpose of BFUSD.