Binance Clarifies the Confusion: BFUSD is Not a Stablecoin

After rumors spread that the new token would act as a stablecoin promising yields as high as 19.55%, crypto users quickly drew unsettling parallels

Binance is introducing a new product called BFUSD, which has sparked rumors among crypto users. According to these rumors, the new token will function like a stablecoin, offering yields as high as 19.55%. However, Binance is澄清 that BFUSD is not a stablecoin.

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Here's a closer look at the rumors and Binance's response:

Unpacking the Rumors: Stablecoin Comparisons

Rumors circulating on social media suggest that Binance is launching a new stablecoin called BFUSD. These rumors claim that the token will be used as a stablecoin in futures trading on the Binance exchange. Additionally, it is being said that users who hold BFUSD in their Universal Margin (UM) wallets will be eligible for daily airdrops, with the yield rate varying based on their VIP level on Binance.

Binance's Clarification: A Margin Asset, Not a Stablecoin

In response to the rumors, Binance X (formerly Twitter) has clarified that the new token, denoted as "BFUSD," is not yet launched and is also not a stablecoin. According to Binance Customer Support, it is a "reward-bearing margin asset for futures trading." This token will be used as collateral in margin trading, enabling users to earn daily airdrops without locking up their funds, which will be further held in a "UM wallet." As Binance further clarified, the yield will be based on a user's VIP level on the platform, adding another layer of exclusivity to its design.

Echoes of Terra's Collapse Raise Concerns

Despite Binance's reassurances, many in the crypto community couldn't help but notice the striking similarity to Terra's disastrous collapse last year. "How much did Anchor... did... Yield?" tweeted one user, referencing the failed protocol behind the UST stablecoin, which once promised similar high yields. After the Terra ecosystem's spectacular crash in 2022, which saw UST plummet from $1 to less than a cent, concerns about another yield-based disaster remain high.

As one user quipped, "Are we the yield?" demonstrating lingering skepticism about Binance's new product. Zoomerfied and CoinDesk noted the swift comparisons to the doomed Terra project, reminding everyone just how risky these high-yield promises can be.