Key Takeaways:
BFUSD is a special asset on Binance designed for Futures traders. It acts as collateral for trades and offers daily USDT rewards.
By holding BFUSD, users can earn daily rewards in USDT, with additional rewards for those actively trading USDⓈ-M Futures using BFUSD as collateral.
The rewards come from Binance's investment strategies, including delta-neutral hedging and Ethereum staking.
A Reserve Fund (starting with 1 million USDT) supports the hedging mechanism, offering protection against negative funding rates.
What Is BFUSD?
BFUSD is a reward-earning asset designed for Binance Futures users. It acts as trading collateral and allows traders to earn passive income. When you purchase BFUSD, you're essentially converting USDT into an asset that both supports your futures trading and generates rewards.
How Does BFUSD Work?
1. Collateral for Futures Trades:
When you buy BFUSD, it can be used as margin for futures trading, increasing your trading power.
2. Earn Passive Rewards:
Hold BFUSD in your USDⓈ-M Futures wallet to qualify for daily USDT rewards.
Use BFUSD as collateral for trading futures to earn higher rewards.
BFUSD Rewards
The rewards are derived from Binance's investment strategies:
1. Delta Hedging:
Involves hedging ETH and other cryptocurrencies between the spot and futures markets, collecting funding fees to offset risks.
2. ETH Staking:
Funds from BFUSD sales are used to stake ETH, and the staking rewards are distributed to BFUSD holders.
Reward Categories:
Base Rate: Rewards for holding BFUSD in the wallet.
Boosted Rate: Higher rewards for using BFUSD as collateral in trading.
Reserve Fund
Binance created a Reserve Fund to protect users from the potential impact of negative funding rates. Starting with 1 million USDT, it has grown as a portion of earnings from investment and hedging strategies is allocated to it.
How to Use BFUSD
1. Buy BFUSD:
Log in to your Binance account and navigate to the Futures page.
Click Buy BFUSD, enter the amount of USDT you want to convert, and confirm.
2. Enable Multi-Asset Mode:
This allows BFUSD to be used as margin in futures trades.
3. Start Earning:
Hold BFUSD to earn passive rewards or actively use it in futures trading to boost rewards.
Redeeming BFUSD
To redeem BFUSD back into USDT (at a 1:1 ratio):
1. Go to the Futures page on Binance and find the BFUSD section.
2. Click Redeem and confirm the amount to convert.
Conclusion:
BFUSD is a unique asset that offers Futures traders the ability to earn rewards while using it as collateral for trading. By holding BFUSD, users can passively earn rewards or boost them by trading, all while benefiting from Binance’s investment strategies and hedging mechanisms.
