Binance launches BFUSD: Reward-bearing margin asset for futures traders Binance launches BFUSD: Reward-bearing margin asset for futures traders
The new foray by Binance is directly related to its futures services, and the rewards are not available for countries under the MiCA.
2 min read
Updated: Dec. 3, 2024 at 12:36 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Binance, the world’s largest crypto exchange by trading volume, has unveiled BFUSD, a pioneering reward-bearing margin asset designed for futures traders.
Announced on November 26, 2024, BFUSD allows users to earn passive income by holding the asset in their futures accounts, with the opportunity to earn higher rewards through active trading.
Innovative Passive Revenue Model
BFUSD offers two distinct reward tiers:
- Boosted APY: Higher rewards for users actively trading USDⓈ-M Futures while holding BFUSD.
- Base APY: Passive income for users holding BFUSD without active trading.
Reward rates are calculated daily based on Binance’s delta-hedging strategy, which generates income through arbitraging spot and futures markets and staking rewards. Binance ensures that reward rates will never fall below zero, with the majority of income distributed as USDT to BFUSD holders. Additionally, Binance has established a Reserve Fund, seeded with 1 million USDT, to safeguard against potential negative funding rates.
Key Features of BFUSD
- Passive Revenue: Earn daily rewards simply by holding BFUSD in a futures account.
- Enhanced Trading Incentives: Boosted rewards for users who trade futures while holding BFUSD.
- High Collateral Efficiency: Near 100% collateral ratio when purchasing and redeeming BFUSD for USD stablecoins.
- Redemption Flexibility: BFUSD is easily redeemable for USD stablecoins, offering users more financial flexibility.
- Market Protection: The Reserve Fund shields users from negative funding rates while ensuring consistent returns.
Broader Implications for Binance Users
BFUSD represents Binance’s continued innovation in derivatives trading. “As the global leader in crypto derivatives products, we aim to provide users with more utility and an enhanced trading experience,” said Jeff Li, VP of Product at Binance.
“BFUSD is a user-friendly addition to our platform, combining passive income with active trading rewards.”
Delta-Hedging Integration
The introduction of BFUSD builds on Binance’s earlier efforts, such as the Funding Rate Arbitrage Bot, which simplifies delta-neutral strategies for users.
By automating spot and futures trades, Binance has empowered users to optimize returns without manual execution.
Competitive Landscape
This launch follows Binance’s transition away from Binance USD (BUSD) after regulatory challenges in 2023, steering users towards alternative stablecoins like FDUSD. BFUSD, with its innovative reward structure and high utility, is positioned to enhance Binance’s market leadership amidst competition from products like Ethena’s sUSDe and tokenized money funds such as BlackRock’s BUIDL.
Binance’s commitment to delivering cutting-edge solutions is evident in BFUSD’s design, providing users with a reliable and engaging option for maximizing their futures trading experience.
Mentioned in this article
Author 
Gino Matos
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
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