Binance recently clarified that their BFUSD product is not a stablecoin, gaining attention following its comparison to the Terra collapse in 2022.
What Is Binance BFUSD?
Binance Customer Support stated that BFUSD is a reward-bearing margin asset, not a stablecoin. It is designed for futures trading where traders can store BFUSD in a Unified Margin wallet and receive daily airdrops based on their VIP level.
Social Media Comparisons to Terra
BFUSD became a topic of comparison to Terra's yield on social media. In 2022, TerraUSD's collapse wiped out $18 billion in value. Some users question the sustainability of high-yield models.
Lessons from Terra
The TerraUSD collapse was a major lesson in DeFi, highlighting the risks of algorithmic stablecoins. Binance took measures to ensure BFUSD does not encounter similar issues, clarifying it's not pegged to any asset.
BFUSD is a new product in Binance's ecosystem that allows traders to earn rewards non-custodially. The comparison to Terra reminds us of the importance of clarity and sustainability in the crypto industry.
