Let’s talk about Binance's RWUSD

Recently, Binance launched a capital-protected wealth management product with an annualized return of 4.2%, called RWUSD. Note that it is capital-protected.

When you buy RWUSD on Binance, they take your money to purchase U.S. Treasury bonds, earning a spread and fees. The current interest rate on U.S. Treasury bonds is 4.3%. The fee for this Binance product is as low as 0.05%, and currently, the fees are waived.

This also has a slight resemblance to using USDT to buy U.S. Treasury bonds. In the crypto world, this behavior has a pretentious term called RWA.

This can be redeemed at any time and is capital-protected. It essentially acts like a demand deposit wealth management product.

During a bear market, USDT wealth management may only yield an annualized return of 1%, which is undesirable. A 4.2% yield feels quite comfortable, especially considering that domestic loans only cost 2.8%, which can help buffer potential exchange losses.