Key Takeaways
BFUSD is a special asset on Binance designed for Futures traders. It works as collateral for trades while offering daily USDT rewards.
By holding BFUSD, users can earn daily rewards in USDT, with additional rewards available for those actively trading USDⓈ-M Futures using BFUSD as collateral. These rewards are powered by Binance’s strategies like delta-neutral hedging and Ethereum staking.
To ensure stability during tough market conditions, a Reserve Fund—initially funded with 1 million USDT—supports BFUSD’s hedging mechanism, offering protection against negative funding rates.
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What Is BFUSD?
BFUSD is a reward-earning asset designed exclusively for Binance Futures users. It’s a special tool that allows traders to earn extra rewards when using it as margin for futures trading. But what exactly is BFUSD and how does it work?
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How Does BFUSD Work?
Binance Futures users can buy BFUSD to boost their trading power and earn passive income. In other words, when you buy BFUSD, you’re essentially converting your USDT into an asset that works as trading collateral while also generating rewards.
Daily Rewards: Users can qualify for daily USDT rewards by simply holding BFUSD in their Binance USDⓈ-M Futures wallet.
Boosted Rewards: Using BFUSD for futures trading can earn even higher USDT rewards.
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BFUSD Rewards
BFUSD rewards are based on Binance’s investment and hedging strategies, which include:
1. Delta Hedging: A strategy that involves hedging ETH and other cryptocurrencies between the spot and futures markets. The aim is to collect funding fees by opening offsetting trading positions, reducing risk significantly.
2. ETH Staking: Funds collected from BFUSD sales are used to buy and stake Ethereum (ETH). Staking rewards are then distributed to BFUSD holders.
Daily Reward Rates: Calculated daily, rates vary depending on Binance’s hedging and staking profits.
Base Rate vs. Boosted Rate:
Base Rate: Earned by simply holding BFUSD in your Binance USDⓈ-M Futures wallet.
Boosted Rate: Higher rewards for active trading using BFUSD as collateral.
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Reserve Fund
The BFUSD Reserve Fund is a safety mechanism created to protect users during adverse market conditions.
Initial Fund: Started with 1 million USDT.
Growth: Part of Binance’s investment and hedging income is allocated to this fund to cover potential risks like negative funding rates.
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How to Use BFUSD
BFUSD can be used as margin in Binance Futures markets to enhance leverage and trading power.
Steps to Use BFUSD:
1. Log in to Binance: Go to your account.
2. Navigate to the Futures Page: Find the BFUSD section.
3. Buy BFUSD: Convert USDT to BFUSD.
4. Enable Multi-Asset Mode: Allow BFUSD to act as margin for trades.
5. Start Trading: Hold BFUSD for passive income or use it as margin for higher rewards.
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Redeeming BFUSD
You can redeem BFUSD for USDT at a 1:1 ratio:
1. Go to your Binance account.
2. Navigate to the Futures page and find the BFUSD section.
3. Click [Redeem], enter the amount of BFUSD, and confirm.
Fees: Small fees apply for both buying and redeeming BFUSD (typically 0.1%).
Delays: Redemption may be delayed (up to 7 days) during periods of high demand.
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Why Should You Use BFUSD?
Benefits for Traders:
Earn Passive Rewards: Daily USDT rewards for holding BFUSD.
Boost Trading Power: Use BFUSD as margin to access more capital.
Flexibility: Redeemable for USDT easily.
Risk Protection: Backed by Binance’s Reserve Fund.
Things to Consider:
1. Fees: 0.1% for each conversion.
2. Market Risk: Rewards depend on market performance.
3. Redemption Delays: Possible during high demand.
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Closing Thoughts
BFUSD is a great tool for Binance Futures traders to maximize their trading potential while earning additional income. With flexibility, solid strategies, and safety measures, it’s an excellent choice for both passive and active traders.
However, always be mindful of fees, market risks, and Binance’s terms before using BFUSD.
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Further Reading
Your Guide to Binance Launchpad and Launchpool
What Is a Stablecoin?
What Is Crypto Staking a
nd How Does It Work?
Disclaimer: This content is for educational purposes only and not financial advice. Always consult professionals for your investments.