Binance Quells BFUSD Stablecoin Rumours

Binance has addressed concerns surrounding its forthcoming "BFUSD" token, emphasizing that it is neither a stablecoin nor has it been officially launched.

The clarification follows a 17 November post by crypto news aggregator Zoomerfied on X (formerly known as Twitter), which suggested Binance was introducing a stablecoin with an annual yield of 19.55%.

This sparked comparisons to Terraform Labs' failed algorithmic stablecoin, TerraClassicUSD.

In response, Binance confirmed on X that BFUSD is a reward-bearing margin trading product, not a stablecoin.

According to Binance's official launch page, BFUSD will allow traders to use it as collateral without the need for staking or locking up funds.

Instead, users will hold BFUSD in a "UM Wallet" and receive daily airdrops to their "UM Futures Wallet" based on snapshots of their holdings.

Access to BFUSD will also be limited by users' social ranking, known as their "VIP level," on the Binance platform.

Community Makes Comparisons to Terra's Failed Stablecoin, Expressing Concern

Before Binance's clarification, comparisons quickly surfaced between BFUSD and Do Kwon's collapsed algorithmic stablecoin, TerraUSD (UST).

Like UST, which once promised a 20% yield via the Anchor protocol, the speculation surrounding BFUSD's high returns raised alarms.

Terra's downfall in May 2022 remains one of the most infamous failures in decentralised finance (DeFi).

UST, then valued at $18 billion, depegged from its $1 value, plunging below $0.01 in under a month as users scrambled to withdraw funds in a DeFi "bank run."

Terra (LUNA), the companion asset designed to stabilise UST, followed suit, crashing from $80 to less than $0.001 in just days.

The echoes of lofty yield promises triggered unease among the crypto community, with many recalling the devastation caused by UST's collapse.

The initial post about BFUSD also caught the attention of prominent Bitcoin advocate Jameson Lopp, further amplifying scepticism.