Binance is making sure its latest product, BFUSD, doesn’t get confused with the failed Terra stablecoin experiment. After rumors spread that the new token would act as a stablecoin promising yields as high as 19.55%, crypto users quickly drew unsettling parallels to Terraform Labs’ ill-fated algorithmic stablecoin, UST. But Binance is setting the record straight—BFUSD is not a stablecoin.
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Clarifying the Confusion
In a post to X (formerly Twitter), Binance explained that BFUSD is not yet launched and is not a stablecoin. Instead, it’s a “reward-bearing margin asset for futures trading,” according to Binance Customer Support. The token will be used as collateral in margin trading, allowing users to earn daily airdrops without locking up their funds. As Binance further clarified, BFUSD will be held in a “UM wallet” and yield will be based on a user’s VIP level on the platform, adding another layer of exclusivity to its design.
Echoes of Terra’s Collapse
Despite Binance’s reassurances, many in the crypto community couldn’t shake the eerie similarity to Terra’s disastrous collapse. “How much did Anchor… did…. Yield?” tweeted one user, referencing the failed protocol behind the UST stablecoin, which once promised similar high yields. After the Terra ecosystem’s spectacular crash in 2022, which saw UST plummet from $1 to less than a cent, concerns about another yield-based disaster remain high.
As one user quipped, “Are we the yield?” demonstrating lingering skepticism about Binance’s new product. Zoomerfied and CoinDesk noted the swift comparisons to the doomed Terra project, reminding everyone just how risky these high-yield promises can be.
