It all began on November 18 when Binance introduced a new asset offering an annual percentage yield (APY) of 19.55%, positioning it as an alternative to traditional stablecoins.
According to Binance, users can earn daily rewards simply by holding BFUSD in their UM wallets, without the need for staking or locking funds. BFUSD maintains its stability with a collateral ratio of 105.54% and a reserve fund containing 1.1 million USDT.
It's important to note that the Anchor Protocol previously offered a 20% yield on the algorithmic stablecoin UST from Terraform Labs until its collapse in May 2022. This has led many in the community to compare BFUSD to this failed stablecoin.
However, the cryptocurrency giant clarified that BFUSD is not a stablecoin but a margin asset for futures trading that is yet to be launched. Binance's customer support also stated that they will soon share more detailed information, including how the APY is determined.
Earlier this year, the launch of the synthetic dollar USDe by Ethena Labs on the public network raised concerns among investors due to its offering of a 27.6% annual yield, which was higher than the yield of the Anchor Protocol on UST.