Binance Clarifies That BFUSD Is Not a Stablecoin as Crypto Community Experiences Terra Flashbacks

The cryptocurrency exchange Binance has attempted to alleviate concerns regarding its new BFUSD token, which offers high yields, clarifying that it is neither a stablecoin nor has it been launched yet. In a post on November 17 on X, the crypto news aggregator Zoomerfied informed users that Binance would launch a stablecoin with an annual yield of 19.55%, prompting many to draw comparisons with the failed algorithmic stablecoin from Terraform Labs, now known as TerraClassicUSD.

Binance confirmed in a comment on X that BFUSD is actually an unreleased leveraged trading product on futures that carries a reward.

– BFUSD has not been launched yet. To be clear, it is not a stablecoin but a margin asset that provides a reward for trading futures contracts – Binance customer support responded.

According to the official asset launch page on Binance, traders will be able to implement BFUSD as collateral without ‘investing or locking’ their funds.

Instead, traders will hold BFUSD assets in their wallets and collect daily airdrops sent to their futures wallet, and users will have a limited quota of BFUSD based on their social ranking, referred to as ‘VIP level’, on the Binance platform.

Before Binance clarified, many crypto commentators quickly drew parallels with Do Kwon’s now-defunct algorithmic stablecoin, which once promised a yield of 20%.

– How much yield did Anchor offer? – asked pseudonymous trader RunnerXBT.

Anchor was the protocol responsible for delivering a 20% yield on the algorithmic stablecoin Terra Luna.

In May 2022, the market capitalization of the stablecoin USTC, which was then at $18 billion, plummeted from its peg of $1 to below $0.01 in less than a month as the Terra ecosystem experienced a bank run equivalent to decentralized finance, with thousands of users wanting to sell their stablecoins in a very short period.

UST was part of a broader ecosystem of tokens, including Luna, an accompanying asset intended to stabilize UST’s peg. Similarly, Luna fell from a price of $80 to below $0.001 within a week.

Several other members of the crypto community also seem to have recalled retrospectives of lofty promises with a mysterious source of yield.

– Are we the yield? – asked one user.