Binance clarifies BFUSD isn’t a stablecoin as X gets Terra flashbacks

Crypto exchange Binance has attempted to cool some concerns over its new high-yield  “BFUSD” token — clarifying it is neither a stablecoin nor has it launched. 

In a Nov. 17 post to X, crypto news aggregator Zoomerfied told users that Binance would be launching a stablecoin with a 19.55% annual yield, sending many on X to throw in comparisons to Terraform Lab’s failed algorithmic stablecoin, now known as TerraClassicUSD (USTC).

However, Binance confirmed in a comment on X that BFUSD is actually an unreleased reward-bearing margin trading product. 

“BFUSD is not yet launched. To be clear, it is not a stablecoin but a reward-bearing margin asset for futures trading,” said Binance Customer Support in response. 

According to the asset’s official launch page on Binance, traders will be able to deploy BFUSD as collateral without “staking or locking up” their funds. 

Instead, traders will hold the BFUSD asset in a “UM wallet” and accrue daily airdrops sent to their “UM Futures Wallet” based on snapshots, and users will have a limited quota of BFUSD based on their social ranking dubbed their “VIP level” on the Binance platform.

Before Binance made the clarification, many crypto commentators were quick to draw parallels to Do Kwon’s now-defunct algorithmic stablecoin, which also once promised a 20% yield.

“How...how much did Anchor... did.... Yield?” asked pseudonymous trader RunnerXBT.

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

“Can we not?” he added moments later. 

In May 2022, the price of the then-$18-billion stablecoin USTC plummeted from its $1 peg to below $0.01 in less than a month as the Terra Money ecosystem experienced the decentralized finance (DeFi) equivalent of a bank run, with thousands of users rushing to withdraw their tokens all at once. 

Related: Tether, Kraken, Fabric Ventures back new MiCA-compliant stablecoins

UST was part of a broader ecosystem of tokens, including Terra (LUNA), its companion asset that was supposed to stabilize UST’s peg. Similarly, LUNA plummeted from a price of $80 to below one-tenth of a cent within a week. 

Several others also appeared to suffer immediate flashbacks to lofty promises with a mysterious source of yield. 

“Are we the yield?” asked another user. 

The initial post also raised eyebrows for OG Bitcoiner Jameson Lopp.

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