BFUSD

BFUSD is a reward-bearing asset redeemable for USD stablecoin. It offers rewards on qualifying balances and can be used as Margin in Futures Accounts, allowing users to earn rewards simultaneously.

Users holding BFUSD in their account will receive a daily reward in USD stablecoin at the APR for their Qualifying balance.

To provide Futures users holding BFUSD with daily Reward Amounts, Binance uses its proceeds from BFUSD sales to execute investment strategies that generate passive income. The funding for Reward Amounts comes from two primary sources:

1. Funding Fee Income Binance employs a delta-neutral strategy by hedging Futures positions with spot positions to collect Funding Fees. Funding Fees are periodic payments between long and short position holders in perpetual futures markets, intended to align the futures prices with the spot prices of the underlying asset.

The funding rate determines the Funding Fee, and fluctuates over time for every symbol independently. You can find an overview of the funding rates here for every symbol on Binance Futures.

This strategy offsets price movement risks by taking opposite positions in the Futures and Spot markets, ensuring that profits from one position counterbalance losses from the other. The primary goal is to profit from Funding Fee payments when the Funding Rate is positive for short futures positions, without significant exposure to price volatility.

2. Staking Rewards Binance stakes crypto assets to generate staking rewards. For example, ETH may be staked via Binance Earn to get WBETH staking rewards.