- Binance has found itself under fire over plans to launch a high-yield asset.
- The product has taken many minds to a dark period in crypto history.
- Binance has attempted to dispel concerns about the planned asset.
Marked by several major projects and company collapses, 2022 will undoubtedly become one of the most turbulent years in crypto history. For many, the primary catalyst for the carnage remains the Terra collapse. At its peak, a bustling $60 billion DeFi ecosystem, its collapse sent shockwaves throughout the crypto space that can still be felt today.
Over the past 24 hours, Binance, the world’s largest crypto exchange by volume, has unwittingly taken the minds of many back to this horrifying time in crypto history with recently unveiled plans for a new high-yield bearing asset.
Terra All Over Again?
Binance has been under fire over its plans to launch a high-yield asset. On Monday, November 18, a blog post from the firm unveiling a new stablecoin-esque product, BFUSD, offering a 19.55% yield, was picked up by crypto news aggregator service Zoomer. If the Binance team had expected to spark excitement with the announcement, however, it would quickly realize that another thing was coming.
Sponsored
Several crypto commentators shared the “PTSD Chihuahua Meme” reacting to the news.
At the same time, several others shared pictures of Terra founder Do Kwon.
“Let’s not do this again,” prominent crypto analyst Benjamin Cowen wrote in response to the news.
These responses come as the planned Binance product sounds eerily similar to Terra USD (UST), the stablecoin at the heart of the LUNA collapse, which offered up to 20% yield in its Anchor staking protocol. This yield eventually proved unsustainable.
Amid the concerns, Binance has been forced to release an official statement to clear the air.
Not a Stablecoin?
Responding to the zoomer post, Binance’s Customer Support team stressed that BFUSD had not launched yet and was not a stablecoin. No details were offered as to how the yield would be calculated.
“BFUSD is not yet launched. To be clear, it is not a stablecoin but a reward-bearing margin asset for futures trading. We are glad to see the community’s interest and will be sharing more details soon including how APY is determined,” the statement read.
Any potential blog post on the product has been scrubbed, save for a feature page vaguely describing the feature, but even this has removed the APY figure.
“Enjoy attractive high APY on your BFUSD holdings, surpassing the yields offered by many other stablecoins,” the firm outlined as part of the benefits of holding the asset on the page.
“Interest is calculated based on a real-time APY and the lowest BFUSD balance recorded in the user’s account from hourly snapshots taken throughout the day,” they added.
Will Binance go the same route as Terra? Time will tell.
On the Flipside
- Binance has yet to release much details about BFUSD.
- Binance was among the early investors in Terra.
Why This Matters
The reaction to Binance’s BFUSD highlights the deep scar Terra’s collapse left on the crypto space.
Learn more about Terra’s collapse:
The Rise and Fall of Do Kwon
Learn about the recent Polter Finance attack:
Fantom’s Polter Finance ‘Pauses’ After Devastating Hack: What We Know
