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Binance USD: Is It a Stablecoin Worth Paying Attention To?

date July 27, 2022 time 5 min read 258 views

Stablecoins and Binance are two things that tend to get plenty of attention in the crypto world, so you might expect them to make a winning competition. Curious about the crypto exchange’s stablecoin Binance USD (BUSD) and what it’s all about? We’ll fill you in.

Binance has a stellar reputation in the crypto world, and its native token BNB has been one of the market’s strongest performers in recent years. But did you know that Binance has another trick up its sleeve, in the form of Binance USD (BUSD)? It’s a stablecoin that has attracted some interest, but has largely flown under the radar so far. Things might not stay that way for long though.

Let’s run through what Binance USD is, what you can use it for, and what makes it special—along with a way to earn up to 4.8% on your holdings.

What is Binance USD?

Binance is a platform that needs no introduction. It’s the biggest and most famous crypto exchange in the world, which has helped its corresponding stablecoin to gain some fame too. But it still lags behind BNB—and even if you’ve heard the name before, you’re probably not aware of what BUSD really is and what it has to offer.

Binance is the biggest crypto exchange around, but what is Binance USD?
Binance is the biggest crypto exchange around, but what is Binance USD? (Source: Unsplash)

The first thing you should know is that BUSD is a stablecoin, meaning it’s a currency pegged to the value of another asset. This could be anything, from a precious metal to another cryptocurrency, but (as the name suggests) BUSD is pegged to the US dollar.

It’s a joint project between Binance and Paxos (a New York financial company specializing in blockchain technology) that launched in 2019. Since then, it has gone from strength to strength, reaching a market cap of more than $17 billion (as of July 2022).

This gives it a very different use case from Binance’s native coin BNB, which has a floating value (meaning it can increase or decrease in value) and is mostly used for paying transaction fees or goods and services, especially on the Binance Smart Chain.

What is BUSD used for?

When most people hear about stablecoins for the first time, they have the same question: Why use a cryptocurrency that’s pegged to the US dollar when you could simply use the US dollar itself?

Binance USD might have a simple concept, but it has a range of use cases.
Binance USD might have a simple concept, but it has a range of use cases. (Source: Paxos)

But the crypto community believes strongly in the power of everything the blockchain represents (aka decentralization), and they’re not happy with the prospect of sacrificing all that to use a cryptocurrency. Since the volatility of most cryptocurrencies makes them an impractical choice for storing as liquid money, a stablecoin represents the best of both worlds.

You can use it to hold in your wallet ready to trade between different cryptocurrencies without having to worry about price fluctuations. This offers a lot more flexibility, speed, and convenience than having to switch between fiat money and cryptocurrencies.

BUSD can also be a bridge to other benefits from the blockchain world, such as the chance to take part in activities like staking, crypto lending, or yield farming. And as BUSD is also an ERC-20 token, you can use it for all kinds of uses on the Ethereum blockchain.

BUSD price history 

Given what we’ve explained so far, it won’t come as a shock that BUSD’s value is $1. As you can see in the price chart below, it’s done a good job of maintaining this price over time.

However, the line isn’t completely straight either. That’s mostly because its value needs to adjust marginally as the Paxos team increases and decreases its supply of US dollars. There was also a larger blip closer to its time of launch and in 2020 around the time of the COVID crash, but things appear to have smoothed over since.

BUSD’s price has remained stable so far, but don’t get complacent.
BUSD’s price has remained stable so far, but don’t get complacent. (Source: CoinMarketCap)

However, just because its price has remained stable, it doesn’t mean that it always will or that there are no risks involved. The story of Terra demonstrates this perfectly, and many regulators remain wary.

How to buy Binance USD

BUSD is available to buy on more than 36 exchanges, so there’s no shortage of places to buy it—naturally, Binance itself is an obvious choice.

However, instead of buying and holding, you might prefer to earn some interest on your BUSD reserves. To find out more about how, keep reading.

What makes BUSD special?

Even if you don’t know much about BUSD, there’s a good chance you’ve come across some of its more famous counterparts, such as Tether (USDT) or USD coin (USDC). All of these cryptocurrencies are pegged to the US dollar.

However, one of BUSD’s stand-out features is its commitment to security. Stablecoins are a controversial invention, but BUSD takes care to follow regulations. More specifically, it complies with New York State of Financial Services (NYDFS) standards. It’s even been approved by US regulators, along with GUSD and PAX—an award that USDT and USDC can’t claim.

In the case of BUSD, the Paxos team holds a store of reserves of US dollars, and it ensures that this store always matches the number of BUSD that people are buying and selling. It also freezes or removes the BUSD stores of people who they believe are taking part in illegal activities.

Plus, while USDT has been in trouble for failing to hold the right amount, BUSD takes care to be transparent. In fact, it publishes an audited report each month outlining how much US dollars it holds. It even works with an accounting company, Withum, to do so, making it one of the most secure cryptocurrencies around.

How to earn 4.8% APY on your BUSD

At MyConstant, we offer a range of crypto products, including crypto lending—and you can get involved by depositing your BUSD with us and earning up to 4% APY. You’ll also be able to withdraw the money whenever you want without facing penalties, and there are no hidden fees. 

Even better, if you join our membership program, your returns will rise to 4.8%. Membership also comes with other perks, including:

  • Up to 18% APR from staking
  • Up to 15% APY on USDT or USDC
  • 20% more interest from MyConstant investing products 
  • 20% reduction in borrowing fees on MyConstant 
  • 50% discount on NFT fees through MyConstant 
  • 50% discount on crypto swap fees on MyConstant 

Sound like something you’d like to get involved in? Sign up today to test it out for yourself.

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George Schooling

George Schooling

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