What Is BFUSD?

BFUSD: Futures Collateral Token

BFUSD is a yield-bearing token designed specifically for futures traders. It is 1:1 convertible with USDT and serves a dual purpose: it acts as margin collateral for your trading positions while simultaneously generating daily USDT rewards.

This allows traders to make their margin work for them, earning passive income even when it's not actively used in a trade.

Key Points About BFUSD

• Collateral for futures: BFUSD can be used as margin to increase buying power in futures markets.
• Daily USDT rewards: Simply holding BFUSD in a futures wallet can generate daily USDT payouts; active traders may qualify for higher rates.
• Risk buffer: A dedicated reserve fund, initially seeded with 1 million USDT, supports the product and helps stabilize rewards during volatile periods.

How BFUSD Works

When you convert USDT into BFUSD, you receive an asset that functions as both collateral and a rewards-bearing instrument. Holders receive daily reward distributions denominated in USDT. If you use BFUSD as margin while placing futures trades, you can often access an elevated reward tier.

Where BFUSD Rewards Come From

Rewards paid to BFUSD holders are funded by the platform's investment and hedging activities. Two primary mechanisms support the reward pool:

• Delta hedging: The platform hedges exposure between spot and futures markets to capture funding fees while reducing directional risk.
• ETH staking: Proceeds from BFUSD sales can be allocated to staking Ether, and the staking yield helps fund BFUSD rewards.

Base Rewards vs Boosted Rewards

Rewards are split into two main categories:

• Base rate: A standard daily reward available to anyone who holds BFUSD in their futures wallet.
• Boosted rate: A higher reward tier for users who actively trade using BFUSD as collateral.

Reserve Fund and Protection Against Funding Shocks

To mitigate the impact of negative funding rates and extreme market moves, a reserve fund supports the hedging program. The fund started with a 1 million USDT allocation and is topped up over time from the platform's hedging and staking income, providing an additional layer of protection for reward stability.

How to Get Started with BFUSD

Getting started is straightforward. Typical steps are:

1. Sign in to your account on the exchange or derivatives platform.
2. Open the futures or derivatives section and locate the BFUSD product or conversion tool.
3. Choose the amount of USDT to convert and confirm the purchase of BFUSD.
4. Enable multi-asset margin mode if required; this setting lets BFUSD be used as collateral across futures positions.
5. Hold BFUSD to earn base rewards or use it as margin to access boosted rewards.

How to Redeem BFUSD Back to USDT

Redeeming BFUSD is typically a simple conversion back to USDT at a 1:1 ratio. The usual flow is:

1. Open your futures wallet and navigate to the BFUSD section.
2. Select the redeem or convert option.
3. Enter the amount of BFUSD to convert and confirm the redemption.

Note that small fees apply on buy and redeem transactions, and high demand periods may lead to temporary redemption delays of up to several days.

Benefits for Traders Considering BFUSD

• Passive income: Earn daily USDT rewards by holding BFUSD in a futures wallet.
• Improved leverage: Using BFUSD as collateral can expand available margin for trades.
• Easy conversion: BFUSD redeems to USDT at parity, giving you liquidity when needed.
• Added stability: A reserve fund helps smooth rewards during volatile market conditions.

Risks and Practical Considerations

• Fees: Converting into or out of BFUSD usually incurs a small fee (commonly around 0.1%).
• Market dependence: Reward rates vary with market performance and the effectiveness of hedging and staking strategies.
• Redemption timing: During spikes in demand, redemptions may be delayed for a short period.

The Bottom Line

BFUSD is best suited for futures traders who want to combine margin utility and steady USDT payouts. It can benefit both passive holders seeking daily rewards and active traders looking to enhance their margin efficiency. Before converting, weigh fees, potential delays, and market conditions to decide if it fits your trading approach.