Binance USD (BUSD) (founded September 5, 2019) is an ERC-20 token issued on the Ethereum (ETH) Blockchain that aims to meld the stability of the dollar with blockchain technology^[1]. Binance USD (BUSD) is a USD-denominated Stablecoin approved by the New York State Department of Financial Services (NYDFS) and launched in partnership with Paxos and Binance^[2].

Binance USD (BUSD) is the first stablecoin launched as part of Binance's Venus project. Each Binance USD coin is backed by one US dollar, insured and held in Federal Deposit Insurance Corporation (FDIC) insured US bank accounts owned by Paxos, who has partnered with Binance to achieve Stablecoin regulations^[3].

History

On September 5, 2019, Binance partnered with Paxos to create BUSD, a USD-denominated stablecoin that gained the approval of the New York State Department of Financial Services (NYDFS) from the get-go^[4][5].

BUSD was initially available on the Binance and Paxos platform for direct purchase and 1:1 redemption for U.S. dollars and can be traded on Binance.com for BTC, BNB, or XRP. The stablecoin is audited by nationally-ranked public accounting firm Withum^[5][6].

On September 20, 2019, the BUSD became available on the Binance platform in trade with BTC, BNB, or XRP. The stablecoin is audited on a monthly basis by the accounting firm Withum as required by the NYDFS.

Overview

Binance USD is a Digital Currency, simply offering to trade in US Dollars (USD). The exchange rate between BUSD and US Dollar is always 1:1. Binance USD is part of the Binance Coin platform, which is currently one of the largest cryptocurrency platforms in the world.

Binance USD (BUSD) is Binance’s very own dollar-backed stablecoin that was launched to provide a Binance-native alternative to other leading stablecoins. BUSD can be utilized in a wide range of DeFi protocols and is a go-to base currency on decentralized trading pools on Binance Smart Chain.

Binance USD not only offers a secure store of value, but it can also be used to earn yield in Binance Smart Chain’s fast-growing DeFi ecosystem^[7]. BUSD aims to meld the stability of the dollar with blockchain technology. It is a digital fiat currency, issued as ERC-20, and supports BEP-2. Paxos Trust Company is the USD custodian and issuer of BUSD^[8].

It is one of the only three STABLECOINS that has been approved by the US regulations^[8].

Growth

The growth and momentum of the BUSD stablecoin have been pretty remarkable, although having the backing of Binance has certainly helped. Even so, growing from a market cap of $17 million in September 2019 to $182 million in March 2020 is impressive, and it shows how strong the Binance community is, and how the company has been able to foster the adoption of the stablecoin even outside its own ecosystem.

While BUSD is only #30 based on market cap among the total universe of cryptocurrencies, it is also ranked #5 among stablecoins. Interestingly the #4 stablecoin is Paxos Standard (PAX) with a market cap of $262 million. Considering the impressive growth rate of BUSD it could feasibly overtake PAX within the next month or two.

Also, according to data from Binance, as of March 11, 2020, there were more than 40,000 users holding BUSD on Binance and Binance.US, with that user base growing by 20-30% on a weekly basis. There have also been 416 million BUSD purchased since the launch of the token, whether that be through Binance or Paxos, or through any of the 45 exchanges that allow for purchases and trading of BUSD.

After passing the $100 million market cap milestone on March 11, 2020, Binance CEO Changpeng Zhao commented in a press release:

BUSD’s market cap crossing $100 million is a big milestone for Binance, illustrating the strong need and use of alternative assets in the market. We are looking forward to seeing more utility through the power of stable digital assets and serving our part with BUSD, a NYDFS-approved USD-based stablecoin.^[9]

People

The notable people in Binance USD (BUSD) are Rich Teo; the Co-Founder of Paxos, Charles Cascarilla; the Chief executive officer and Co-Founder of Paxos, and Changpeng Zhao; the Chief executive officer and Founder of Binance.

Services

Binance USD (BUSD) was founded to minimize the volatility associated with Cryptocurrency. It improves the DeFi (Decentralized Finance) ecosystem allowing digital access to add accessibility, flexibility, and speed to transactions and skills.

Tokenomics

Binance USD (BUSD) has a circulating supply of 3,159,603,005 BUSD coins and a maximum supply of 3.16 Billion. Binance is the current most active market trading it. Binance USD registers a historic All-Time Highest of $1.15 on March 13, 2020, and an All-Time low of $0.906729 on March 12, 2020^[10].

Governance

The Binance USD token circulating supply is solely altered by Paxos. Paxos issue tokens when users deposit fiat currency into Paxos bank accounts while Paxos destroys tokens when users redeem tokens for fiat currency deposits in Paxos bank accounts. In order to prove that reserves exist and the system is solvent, BUSD relies on a proof-of-reserves system whereby the system is fully collateralized when the number of BUSD in circulation matches the value of the funds held in segregated accounts at FDIC-insured, U.S.-domiciled banks by Paxos. Paxos publishes monthly reports proving the US dollar reserves that back the BUSD tokens in circulation.^[11]

BUSD Use Cases

Based on the price stability, Stablecoin plays an important role in transactions, payments and settlement, and Decentralised Finance (DeFi). Some of the BUSD use cases include:

1. Transfer your digital dollars (BUSD) anywhere in minutes, at low cost, and on the blockchain.
2. Trade BUSD on different exchanges and DEX.
3. Deposit BUSD to earn an interest rate.
4. Pay BUSD as payment for goods and services.
5. Use BUSD as collateral and loan asset.
6. Use BUSD as cross collateral in Futures.
7. Store BUSD on an exchange or in a wallet.