{"id":4532,"date":"2022-04-29T10:12:56","date_gmt":"2022-04-29T03:12:56","guid":{"rendered":"https:\/\/test.wikibinance.com\/?p=1106"},"modified":"2022-12-15T09:43:25","modified_gmt":"2022-12-15T02:43:25","slug":"what-is-busd","status":"publish","type":"post","link":"https:\/\/wikibinance.com\/en\/investment\/what-is-busd.html","title":{"rendered":"WHAT IS BUSD? How does BUSD work?"},"content":{"rendered":"

What is BUSD?<\/h2>\n
\"What
What is BUSD?<\/figcaption><\/figure>\n

BUSD<\/strong> is a combination of Binance<\/a> (B) and U.S. dollars (USD) to create a new stablecoin called Binance USD, also known as BUSD.\u00a0<\/span>Binance USD (BUSD)<\/a> is a stable currency secured by fiat currency, anchored at a rate of 1:1 against the USD and issued by Binance (in partnership with Paxos), approved and regulated by the New York State Department of Financial Services (NYDFS), BUSD’s Monthly Audit Report can be viewed from the official website. Launched on September 5, 2019, BUSD aims to combine the stability of the dollar with blockchain technology. It is a digital fiat currency, issued in the form of ERC-20 and supports BEP-2.<\/span> Paxos released BUSD on the Ethereum blockchain. In addition, Binance also offers Binance-Peg BUSD tokens on the BNB Chain. Binance created BUSD (BEP-20) by keeping BUSD in an Ethereum blockchain address and minting the pegged BUSD token, each of which corresponds to a BUSD token stored by Binance. Holders of BUSD (ERC-20) and BUSD (BEP-20) can swap their tokens between blockchains depending on their needs. This can be done on the Binance exchange (when withdrawing funds) or through Binance Bridge.<\/span><\/p>\n

How does BUSD work?<\/h3>\n

BUSD’s price-keeping mechanism is relatively simple compared to other stablecoins. Each BUSD can be exchanged for $1 in the reserve fund. By sending your BUSD to Paxos, they will burn your tokens and give you fiat money. This mechanism keeps BUSD’s supply and reserves at a constant 1:1 ratio.<\/span> Whenever busd<\/strong> prices start to fall below $1 per 1 BUSD, arbitrage traders will buy BUSD in bulk. Even a price of $0.98 can give them the opportunity to make a profit. After purchasing a large amount of BUSD, arbitrage traders can then convert BUSD tokens into fiat money through the Paxos platform. The increase in demand for BUSD will naturally increase the token price by up to $1, restoring the 1:1 price.<\/span><\/p>\n

Cases of use of BUSD<\/h3>\n
\"Busd
Cases of use of BUSD<\/figcaption><\/figure>\n

Binance USD can be used in many cases, playing an important role in digital transactions and DeFi systems.<\/span> Firstly, it is possible to trade BUSD with more than 48 currency pairs, each of which is valued in dollars and is available everywhere in the world. Users will find an alternative to fiat currency in BUSD, as you can exchange it for a ratio of 1:1 to the dollar. With a near-zero fee, this currency is a great alternative to any currency anywhere, anytime in the world.<\/span> Second, BUSD’s flexibility is not limited to real-world assets. You can exchange it instantly for other popular stablecoins on a 1:1 basis without paying a fee. And as an ERC-20 token, BUSD is capable of interacting with several platforms and can easily integrate with some DApps and smart contracts.<\/span> Moreover, with BUSD, users can make money passively or proactively. Users can store BUSD in their wallet and keep it, covered their bet risk against the volatility of accumulated digital assets, or they can trade with it on the Binance market.<\/span> Binance continues to build new features for the BUSD coin. It is increasingly flexible with features such as Binance Margin Trading that allow BUSD to be used as collateral for loans. The addition of some loan products is allowing users to send BUSD and earn interest rates of up to 15% annually.<\/span><\/p>\n

Advantages and disadvantages of BUSD<\/h3>\n

Advantages<\/h4>\n