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What is BUSD?

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PDAX

July 20, 2022

2 min read

TokensDeFi

BUSD is a stablecoin pegged to the value of the US dollar and is among the most dominant stablecoins in the market, trailing only behind other stablecoin giants Tether (USDT) and USD Coin (USDC).  

BUSD or Binance USD is an ERC-20 asset on the Ethereum blockchain which is issued by Paxos, a New York-based fintech company, in partnership with Binance. Additionally, Binance issues a wrapped BEP-20 version of BUSD for the BNB Chain. 

Similar to other fiat-backed stablecoins, BUSD is able to resist volatility by being backed by cash reserves and US treasury bills. Meanwhile, every Binance-peg token of BUSD on the BNB Chain is backed by an equivalent store of ERC-20 BUSD held in a public address and viewable on Binance’s Proof of Assets page.   

[Note: PDAX only lists the BEP-20 version (BSC) of BUSD]

Why use BUSD?

BUSD offers its users many advantages. Using a stablecoin like BUSD makes trading cryptocurrencies far more convenient as it allows traders to lock the value of their trades without having to convert their holdings into fiat and take their assets off the blockchain. 

BUSD can also be used as a hedge against cryptocurrency inflation and volatility. As holding each token is as good as having one dollar in a bank, this allows investors to secure the value of their assets during times of uncertainty, and makes converting your holdings to a stable asset more convenient and faster. 

The Binance-peg BUSD can also be staked on Binance to earn annual yields and can also be used on BNB Chain applications such as PancakeSwap. 

Tokenomics

BUSD has a current supply and market capitalization of $20 billion as of September 2022. There is no maximum supply as the amount of BUSD in circulation corresponds to the demand for the token. 

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DISCLAIMER: The statements in this article do not constitute financial advice. PDAX does not guarantee the technical and financial integrity of the digital asset and its ecosystem. Any and all trading involving the digital asset is subject to the user’s risk and discretion and must be done after adequate and in-depth research and analysis.

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