Binance USD (BUSD) is a stablecoin backed by fiat, serving as a digital representation of the U.S. dollar. It is designed to trade at a 1:1 peg to USD. BUSD has been approved by the New York State Department of Financial Services (NYDFS) and debuted in 2019 through a collaboration between Paxos and Binance. Paxos acts as the USD custodian and issues BUSD.

What are BUSD key features and how does it work?

BUSD falls under fiat-backed stablecoins, which differ from crypto-backed options like DAI that rely on crypto assets to back their supply. With BUSD, Paxos maintains USD reserves that correspond to the BUSD in circulation, and those reserves can be exchanged for BUSD. Paxos also provides ongoing audits to show that its USD reserves align with the BUSD supply on a 1:1 basis.

To preserve the peg, Paxos removes BUSD from circulation when tokens are sent to it in return for the corresponding fiat, or it creates new BUSD when users deposit USD, or PAX, through the Paxos platform. If BUSD trades below $1, arbitrage participants typically buy significant amounts of the stablecoin and convert it back into USD via Paxos. As demand increases, the price trends upward to bring the token back toward its 1:1 peg.

The BUSD token is issued on three blockchains: Ethereum, Binance Smart Chain (BSC), and Binance Chain. Additionally, wrapped (bridged) versions exist on other networks such as Solana or Polygon, where BUSD is not native. These wrapped tokens track the value of BUSD. Users can move between chains based on their needs, using the Binance exchange, withdrawals, or Binance and other bridge services.

What can Binance USD be used for?

BUSD is known for accessibility, flexibility, and speed. You can obtain Binance USD through Binance directly or through Paxos.

With BUSD, users can secure profits without converting into fiat. Crypto participants can shift their holdings into stable assets quickly while keeping everything on-chain, helping them reduce exposure to price swings in crypto markets. In addition, using BUSD through compatible exchanges can enable faster global transfers.

BUSD can also be used for arbitrage. Because it is widely used and is available on many automated market makers on BSC, liquidity pools may create chances for arbitrage traders. Since prices can vary across AMMs, traders can take advantage of BUSD’s broad availability to rotate between exchanges quickly.

Where can you buy BUSD?

BUSD can be purchased via Binance’s exchange or its fiat gateway offerings, as well as through the Paxos minting service. It is also listed across various swaps. You can find available DEX’s and CEX’s here.