USD-Margined Future Contracts

BUSD is a regulated, fiat-backeds. stablecoin pegged to the U.S. dollar. For every unit of BUSD, there is one U.S. dollar held in reserve. In other words, the supply of BUSD is pegged to the U.S. dollar at a 1:1 ratio. Holders can swap their tokens for fiat and vice versa. Paxos, the project’s owner, releases monthly audits of BUSD’s reserve

What is BUSD?

One of the newer futures contracts available on Binance is BUSD margin futures. BUSD is a USD-backed stablecoin, which pegs each BUSD at USD 1. As a result, BUSD offers faster ways to finance your operations and is acceptable as a medium of exchange, store of value, and payment method throughout.

For newcomers, it’s not always obvious why traders and investors hold BUSD. The role of BUSD and other stablecoins is, however, an essential part of the crypto ecosystem.

But how exactly do BUSD-margined contracts work?

BUSD-margined contracts are a type of linear futures product quoted, collateralized, and settled in BUSD, making the entire transaction fairly easy to calculate into USD (or other fiat currencies). This makes BUSD-margined contracts just as intuitive and easy to use as USDT-margined contracts. Therefore, users need not spend additional efforts learning how to use BUSD-margined contracts.

What are BUSD-Margined contracts?

In a BUSD-Margined contract, you open positions on specific Perpetual contracts using the BUSD. Without having some BUSD, you can’t open margin positions. 

Frankly, everything you do on a BUSD-Margined contract demands having the stable coin (BUSD). Whether you’re looking to add margin to a position, manage your profit/loss or close an open position, or settle margin maintenance fees in a BUSD-Margined contract, the BUSD is at the center of it all. The BUSD-margined contract is similar to its USDT counterpart in all ramifications, including ease of use, available trades, etc. 

So if you have some knowledge of the USDT-margined contract, then you’re just about ready to delve into the virtual world of the BUSD-Margined contract.  

BUSD-Margined contracts available on Binance Futures:

USD-margined contracts are available for different assets including BTC, DOGE, BNB, and more. The margin contract can be opened on different modes including the isolated and cross variants. Each margin mode has distinct features peculiar to it. 

The Isolated Margin Mode This entails opening a BUSD-margined contract in isolation. 

Why use BUSD for Future Trading?

BUSD-margined perpetual contracts offer the following characteristics:

• Settlement in BUSD: contracts are denominated and settled in BUSD. A versatile settlement currency across the BUSD-margined futures product line.
• No expiration date: you can hold positions without an expiry date and do not need to keep track of various delivery months, unlike traditional futures contracts.
• Funding rate: every eight hours, funding rates are paid either to the long or the short based on differences with the spot right. Thus, it prevents lasting divergence in the price of the spot and perpetual contract markets.
• Clear pricing rules: each futures contract specifies the base assets quantity delivered for a single contract, also known as Contract Unit. For instance, BTC/BUSD, ETH/BUSD, and BNB/BUSD futures contracts represent only one unit of its respective base asset, similar to spot markets.
• Purchase and redeem with Zero Fees
• Strict Compliance and 100% Backed by Cash Cash Equivalents.

Why should you trade these future contracts?

The first to highlight would be the versatility. BUSD is a universal settlement currency that allows traders to trade multiple contracts (BTC, ETH, BNB, etc.) at any time. This means that any contract can be opened in the cryptocurrency of a trader’s choice and settled in a stablecoin on the backend.

This eliminates the need for traders to buy the underlying cryptocurrencies to fund any futures positions. As such, this minimizes the fees that a merchant will incur as no exchange conversions will occur upon settling to the stablecoin.

A BUSD margin futures trade will be easy to calculate in fiat money terms. If a merchant does not want to calculate US dollars, but is using BUSD, they can check the 1 USD exchange rate against the value of their desired currency and be sure that BUSD maps directly to the same exchange rate.

Closing Remarks

BUSD joins the foray in spicing up the global crypto ecosystem. Through BUSD-margined contracts, you can take advantage of all the perpetual futures contracts that interest you without limiting your portfolio to a single stable coin.

Just as it’s often a great idea to diversify your portfolio, an even spread of stable coins is also advised. BUSD-margined contracts might have their appeals, but like any derivatives trading, it’s highly risky.