According to the network, 44% of Binance’s emergency reserves are backed by the company’s own token, BNB.
On-chain data analyst Willy Woo said on Twitter that Binance’s Safe Assets Fund for Users (SAFU) emergency reserve holds $367 million in BNB, with the remainder made up of the Bitcoin USD-pegged BUSD stablecoin.Binance at $300 million, Bitcoin at $270m
Binance $1b SAFU insurance fund today:
BNB: $367 million (44%)
BUSD: $300 million (32%)
Bitcoin: $270 million (24%)
While I applaud Binance for having such a fund, it doesn’t make sense to put BNB there in relation to the incidence.
How do we feel about FTX having an insurance fund full of FTT?
— Willy Woo (@woonomic) November 24, 2022
Balances are verifiable via Bitcoin and Binance’s BSC’s public blockchain data. The company plans to provide proof of reserves to verify the status of the exchange’s assets soon.
Willy Woo sees Binance’s reliance on BNB as a reserve fund as worrisome.
“While I admire Binance for setting up such a fund. On the other hand, I worry about the BNB in the fund,” he said. “How should we feel when FTX’s contingency reserves are filled by FTT?
The SAFU fund was established in 2018 to protect Binance users’ funds from the crash. The fund is funded by trading fees collected by Binance and officially launched in January 2022 with a value of $1 billion.But fund’s value falls to $837 million in cryptocurrency market volatility
Compared to Binance’s current proof of reserve of $68 million, the fund is still in use. Add to that about $800 million in assets under custody at Binance, but with increased volatility, especially in BNB, the value of the SAFU fund could drop more than it should. Especially when its value is tied to the stability and success of Binance.
Compared to BNB and FTT, the BNB coin offers its holders a discount on transaction fees when trading cryptocurrencies on Binance, similar to FTT, but with a larger market cap.
As disclosed in financial statements earlier this month, FTT once constituted Alameda Research’s total assets. The firm collapsed on Nov. 11 for FTX after Binance CEO Changpeng Zhao dumped FTT in the market, causing the price of FTT to plummet from above $22 to its current price below $2.
Source of information: Compiled from SIAMBLOCKCHAIN by 0x Information.Copyright belongs to the author Sureeporn Detthongchan, without permission, may not be reproduced