Steemit Crypto Academy Week 7 // Introduction to Defi and Yield Farming //Homework submitted to @gbenga
Greetings Prof. @gbenga and thank you for the Lecture this week.
Decentralized Finance aka DeFi exist to handle problem encountered with the centralized way of trading which is the middleman required.
Decentralized Finance does not require any middle man or a central system whereas it deals with two parties transacting a trade or business.
Binance USD coins fall under the stablecoin DeFi ecosystem. Stablecoins are coin which backed or pegged to a fait currency of which may be the USD, even gold can be used. This DeFi ecosystem tackles the problem of volatility and price fluctuations experienced within the cryptocurrency market. Infact the acceptance of cryptocurrency lies greatly on stable coin. Other stable coins are tether, Dai, Pax, etc.
Introduction to Binance USD
BUSD is a decentralized stable coin denominated and approved by the New York Department of Financial service for Paxo and Binance exchanges respectively.
Binance USD launched on 5th September 2019, like other stable coins is backed by the fiat USD, it is pegged on a 1:1 ration with the fait USD, meaning 1Busd=1Usd. It has being able to maintain its price with that of USD making it easier for cryptocurrency to be valued, because of this it is plays a very important in Decentralized Finance (DeFi). However, it is issued by the Etherum blockchain using smart contracts, but supports BEP-2 tokens.
Use cases for Binance USD
1)It aids I have a transfer of digital USD to anyone anywhere in the world, within the short possible time and at very low cost
2)Busd can be traded in decentralized exchanges
3)It can be used as a collateral for loan
4)It can be deposited into exchanges and interest are incurred on it just like we have fixed deposit in our banks.
5)Finally, BUSD can be stored in your wallets.
Why is BUSD safe
1)it is audited monthly by a top auditing firm to attest to the matching supply of BUSD and the U. S dollar
2)It is 100% backed by the U. S dollar
3)it is regulated by the New York state department of financial services
4)It is developed in Partnership with Binance source
Conclusion
Binance USD is being traded by several exchanges today and it is no. 32, with a trading volume of over 4 billion USD and market cap of over 3 billion USD. From my observations, I think it's safe for now, moreover it is denominated to Paxo and Binance.