Popular on-chain analyst Willy Woo raised considerations over Binance’s Secure Asset Fund for Users (SAFU) Insurance Fund. He believes it’s not secure to place “incidence-correlated BNB” within the SAFU fund. Willy Woo compares it with the crypto exchange FTX having an insurance coverage fund backed by FTT.
Is It Safe to Have BNB in Binance SAFU Fund?
Willy Woo in a tweet on November 25 shared that Binance’s Secure Asset Fund for Users (SAFU) now consists of $367 million price of BNB, which is 44% of the fund. Moreover, it has $300 million price of Binance’s dollar-pegged stablecoin BUSD and simply $270 million price of Bitcoin. It has fallen considerably beneath $1 billion amid value fluctuations.
Willy Woo believes the SAFU insurance coverage fund with 44% of its reserves backed by BNB is just not secure. He compares it with FTT, the native token of FTX crypto alternate, which plummeted massively amid the FTX disaster. It could be like FTX having an insurance coverage fund backed principally by FTT tokens.
“While I commend Binance for having such a fund, there’s no sense putting incidence-correlated BNB in there. How would we feel about FTX having an insurance fund filled with FTT?”
Crypto alternate Binance on November 9 topped the emergency insurance fund with $700 million price of BNB and BUSD tokens and $300 million price of Bitcoin. However, Willy Woo famous the fund has now declined to $837 million amid market fluctuations. He additionally shared Bitcoin and BSC addresses for verifying SAFU proof of reserves. The alternate plans to implement a Merkle tree-based proof of reserves system verifying its complete alternate belongings.
The $837 funds nonetheless roughly match the $68 million in Binance’s proof of reserves and practically $800 million inside Binance Custody. Willy Woo asserts the SAFU fund can take successful throughout troublesome market situations as seen traditionally. BNB’s efficiency is instantly associated to Binance’s stability and success. Thus, it considerations having BNB within the emergency fund.
“BSC is governed 21 validators chosen daily by 11 validators on the BNB chain. There’s circumstantial evidence that the 11 beacon chain validators are centralised around Binance. In a Binance incident, the BSC valuation component of BNB would likely also sell off.”
BNB Price Stagnates
BNB value trades at $296, down practically 1% within the final 24 hours. The BNB token has failed to carry over $300 regardless of the robust efficiency and steady growth of Binance.
While the BNB token noticed an virtually 9% rally in every week amid Binance CEO “CZ” announcing an industry recovery fund, the value fails to maneuver towards the market.
Also Read: Binance $1 Billion Industry Recovery Initiative
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