Binance rebalances much more frequently to ensure it’s always 1:1 backed.
How Binance-Peg BUSD works?
Recently, there have been reports focusing on Binance-Peg BUSD, and questioned that the amount of BUSD (issued by Paxos) anchored by the coin is not always in line with the 1:1 ratio.
In this regard, to put it simply: Binance will regularly rebalance or update the assets of the anchor address, but this rebalancing and update is not real-time.
Binance has now increased the frequency of rebalances and updates to ensure that the anchor ratio is 1:1 at all times.
At the same time that Paxos issued BUSD on Ethereum, Binance also issued a BUSD-wrapped version of the anchor token — Binance-Peg BUSD, which runs on BNB Chain, Avalanche, Polygon, and TRON.
BUSD is fully pegged to USD cash and cash equivalents, which can be viewed here.
Binance-Peg BUSD is fully pegged to BUSD, which can be viewed here.
“Wrapping” tokens is a blockchain term that refers to creating a transferable version of an original asset to other blockchains, with the aim of increasing interoperability and interconnectivity in the digital asset space.
Generally speaking, the value of the “wrapped” token is guaranteed by locking the margin of the original asset, which is also the principle of Binance-Peg BUSD.
Due to operational reasons, in the past, there was a certain time difference between the anchoring of BUSD and Binance-Peg BUSD, which is also a problem found in some recent reports.
It can be clearly seen from the data that the rebalancing is not always able to keep up with the demand of Binance-Peg BUSD.
Binance discovered this issue last year, and now Binance has increased the frequency of rebalancing and updates to ensure accurate and transparent anchoring ratios.
Binance’s ongoing development of the Proof of Reserve system will also incorporate this data.
The important thing is that although there are some discrepancies in the data, the user’s exchange will never be affected. Also, BUSD on ERC-20 is not affected.
BUSD is a stablecoin issued by Paxos, regulated by the New York Financial Services Authority (NYDFS), audited monthly, and pegged to USD cash and cash equivalents.