• Binance’s BUSD stablecoin has been the largest in the crypto sector, however there have been concerns about the stability of the asset due to the collapse of the Terra UST stablecoin.
• Concerns were raised around the collateral used to back the coin, with Binance admitting some flaws in the way that the peg was maintained.
• An analysis of the Binance Smart Chain revealed that there were times in the past when BUSD was not backed by an equivalent amount in dollars.

Binance’s BUSD stablecoin has been one of the largest in the crypto sector since its launch in 2020, however concerns have been raised around the stability of the asset due to the collapse of the Terra UST stablecoin. Most of these concerns have been raised around the collateral used to back the coin, with Binance itself admitting to some flaws in the way that the peg was maintained.

An analysis of the Binance Smart Chain by Patrick Tan revealed that there were times in the past when BUSD was not backed by an equivalent amount in dollars. This was due to the fact that the first version of BUSD was created on the Ethereum blockchain in conjunction with Paxos, which was backed by dollars. Binance, which launched its own blockchain in 2020, then began minting BUSD on BSC.

The way it was set up meant that BUSD on Ethereum would be used as collateral for the BUSD minted on BSC, meaning that whatever amount of BUSD was minted on BSC there would be an equivalent amount of the stablecoin held in an Ethereum wallet. However, it was revealed that at times the Ethereum wallet that was supposed to hold the BUSD fell below the total amount of BUSD on BSC. This meant that the BUSD on BSC was not backed by the same amount of USD, raising questions about the stability of the asset.

In response to these concerns, Binance has said that they are working to improve the way that the peg is maintained, with greater transparency around the collateral being used. Binance has also said that they are dedicated to improving the stability of the BUSD peg and that they are continuing to work on the issue.

Despite the concerns, BUSD remains one of the most popular stablecoins in the crypto sector. It is widely used as a safe haven asset and is becoming increasingly popular with traders and investors alike. With Binance’s commitment to improving the stability of the asset, BUSD is likely to remain a popular choice for those looking for a safe asset to invest in.