Willy Woo Raises Concerns On “BNB-Backed” Binance SAFU Fund

Fashionable on-chain analyst Willy Woo raised considerations over Binance’s Safe Asset Fund for Customers (SAFU) Insurance coverage Fund. He believes it’s not secure to place “incidence-correlated BNB” within the SAFU fund. Willy Woo compares it with the crypto alternate FTX having an insurance coverage fund backed by FTT.

Is It Protected to Have BNB in Binance SAFU Fund?

Willy Woo in a tweet on November 25 shared that Binance’s Safe Asset Fund for Customers (SAFU) now consists of $367 million value of BNB, which is 44% of the fund. Furthermore, it has $300 million value of Binance’s dollar-pegged stablecoin BUSD and simply $270 million value of Bitcoin. It has fallen considerably under $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 might be like FTX having an insurance coverage fund backed principally by FTT tokens.

“Whereas I commend Binance for having such a fund, there’s no sense placing incidence-correlated BNB in there. How would we really feel about FTX having an insurance coverage fund stuffed with FTT?”

Crypto alternate Binance on November 9 topped the emergency insurance coverage fund with $700 million value of BNB and BUSD tokens and $300 million value of Bitcoin. Nonetheless, 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 whole alternate property.

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 a success throughout tough market circumstances as seen traditionally. BNB’s efficiency is immediately associated to Binance’s stability and success. Thus, it considerations having BNB within the emergency fund.

“BSC is ruled 21 validators chosen each day by 11 validators on the BNB chain. There’s circumstantial proof that the 11 beacon chain validators are centralised round Binance. In a Binance incident, the BSC valuation part of BNB would doubtless additionally dump.”

BNB Value 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 sturdy efficiency and steady growth of Binance.

Whereas the BNB token noticed an virtually 9% rally in every week amid Binance CEO “CZ” asserting an trade restoration fund, the worth fails to maneuver in opposition to the market.

Additionally Learn: Binance $1 Billion Trade Restoration Initiative

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