The entire crypto ecosystem is currently in the red zone. The Terra (LUNA) ecosystem and its stablecoin UST appear to have taken the brunt of the damage. Analysts believe Terra’s minting and burning mechanism had a significant role in its demise.
As a result, investors are looking to BUSD as a replacement for both TerraUSD (UST) and Tether (USDT) stablecoins, despite the present unfavorable trends in the overall cryptocurrency industry.
Let’s look at some additional reasons why BUSD is now the most popular stablecoin. To be considered safe and profitable, stablecoins must have at least three important aspects (regular audits, regulation, and top-tier reserves), according to a recent Binance analysis. Surprisingly, the BUSD stablecoin can confidently claim these advantages.
Three Reasons for BUSD’s Current Success
Stablecoins are intended to provide stability in the volatile crypto sector. This cannot be said for all stablecoins currently accessible. As a result, one of the most appealing qualities of the BUSD stablecoin is:
- Its reputation as a stablecoin that complies with regulatory requirements. BUSD also keeps its users up to date on all of its activities, enhancing transparency. While being backed by money is beneficial, BUSD goes above and above by providing a stablecoin that is protected and supported by verified fiat assets. It is subject to regular attestation and is approved by the New York State Department of Financial Services (NYDFS). Finally, it is one of the most strictly controlled stablecoins accessible today.
- Its vastness provides customers with ample evidence of BUSD’s lack of trustworthiness. Fiat-backed stablecoins such as USDT and algorithmic stablecoins such as TerraUSD (UST) cannot claim such trustlessness. The BUSD is now worth 96 percent of its face value in cash reserves, with the remaining 4 percent in US treasury bills.
- The significance of transparency. It makes the auditing process’s outcomes visible and accessible to the public. This is due to the fact that a stablecoin is only as good as the reserve to which it is linked. BUSD is subjected to a monthly attestation process, with the results of these attestations made public each month.