Binance Extends Stablecoin BUSD to Polygon, Avalanche

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Crypto exchange Binance made his stablecoinBinance USD (BUSD), available at avalanche and Polygon.

The token was until now available on Ethereum and BNB Channel.

Each unit of BUSD is backed by a US dollar, making it a fiat-backed stablecoin, according to Binance and stablecoin issuer Paxos, according to Binance. Traders and crypto users often trade with stablecoins like BUSD to protect against volatility in the crypto markets.

The token reached a market capitalization of $20.9 billion last week, making it the third largest stablecoin by value, according to CoinGecko. Tether (USDT) and USD Coin (USDC) are valued at $67 billion and $50 billion respectively.

While Ethereum has recently suffered its long-awaited mergerwhich has significantly reduced its energy consumption, the network is still uncomfortable through slow and costly transactions. Avalanche and Polygon, on the other hand, are significantly cheaper and faster.

The move comes as Binance actually written off rival stablecoins USDC, USDP and TUSD in early September, converting existing and new deposits of these tokens into BUSD.

Two weeks later, India’s leading crypto exchange WazirX followed suitciting efforts to “improve capital liquidity and efficiency for users”.

The rise of stablecoins

Stablecoins have come under a lot of criticism recently, following the collapse of the algorithmic stablecoin TerraUSD (UST) earlier this year. The downturn wiped out millions of dollars and helped snowball the ensuing crypto winter.

Unlike Terra’s UST, BUSD is backed by a 1:1 ratio to the greenback, which means that for every unit of BUSD issued, Paxos holds one US dollar in reserve at US banks insured by the FDIC.

The token is also regulated by the New York State of Several Financial Services (NYDFS).

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