Binance's recent event of holding USD1 to share a value of 40 million WLFI has been hotly launched for a week. As the activity heats up, the issuance of USD1 has rapidly increased by about 1.64 billion since the announcement, and the total holdings on Binance have reached 4.31 billion.
Facing such a massive influx of funds, is this event still worth participating in? According to the latest data, if you deposit USD1 into the contract account as collateral, enjoying the official 1.2x weight bonus, the expected annualized yield remains as high as 10.4% - 12.48% under a total fund pool of 5 billion.
How appealing is this activity? Let me tell you by comparing it to traditional bank deposits.
What does an annualized rate of 12.48% mean? Let's compare it hard with the current interest rates of mainstream banks in the country. For example, with a deposit of 100,000 U (approximately 700,000 RMB):
It can be seen that the profit from holding for one year in the Binance activity is almost equivalent to depositing in a bank for 5 years! Moreover, traditional fixed deposits usually require locking in funds, while Binance's activity allows for flexible deposits and withdrawals, greatly surpassing traditional options.
If you think the data is not solid enough, then compare it with U.S. Treasuries.
Many large investors prefer to buy U.S. Treasury bonds as a risk-averse investment, but in the face of such a high WLFI prize pool, the attractiveness of U.S. Treasuries seems slightly inferior. According to the latest real-time data today, the yield on U.S. Treasuries for 1-5 years is fluctuating between 3.5% - 3.85%.
With the same 100,000 U, the expected earnings from depositing in the Binance activity for one year are a full $8980 higher than U.S. Treasuries. In the current macro environment, this interest rate difference undoubtedly provides an excellent growth opportunity for existing funds.
Finally, the biggest concern for everyone: will there be a loss? Risk analysis of breaking away from the peg.
The biggest fear in participating in activities is earning interest but losing the principal. Due to the buying premium of USD1, everyone's main concern is its breakeven point. My cousin calculated the breakeven analysis table (benchmark: 10,000 U position + one month expected earnings):
• If you buy at the price of 1.002, as long as USD1 does not fall below 0.9953, you will be in profit.
• If you buy at 1.0005, the safety cushion is thicker; as long as it does not fall below 0.9938, you will not incur a loss
Currently, unless there is an extreme liquidity crisis in the market, it is difficult for USD1 to break away from these price levels in the short term. Especially since the official has provided a 1.2x contract bonus, which effectively reduces the risk of your position further.
Overall, this wave of WLFI activities is an opportunity that cannot be missed for users pursuing stable returns. As long as you utilize the 1.2x weight bonus and pay attention to the premium situation of USD1, earning around 11% annualized in the current pool size is still very stable.
For those who have not yet participated, it is recommended to hurry up, convert idle U into USD1, and transfer it to the contract account to start earning passively!