Popular on-chain analyst Willy Woo expressed concern about Binance’s Secure Asset Fund for Users (SAFU) Insurance Fund. He does not think it is safe to put ‘incidence-correlated BNB’ in the SAFU fund. Willy Woo likens the crypto exchange FTX to an insurance fund backed by FTT.

Is it safe to have BNB in ​​Binance SAFU Fund?

Willy Woo in one tweet on November 25 shared that Binance’s Secure Asset Fund for Users (SAFU) is now made up of $367 million in BNB, which is 44% of the fund. In addition, it has $300 million in Binance’s dollar-pegged stablecoin BUSD and only $270 million in Bitcoin. It has fallen significantly below $1 billion due to price swings.

Willy Woo believes that the SAFU insurance fund with 44% of its reserves backed by BNB is not safe. He compares it to FTT, the original token of the FTX crypto exchange, which plummeted during the FTX crisis. It would be like FTX has an insurance fund largely backed by FTT tokens.

“While I commend Binance for having such a fund, there is no point in putting incidence-correlated BNB in ​​there. How would we like it if FTX had an insurance fund filled with FTT?”

Crypto exchange Binance topped the emergency insurance fund on November 9th with $700 million in BNB and BUSD tokens and $300 million in Bitcoin. However, Willy Woo noted that the fund has now dropped to $837 million amid market swings. He also shared Bitcoin and BSC addresses for verifying SAFU proof of reserves. The exchange plans to implement a Merkle tree-based proof of reserves system that verifies total exchange assets.

The $837 funds still roughly match the $68 million in Binance’s Proof of Reserves and nearly $800 million in Binance Custody. Willy Woo argues that the SAFU fund can take a hit during difficult market conditions, as historically. BNB’s performance is directly related to Binance’s stability and success. So it’s about having BNB in ​​the emergency fund.

“BSC is governed by 21 validators who are elected daily by 11 validators in the BNB chain. There is circumstantial evidence that the 11 beacon chain validators are centralized around Binance. In a Binance incident, BNB’s BSC valuation component would likely also go on sale.”

BNB price is stagnant

BNB price is trading at $296, down nearly 1% in the past 24 hours. The BNB token has failed to hold above $300 despite Binance’s strong performance and continued expansion.

While the BNB token saw a nearly 9% rally in a week as Binance CEO “CZ” announced an industry recovery fund, the price is not moving against the market.

Also Read: Binance $1 Billion Industry Recovery Initiative

Varinder is a technical writer and editor, technology enthusiast and analytical thinker. Fascinated by disruptive technologies, he has shared his knowledge about Blockchain, Cryptocurrencies, Artificial Intelligence and the Internet of Things. He has been associated with the blockchain and cryptocurrency industry for quite some time and is currently covering all the latest updates and developments in the crypto industry.

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.

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