According to a blockchain analytics Twitter account, Whale Alerts, Binance has transferred about 300 million BUSD ($299,994,233) to the Paxos Treasury. The transaction took place today at 14:16 UTC, on Jan. 24.
BUSD transfer and burn on Paxos Treasury
In a Twitter update, blockchain transactions tracker @whale_alert highlighted Binance’s transfer of 300 BUSD to Paxos Treasury. The transaction occurred earlier today and was immediately followed by a burn update 30 minutes after the transfer. Paxos burned about 324,663,193 BUSD coins at around 14:44 UTC.
The transfer and burn news could alert investors, as Bloomberg reported on BUSD’s dollar-depegging fears just a fortnight ago.
Paxos, a blockchain technology firm, is working with Binance to ensure BUSD is fully backed.
However, as far as BUSD is concerned, the firm promised to work on the stablecoin version that lies on the Ethereum blockchain only. Paxos distanced itself from the problems of non-ETH-based BUSD coins.
“Binance-Peg BUSD is strictly a Binance product; it is not issued by Paxos nor regulated by the New York State Department of Financial Services.”
A week ago, Paxos Treasury transferred about 88.9 million BUSD ($88,886,710) to Binance. The two could be working around fixing the problems that stabilize BUSD 1:1 backing. All the transactions, including the transfer and burn, took place on Ethereum.
Binance admitted that BUSD on the Binance chain was undercollateralized for some time.
The firm acknowledged solving the peg issue wasn’t “flawless.” However, the crypto exchange is yet to affirm when it discovered the stablecoin was undercollateralized. Since the news broke out, investors went on a massive withdrawal spree from the exchange.
Paxos seeking to uphold USDP peg
Paxos is not only trying to save BUSD’s reputation; the firm recently made some steps to increase its digital reserves and maintain the USDP dollar peg. The startup announced its plan to pay DeFi company MakerDAO to increase its Paxos USD(USDP) holdings to $1.5B.
MakerDAO currently holds about $450 million USDP, and Paxos urged the former to max up the reserves. The firm asked MakerDAO to use the Peg Module Stability reserve system to stabilize its stablecoin holdings when prices heighten above the peg.
Paxos proposed a daily fee payment worth 45% of an Effective Federal Funds Rate outlined in a proposal shared by MakerDAO last Friday.
The proposal also stated that MakerDAO stands to earn about $29M annually from USDP’s PSM collateral reserves. It also highlighted how the fees would reflect the fed’s interest rate changes.