[BUSD] MIP6 Collateral Onboarding Application

[BUSD] MIP6 Collateral Onboarding Application for Binance USD Token

  1. Who is the interested party for this collateral application?

@monet-supply

  1. Provide a brief high-level overview of the project, with a focus on the applying collateral token.

BUSD was launched in 2019. It is issued and custodied by Paxos. Currently, BUSD is issued on both Ethereum and Binance chain (this application addresses only erc20 BUSD), with total BUSD circulating on Ethereum of ~170 million.

  1. Provide a brief history of the project.

Binance launched in 2017 and quickly became the most prominent spot crypto exchange. It has since moved into adjacent verticals such as futures, mining, staking, OTC and stablecoin issuance. Binance began issuing stablecoins in 2019.

  1. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.

Whitepaper - none for BUSD specifically, linking PAX whitepaper: https://account.paxos.com/whitepaper.pdf

Website (Paxos): https://www.paxos.com/busd/

Website (Binance): https://www.binance.com/en/busd

Source Code: https://github.com/paxosglobal/busd-contract

BUSD token contract: https://etherscan.io/address/0x4Fabb145d64652a948d72533023f6E7A623C7C53

  1. Link any available audits of the project. Both procedural and smart contract focused audits.

Accountant attestations (look for BUSD tab): https://www.paxos.com/attestations/

Technical audit reports: https://github.com/paxosglobal/busd-contract/tree/master/audit-reports

  1. Link to any active communities relating to your project.

Twitter: https://twitter.com/binance
https://twitter.com/PaxosGlobal

  1. How is the applying collateral type currently used?

BUSD is used as a quote currency on Binance exchange, and can also be used in various DeFi products such as Curve and Aave.

  1. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?

Paxos is the issuer and custodian for BUSD. Paxos is a New York State trust company regulated by the NYDFS.

  1. Where does exchange for the asset occur?

BUSD can be exchanged on Binance, as well as via Curve and other DEX platforms. BUSD can also be created and redeemed via Paxos (KYC required).

  1. (Optional) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.

I am not aware of any publicly available legal opinions addressing the project or token’s regulatory standing.

  1. (Optional) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.

BUSD was given permission to operate by the NY Department of Financial Services. Press release: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1909051

  1. (Optional) List any possible oracle data sources for the proposed Collateral type.

BUSD could be pegged to $1 similar to the USDC price oracle.

  1. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.

n/a

6 Likes

I support BUSD and he will give us more security options.

2 Likes

Thanks for the great support of @monet-supply who created the application above.
We’ve received some of the BUSD holders’ requirements for adding BUSD in the collateral of Maker Protocol. Despite the information we’ve posted here, we may have missed things. Please feel free to comment or correct, so much appreciate your support of BUSD.

1. Who is the interested party for this collateral application?

The Binance BUSD Team
Contact us: [email protected]

2. Provide a brief high-level overview of the project, with a focus on the applying collateral token.

Binance USD (BUSD) is a 1:1 USD-backed stablecoin issued by Binance (in partnership with Paxos), Approved and regulated by the New York State Department of Financial Services (NYDFS).

3. Provide a brief history of the project.
Launched on 5 Sep 2019, BUSD aims to meld the stability of the dollar with blockchain technology.

  • September 5, 2019: Launched by Binance and Paxos.
  • March 13, 2020: Market Cap surpassed 100 million USD.
  • April 17, 2020: Market Cap reached 200 million USD.
    (It took 35 days for BUSD market cap to jump 2x )
  • May 28, 2020: Purchasing volume (minting or tokenizing) reached the 1 billion USD milestone.
    (It took 261 days for BUSD to hit 1 billion)

4. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.

BUSD on Github
BUSD on CoinMarket Cap
BUSD on Etherscan

5. Link any available audits of the project. Both procedural and smart contract focused audits.

5.1 The BUSD smart contracts are audited by Nomic Labs, ChainSecurity, and Trail of Bits. Full audit reports are available at the BUSD GitHub repository.

5.2 Monthly Attestations: Additionally, Binance and Paxos team has engaged Withum, a nationally top-ranking auditing firm, to independently verify at specific points in time that the entire supply of BUSD is consistent with USD in reserve accounts at U.S. banks held and managed by Binance and Paxos.
Withum performs month-end attestations of these accounts using standards established by the AICPA. Every attestation report that has been published since the launch of the Paxos Standard can be viewed BUSD Monthly Attestation Report.

6. How is the applying collateral type currently used?

In the first 6 months of BUSD’s rapid growth, to be honest, it was mainly used in the Binance exchange (trading and savings), which is a top contributor for its market cap. From the second half of 2020, we will rapidly promote the other use cases for BUSD. We believe the Defi and payment will be the next biggest use case.

6.1 Here are some of the existing BUSD use cases:

  • Trade BUSD on different exchanges and DEX. (All BUSD trading pairs on Binance is Maker Zero transaction fees)
  • Deposit BUSD to earn an interest rate.
  • Pay BUSD as payment for goods and services.
  • Use BUSD as collateral and loan asset.
  • Use BUSD as cross collateral in Binance Futures.
  • Transfer your digital dollars (BUSD) anywhere in minutes, with low cost and on the blockchain.
  • Store BUSD on an exchange or wallet.

6.2 Where you can use BUSD:
(Sorry for not being able to list all important partners, while we plan to update the BUSD ecosystem on the BUSD website before this Sep.)

  • DeFi (Lending): Aave, Curve, 1inch, DDEX, etc.
  • Trading: More than 30 exchanges/Dex had listed BUSD by July.2020, Binance.com, Binance.US, Poloniex, WazirX, Kyber Network, Tokenlon, etc.
  • CeFi Lending: Binance, Celsius Network, Coinloan, etc.
  • Payment: Bitpay, BitTorrent, Bundle, Simplex, AlchemyPay, Moonpay, etc.
  • Cross-Chain case: Binance Chain, Elrond, Syscoin, Zilliqa, etc.
  • Wallet: BUSD is issued on the Ethereum, we suppose that it has been supported by most of the mainstream Wallets.

7. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?

Binance and Paxos manage the smart contracts and issuance of BUSD. Paxos is a qualified custodian under New York law, and in that capacity bears full legal responsibility for custodian the US dollar reserves underlying BUSD.

8. Where does exchange for the asset occur?
More than 30 exchanges/Dex had listed BUSD by July.2020, Binance.com, Binance.US, Poloniex, WazirX, Coinsbit, FTX, Tokok, Bilaxy, Binance DEX, Kyber Network, Tokenlon, etc.
Link to Coinmarketcap.

9. Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.

BUSD has obtained legal memoranda from major international law firms, Davis Polk. Consistent with standard industry practice in these jurisdictions, the firms require that Binance not share these memoranda with third parties without certain non-disclosure/non-reliance agreements. Binance can disclose that based on the legal advice provided in these memoranda from US counsel, Binance has concluded that BUSD is operating consistent with the laws and regulations of the jurisdictions.

10. Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.

The joint issuer Paxos is a Limited Purpose Trust Company chartered since 2015 by the NYDFS, making PAX and BUSD the first fully regulated digital asset.

11. List any possible oracle data sources for the proposed Collateral type.
As BUSD is always redeemable 1:1 with a US dollar, it can be treated the same as PAX or USDC and be pegged 1:1 to Dai.

Thanks!

5 Likes

Thanks for posting this! Very thorough!

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