TL;DR
If you’ve been involved in the world of crypto for a while, you’ll know that crypto assets can be extremely volatile. The total value of your portfolio can experience large swings, leaving you holding on to dear life in the front seat of a wild roller coaster.
Binance Dual Savings is a great way to earn passive income no matter which direction the market goes. If you’re looking to earn yield while minimizing the risk of price exposure, Binance Dual Savings is for you.
What can you do to protect yourself from volatility but still generate yield? Binance Savings offers many convenient ways to earn passive income, but they may expose you to price risk. The option to use more volatile cryptocurrencies to generate income is enticing, but they are directly related to market conditions.
You can also use stablecoins, such as BUSD or USDT, but Binance Dual Savings takes this concept to the next level. You have the opportunity to enjoy yield no matter which direction the market goes. Let’s see how it works.
Binance Dual Savings lets you deposit a cryptocurrency and earn yield based on two assets. You commit your crypto holdings, lock in a yield, but earn more if the value of your committed holdings increases. It’s basically a way for you to have more control over your risk.
The return you get is dependent on the outcome of your bet at the expiry date. If the value of your holdings increases so that your earnings exceed the savings rate, you’ll get a higher return. If the value of your holdings doesn’t exceed the savings rate, you’ll still get the yield from your savings.
Before we get into how these products work, let’s clear up some of the terms you’ll need to know.
The BTC Dual Savings product lets BTC holders hedge their bitcoin holdings.
The idea is that if the settlement price is higher than the strike price, the product is settled in BUSD. On the other hand, if the settlement price is lower than the strike price, the product is settled in BTC.
This means that if the product is settled in BUSD, you can effectively sell your BTC higher than the current spot price at the time of expiry.
So how are the interest rates calculated for this product? The higher the strike price and the shorter the period, the lower the yield. The lower the strike price and the longer the period, the higher the yield.
How does this work in practice? Let’s say you have 1 BTC at a price of $10,000, and you subscribe to a 30-day Dual Savings product with a 2% rate of return. The strike price is set to $12,000.
30 days later, one of two things will happen:
The stablecoin-based Dual Savings products let you effectively buy BTC at a lower price than the current spot price at the time of expiry. In the other outcome, you get your stablecoins back with interest.
Let’s say you have 10,000 BUSD when the price of 1 BTC is $10,000. You subscribe to a 30-day Dual Savings product with a 2% rate of return. The strike price is set to $8,000.
30 days later, one of two things will happen:
Using Binance Dual Savings is quite easy if you’re familiar with how the product works. You’ll find the available Dual Savings products on the Binance Pool page, or by clicking on the link in the first step below.
Binance Dual Savings ensures that you can have the best outcome with your crypto savings, no matter which direction the market goes.
Do you still have questions about Binance Dual Savings? Check out our Q&A platform, Ask Academy, where the Binance community will answer your questions.