This articles covers two points that, although are listed in the documentation on Binance, might not be clear for common users like me.
At first glance, I was really excited about the Flexible Savings Plan on Binance. A 10% APY i.e. Annual Percentage Yield on BUSD. This was by far more than what the local banks were offering in Savings Account (2% in my country at that time).
Annual Percentage Yield Is Tier-ed
Update 26/09/2022 APR has changed to 8%
Let’s take BUSD as an example. If you have set 1000 BUSD in your savings, after 1 year you will have 10% interest on the FIRST 500 BUSD and then only 1.5% interest on the rest of the 500 BUSD. If you don’t read it carefully after one year you could have expected this to be 11.5% on the 1000 BUSD which is not the case here.
This means at the end of the year your 1000 BUSD will be 1057.5 BUSD only.
Price Drop In Crypto
Once you have converted your money let’s say USD to BTC. Your money and savings will be in BTC. This means that if BTC’s price drops, although your savings will be increasing, you might make a loss when you convert it back to USD (don’t forget withdrawal fees 15 USD SWIFT for me). This is why I try to use BUSD as much as possible. My personal opinion is that BUSD is the safest token to hold because BUSD tokens and underlying U.S. dollars are controlled on a monthly basis by Paxos. I will probably write another article on this topic if this article gets enough traction.
The lesson here is to always carefully read all information and understanding the products that you are investing your hard earned money in. There is rarely a free lunch.