A Binance initiative to protect investors turned into a crypto snake
Of CNBCTV18.com IST (published)
Mini
The Secure Asset Fund for Users, or SAFU for short, is an initiative by Binance that takes a portion of trading fees and pools it into a fund. This fund will be used to compensate users if the need arises, i.e. if the platform is hacked or investors lose money through a technical exploit.
Last year, the cryptosphere lost nearly $14 billion to scams and hacks; that’s almost double the number from 2020. It’s a growing concern among investors, with so many stories of people losing everything to these companies circulating on the internet.
Public confidence will naturally only remain strong if there are measures to mitigate, correct or compensate for these frauds. As the largest crypto exchange in the world, Binance took the lead in protecting its users’ interests and protecting them from such unfortunate scams through an initiative known as SAFU.
Let’s learn more about what SAFU is and how it works.
What is SAFU?
The Secure Asset Fund for Users, or SAFU for short, is an initiative by Binance that takes a portion of trading fees and pools it into a fund. This fund will be used to compensate users if the need arises, i.e. if the platform is hacked or investors lose money through a technical exploit.
SAFU was created as an emergency insurance fund back in 2018. Since then, Binance has hidden a small percentage of each transaction fee into the fund. Earlier this year, it was revealed that the SAFU fund was worth over $1 billion in BNB, BUSD and BTC. The wallet addresses where the funds are stored are also publicly available, giving transparency to the initiative.
The need for SAFU
With the increasing cases of fraud, even the crypto giants are not safe. There are always chances of a data breach, private keys being lost by the exchange and other unforeseen events. This is where SAFU comes in.
It acts as insurance that the company and users can rely on when something like this occurs. With an exchange as big as Binance, the trust of the people is everything; if that is lost, people will be hesitant to create accounts.
SAFU is a gesture of goodwill and an intelligent business tactic to maintain people’s trust in Binance. It won’t take long before others catch on and start their own SAFU.
The meme
Leave it to the internet to take something noble and turn it into a funny/ridiculous meme with little grounding in logic. During an unexpected maintenance run, Binance CEO Changpeng Zhao wrote a tweet saying, “Funds are safe.” A Youtuber named Bizonacci made a video mocking the tweet – it was called “Funds are SAFU”.
The video repeats “funds are safe” in Zhao’s voice in various scenarios ranging from extreme to absurd. The three-minute clip has us traveling from modern times to the death of the universe, and a machine version of Zhao still saying the funds are safe. Somehow the video went viral and the term SAFU stuck. Since then, SAFU has been used as slang for “funds are safe”. Like how HOLD has become HODL in the cryptoverse, we have SAFE which is now SAFU.
Conclusion
The only disadvantage of the SAFU fund is that it is stored in cryptocurrencies. This means that it is subject to market corrections. Bear markets, such as the one we are currently in, can seriously affect the fund’s valuation. Apart from that, it is a great way to ensure that customer funds are safe or, shall we say, SAFU.
