In no time, cryptocurrencies have attracted global interest. Retail and institutional investors alike are heavily invested in this asset class despite its volatile nature. However, recent black swan events like the FTX saga and others have made them hesitant. SAFU (Secure Asset Fund For Users) provides them with a sense of safety that their funds are secure with the exchange.
It is a reserve fund to safeguard the interest of investors in investing in digital assets. It acts as a cushion for investors in case a crypto exchange is hacked or is affected by other technical exploits.
Sounds interesting? Then, let’s get into what SAFU is in cryptos, its origin, and how it keeps your investments safe from losses.
What is SAFU?
Secure Asset Fund For Users (SAFU) is like an insurance fund created by Binance in July 2018 to keep users’ money safe during unexpected events, like a hack or theft. Binance sets aside 10% of all the fees they collect from trading and puts it in a separate wallet that is not connected to the internet. This special fund has been used before to give money back to users who lost their funds during a hack on the Binance exchange in May 2019.
SAFU’s meaning has three components – trust, integrity, and transparency. Retail traders and investors have immense confidence in centralized exchanges, and SAFU ensures that investor funds are secured in case of any issues. In November this year, the total value of SAFU by Binance topped $1 billion. However, just like the volatile crypto market, the value of this fund also fluctuates as per the market movements since it is held in BUSD, BNB, and BTC.
After its creation, the word SAFU has been used frequently by users and Binance to ensure their funds are safe in case of any unfortunate events.
Binance had its latest security breach in 2018, which eroded investors’ capital and thus led to the creation of SAFU. This incident called for measures to protect exchanges as well as investors against such events.
The Origin of SAFU Term
The origin of SAFU is quite interesting. In July 2018, the CEO of Binance, Changpeng Zhou (CZ), tweeted, “Funds are safe” during an unexpected maintenance run. Later in the same year, a Youtube channel, Bizonacci, uploaded a video on YouTube titled “Funds are SAFU” to mock the tweet. The video repeats “funds are safe” in Zhao’s voice in different scenarios, which made the term viral. It also became a meme topic.
CZ, since then, has been using this term liberally to assure people that their funds are safe with Binance.
As per Binance, “To protect the future interests of all users, Binance will create a Secure Asset Fund for Users (SAFU). Starting from 2018/07/14, we will allocate 10% of all trading fees received into SAFU to offer protection to our users and their funds in extreme cases. This fund will be stored in a separate cold wallet.”
The series of memes made SAFU a worldwide sensation and further increased its importance and implementation.
SAFU is a word that creates trust, establishes goodwill, and also acts as a marketing tactic. If one person takes the name SAFU, others get curious and want to know about it. This helps spread the word.
What Is the Need for SAFU?
Crypto investments can be highly risky as, aside from being extremely volatile, they are also prone to fraud and data breaches. We have already heard the news of many crypto scams and how it has impacted exchanges and investors. A typical solution to this situation is to opt for insurance. However, since the crypto market is dynamic, insurance companies either find it a losing bet or charge higher rates. Both of these are not cost-effective.
Thus, creating a SAFU ensures that crypto exchanges can take measures at their end to protect investor money from scams. As exchanges maintain a fund in the form of SAFU to protect from downside risks, the risk associated with opting for insurance reduces as the probability of a risk claim reduces. As a result, crypto exchanges are likely to get better insurance deals.
SAFU provides a cushion to exchanges and investors to protect their financial interests. This is not just a need for Binance; SAFU is equally important for all crypto platforms.
The Bottom Line
Since the start of 2021, thousands of investors have reported losing over $1 billion in crypto scams. Thus, calling for crypto platforms to take active measures to protect the investors. Binance started the SAFU trend and brought a sense of safety to the crypto market; however, it is not too far to expect more crypto exchanges to adopt this concept.
1. How much money is in SAFU?
Binance transfers 10% of its trading fees to SAFU. In January, it reached $1 billion, which was later reduced to $735 million. But as of November 2022, Binance topped the value of their Binance SAFU to $1 billion again.
2. Where can I buy a SAFU token?
The top cryptocurrency exchanges for trading in the StaySAFU token are CoinTiger, and PancakeSwap (V2). You can download the needed wallet, set up your account, connect your wallet with the exchange, and start trading. However, please, DYOR, before trying any exchange or buying any token.