Last year, the cryptosphere lost nearly $14 billion to scams and hacks; that’s nearly double the figure from 2020. It is a rising concern among investors, with so many tales of people losing their everything to these exploits that are circulating the internet.
Naturally, public trust will only stay strong if there are measures to curb, rectify or compensate for these scams. As the largest crypto exchange in the world, Binance took the lead in protecting its users' interests and safeguarding 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?
Secure Asset Fund for Users, or SAFU in short, is an initiative by Binance that takes a portion of trading fees and accumulates it in 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 some technical exploit.
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SAFU was created as an emergency insurance fund back in 2018. Since then, Binance has been tucking away a tiny percentage of every 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, adding transparency to the initiative.
The need for SAFU
With the rising cases of scams, not even the crypto giants are 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 works like an insurance policy that the company and users can count on when such a thing occurs. With an exchange as big as Binance, the people's trust 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 the people's trust in Binance. It won't be long before others take a cue and start a SAFU of their own.
The meme
Leave it to the internet to take something noble and turn it into a hilarious/ridiculous meme with little grounding in logic. During an unexpected maintenance run, the CEO of Binance, Changpeng Zhao, wrote a tweet saying, "Funds are safe." A Youtuber named Bizonacci created a video that mocked the tweet – it was called “Funds are SAFU.”
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The video repeats "funds are safe" in Zhao's voice in different scenarios going from extreme to absurd. The three-minute clip has us travelling from modern time to the death of the universe, and a machined version of Zhao still saying that 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 that's now SAFU.
Conclusion
The only drawback of the SAFU fund is that it is stored in cryptocurrencies. This means that it is subject to market corrections. Bear markets, like the one we currently find ourselves in, can severely affect the fund's valuation. Other than that, it is a great way to ensure that customer funds are safe or, should we say, SAFU.
