- Falcon Finance holds $632.5 million in audited reserves, with a 116% over-collateralization ratio backed by stablecoins and BTC.
- The protocol generates yield through delta-neutral strategies like basis trading (44%), arbitrage (34%), and staking rewards (22%).
- USDf’s peg is maintained organically via arbitrage, and users benefit from instant unstaking.
In a move designed to answer key questions about its safety and strategy, synthetic dollar protocol Falcon Finance has released a detailed breakdown of its $632.5 million in reserves and the market-neutral methods it uses to generate yield. The report offers a transparent look under the hood as the project’s head, Andrei Grachev, directly addresses and dismisses recent criticism from competitors.
Of this, 89%, roughly $565 million, is held in Bitcoin and stablecoins, while 11% (about $67.5 million) is allocated to altcoins.
The protocol maintains a 116% over-collateralization ratio, with all reserves undergoing third-party audits. Assets are selectively onboarded based on hedging potential and yield opportunities from tailored staking programs.
Delta-Neutral Strategies Drive Yield
Falcon Finance sets itself apart through its use of market-neutral strategies. According to Andrei Grachev, Head of Falcon Finance and DWF Labs, the protocol’s revenue is generated from basis trading (44%), arbitrage (34%), and staking rewards (22%).
At times, liquid OTC trades during reserve rebalancing also contribute additional revenue. Notably, Falcon avoids any directional trading exposure, ensuring that either stablecoins or properly hedged positions back every USDf minted.
Related: Lido Finance (LDO) Targets $2.35 on Account of Surging AuM
Efficient Redeem and Unstake Mechanism
Unlike many competitors, Falcon enables instant conversion from staked sUSDf to USDf, thereby enhancing capital mobility. Users who undergo KYC verification can mint and redeem USDf, with a standard 7-day cooldown period on redemptions.
This mechanism, combined with access to the liquid secondary market, enables users to enter or exit positions efficiently as needed.
Peg Maintained by Arbitrage Incentives
USDf’s peg to the dollar is not enforced by algorithmic mechanics or intervention but rather maintained organically by traders.
When USDf trades above $1, traders mint and sell. When it trades below $1, they buy and redeem, exploiting price gaps for profit and restoring equilibrium.
Falcon Fires Back at Competitor FUD
Grachev also addressed recent waves of negative sentiment and alleged smear campaigns from competitors, suggesting they stem from Falcon’s rapid growth and market impact.
“Some competitors are not able to compete fairly and run coordinated FUD. It’s sad, but it proves we’re on the right path,” he stated.
With a major product roadmap announcement on the horizon, Falcon Finance continues to strengthen its reputation as a reliable fixed-income DeFi protocol built on audited reserves, yield-generating neutral strategies, and transparent operations.
Related: Can Any DeFi Platform Catch Up to Hyperliquid’s $1.6T Surge?
Grachev concluded with a bold message that those who haven’t adopted Falcon Finance yet will eventually join, as “there is no alternative.”
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
