Falcon Finance, the synthetic dollar protocol whose Total Value Locked (TVL) has been steadily climbing throughout the year, has officially unveiled a new transparency and security framework for its stablecoin, USDf. This comprehensive new standard reflects both increasing demand from its user base and the elevated position USDf now occupies in the market, having surpassed $2 billion in supply. No longer a nascent contender, USDf has demonstrably evolved into a significant player and a serious rival to other stablecoins like USDe.
Falcon’s stablecoin protocol empowers users to lock crypto assets, including standard stablecoins such as USDT and USDC, as collateral to mint USDf. Once minted, users can stake the synthetic stablecoin within the Falcon Finance dashboard to earn yield. The liquid token received in return, sUSDf, can then be utilized to pursue additional earning opportunities across the broader Decentralized Finance (DeFi) ecosystem. The introduction of this new transparency framework underscores the substantial progress USDf has achieved this year and signals the future direction of Falcon’s DeFi protocol.
Transparency as a Service
While USDf has experienced a highly successful year, the broader sector of yield-bearing stablecoins has faced intermittent challenges. A recent instance involved the depegging of Stream's xUSD, where its yield strategies were found to be deviating from delta-neutral sources, contrary to its founders' initial claims. Although this was not a direct issue with USDf, it presents an opportune moment for Falcon Finance to proactively reassure its users about USDf's full backing and the sustainability of its yield generation mechanisms.
In unveiling its updated risk management framework, Falcon's Andrei Garchev stated, “Users should never have to guess what is backing their assets or how risk is being managed. If USDf is to serve as collateral and a yield instrument for serious builders and institutions, its reserves, custody, and controls must be transparent by default and validated by independent experts.”
Putting It All on the Table
Falcon Finance had previously launched a transparency dashboard that provided users with access to key metrics regarding the backing of its native stablecoin, a detailed breakdown of its reserves, and the allocation of its yield strategies. This existing framework has now been further enhanced with the integration of new metrics, offering an unprecedented level of insight into the security and risk-management parameters embedded within USDf. After users stake USDf to create sUSDf, they gain access to a yield-bearing token that benefits from diversified, institutional-grade trading strategies.
Falcon not only allows users to view near real-time data points concerning USDf’s backing and supply but also engages independent auditors to provide formal attestation. These measures, combined with third-party smart contract audits, have significantly bolstered confidence in USDf, contributing to its increasing adoption by both retail DeFi users and institutional investors.
Falcon Finance believes it can attract a wide range of clients, including Web3 projects managing Digital Asset Treasuries (DATs), who are actively seeking yields that surpass the returns offered by traditional ETH staking. With the current yield for staked USDf exceeding 9%, it is delivering approximately double the benchmark return of ETH staking. Falcon's commitment to providing full transparency regarding its operations is expected to further drive TVL growth and encourage greater institutional adoption of yield-bearing stablecoins, a sector that has now reached a valuation of $15 billion.