In the rapid development of decentralized finance (DeFi), stablecoins have become a key bridge connecting traditional finance with the blockchain world. Falcon Finance, as an innovative protocol, is reshaping the landscape of collateralized finance with its synthetic dollar stablecoin USDf.
By the end of 2025, the circulation of USDf had exceeded $2 billion, which is not just a stablecoin, but a universal infrastructure for unlocking the value of various liquid assets. Falcon Finance allows users to use crypto assets or real-world assets (RWA) as collateral to generate USDf, thereby obtaining on-chain liquidity and returns without selling the original assets. The core mechanism of USDf is the over-collateralized synthetic stablecoin model, aimed at maintaining a 1:1 peg with the US dollar.
In simple terms, users can mint USDf by depositing eligible collateral, which includes stablecoins (like USDT, USDC) and non-stablecoins (like ETH, BTC, or other tokenized securities). The protocol employs a dual minting mechanism to cater to users with different risk preferences: the classic mode focuses more on conservative stability, usually requiring a higher collateral ratio (like over 150%) to minimize liquidation risks; the innovative mode allows for more flexible collateral, combining real-time oracles and dynamic adjustment mechanisms to optimize capital efficiency, but may involve higher volatility.
The minting process is as follows: after users deposit assets, the protocol evaluates their value and applies a collateral ratio (for example, a 200% over-collateralization may be required for volatile assets), and then generates the corresponding amount of USDf. Upon redemption, users return USDf and reclaim their collateral, during which a small fee will be deducted to support protocol governance. The highlight of this mechanism is its versatility and yield optimization. Unlike traditional lending platforms that are limited to specific assets, Falcon Finance supports a wide range of collateral types, including tokenized real estate or stocks, significantly lowering the entry barrier to DeFi. At the same time, users can stake the minted USDf as sUSDf (a derivative stablecoin) to earn diversified returns, such as liquidity mining or cross-chain farm rewards, without giving up the appreciation potential of the original assets. For example, a user holding an NFT can collateralize it to generate USDf and then participate in high-yield strategies with USDf, all while ensuring stability under over-collateralization and real-time monitoring.
The protocol also enhances transparency and decentralization by allowing holders to participate in upgrade decisions through the community governance token FF. Although there was a brief depegging event in July 2025 (due to market volatility causing a decline in the value of some collateral), Falcon Finance quickly restored the peg by adjusting oracles and increasing reserve mechanisms. Currently, USDf circulates seamlessly across chains such as Ethereum and Solana, promoting cross-chain interoperability.
This not only improves market efficiency but also provides compliant and friendly liquidity solutions for institutional investors. In summary, Falcon Finance's USDf mechanism represents an important step towards the maturity of DeFi: achieving a stable, flexible, and high-yield financial experience through over-collateralization and dual-mode minting.
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