Falcon Finance is a decentralized finance (DeFi) platform that provides stablecoin solutions, cross-chain interoperability, and yield optimization services. Launched in 2023, the protocol supports lending, borrowing, and liquidity provisioning across multiple blockchain networks, anchored by its primary stablecoin, Falcon USD (USDf). ^{[1] [2]}

Overview

Falcon Finance presents an approach to creating an overcollateralized synthetic dollar using a dual-token system comprised of USDf and sUSDf.

• USDf is minted when eligible digital assets (both stable and non-stable) are deposited as collateral. For stablecoin deposits, the token is issued at a 1:1 ratio, while non-stable assets (such as BTC, ETH, and various altcoins) are subject to an overcollateralization ratio intended to reduce the impact of market volatility.
• sUSDf is the yield-bearing token generated when USDf is staked. This token reflects yields produced by strategies including funding rate arbitrage, cross-exchange arbitrage, and other yield-generation techniques.

The platform accepts multiple types of collateral, allowing a range of assets to serve as backing. It uses a dynamic system to assess liquidity and risk in real time. ^{[1] [2] [3]}

History

According to the whitepaper published in February 2025, Falcon Finance was developed in response to the need for solutions that combine sustainable yield with effective risk management in volatile markets. The protocol was designed to address limitations observed in traditional methods that rely solely on positive arbitrage or funding rate strategies. In March 2025, during its Closed Beta phase, Falcon Finance reached $100 million in Total Value Locked (TVL). This phase allowed for adjustments to the system’s interface and functionality in preparation for a wider public launch. ^{[1] [2] [3] [7] [8]}

Technology

Falcon Finance’s architecture is designed to operate efficiently under varying market conditions. Key aspects include:

1. Minting and Redemption Mechanism: The process of minting USDf involves converting deposited assets into collateral while applying appropriate collateralization ratios based on asset type. The conversion of USDf into sUSDf occurs through a staking mechanism, where the number of sUSDf tokens issued is determined by current value and accumulated yields. The system also supports the redemption of assets while respecting the overcollateralization parameters.
2. Dual-Token System: The protocol employs two interrelated tokens. USDf is minted through collateral deposits and is overcollateralized to help manage the risks associated with volatile assets. In contrast, sUSDf accumulates yield over time as the protocol allocates returns from various financial operations.
3. Risk Management and Transparency: Falcon Finance employs both automated systems and manual oversight to manage risks. User assets are protected by secure wallet solutions that use Multi-Party Computation (MPC) and multi-signature protocols. In addition, the protocol provides transparency dashboards that report daily metrics on reserves, TVL, and yield performance, along with regular audits.
4. Scalability Solutions: Ethereum-based transactions are processed via zk-Rollups to reduce costs, while Solana’s infrastructure supports high-throughput settlements.
5. Yield-Generation Strategies: The protocol incorporates several methods beyond basic arbitrage, including:
   • Funding Rate and Cross-Exchange Arbitrage: Strategies that exploit discrepancies between spot and futures markets.
   • Altcoin-Based Yield Opportunities: By accepting a diverse range of collateral, the protocol can utilize yield opportunities present in native staking and farming platforms. ^{[1] [2]}

Falcon USD (USDf)

USDf is the principal component of the Falcon Finance ecosystem, functioning as an overcollateralized synthetic dollar.

• Function and Issuance: USDf is minted based on the deposit of eligible digital assets. Stablecoin deposits are converted on a 1:1 basis, while more volatile assets require a higher overcollateralization ratio to maintain stability.
• Utility Within the Ecosystem: USDf is used as both a store of value and a medium of exchange. When staked, it is converted into sUSDf, a token that reflects the accumulated yield over time as per the protocol’s operational strategies.
• Performance and Liquidity: Reports from cryptocurrency monitoring platforms indicate that USDf maintains a value near $1. The token has been listed on decentralized exchanges such as Uniswap and Curve Finance and centralized exchanges such as Binance and Coinbase, which facilitates liquidity and trading.

The circulating supply of USDf adjusts algorithmically based on demand. Reserve balances are audited quarterly and displayed in real time on the platform’s dashboard. Governance decisions, such as adjustments to collateral ratios, are voted on by FALCON token holders.

Falcon Finance operates as a synthetic dollar protocol that integrates a dual-token system with minting and redemption mechanisms alongside diversified yield-generation strategies and a comprehensive risk management framework. The protocol is designed to offer a stable synthetic dollar backed by a variety of digital assets while generating yield through multiple financial strategies. All information is presented in an objective manner without promotional language or subjective commentary. ^{[1] [2] [3] [4] [5] [6] [9] [10]}

Recent Developments

Custody Integration with BitGo

In June 2025, Falcon Finance announced an integration with BitGo to provide secure custody support for its overcollateralized synthetic dollar, USDf. This partnership aimed to extend Falcon Finance’s access to regulated infrastructure and prepare the groundwork for future features, including token listing and staking.

BitGo, described as a leading qualified custodian for digital assets, began the process of onboarding USDf to its custody platform. Once the integration is live, institutional users will be able to hold USDf within BitGo wallets, streamlining access to Falcon’s ecosystem.

USDf is minted by depositing approved collateral, including USD1, a fiat-backed stablecoin issued by World Liberty Financial. USD1’s reserves, composed of short-term U.S. Treasuries and dollar deposits, are held in custody by BitGo, creating a clear and auditable flow from fiat reserve to synthetic dollar issuance.

Andrei Grachev, Managing Partner at Falcon Finance, stated that the integration reflects the growing alignment between synthetic dollar protocols and regulated digital asset infrastructure. Mike Belshe, CEO and Co-founder of BitGo, commented that integrating USDf into their qualified custody platform enables institutional clients to interact with a new class of digital dollars without compromising on compliance or operational integrity. Once USDf custody is live, Falcon and BitGo plan to expand support to include USDf staking, allowing users to stake USDf into sUSDf vaults via the ERC-4626 standard. Additionally, they will introduce fiat settlement, enabling seamless fiat transfers and on

• and off-ramps capabilities through BitGo’s Go Network. This collaboration is intended to lay the foundation for a broader integration of synthetic dollar infrastructure with institutional custody and liquidity networks, supporting compliant, yield-bearing digital dollar adoption across institutional finance. ^{[11] [12] [13] [14]}