Quick summary before starting:
Falcon Finance is a protocol that issues a synthetic digital currency called USDf — a synthetic dollar backed by multiple collateral — allowing you to convert your crypto assets into usable liquidity without selling them. There is also a production token called sUSDf that can earn you a return when depositing USDf into the protocol's vaults. The project also has a governance token called FF. These functions are supported by a transparency dashboard displaying the protocol's reserves and supply figures.
1) What is the basic idea?
Falcon allows you to extract liquidity from your assets (like USDT or ETH or BTC) by depositing them as collateral and then minting USDf — thus you receive a digital dollar that you can trade or use in DeFi without selling your underlying assets.
2) The most important components you should know
USDf: the synthetic dollar — can be minted when you provide excess collateral. The goal: to provide you with liquidity on-chain without giving up ownership of the asset.
sUSDf: a token granted to you when you deposit USDf in the protocol's vaults; sUSDf carries a portion of the yield generated by the protocol (yield-bearing token).
FF: the governance/incentive token used for incentives and governance within the Falcon network.
Transparency Dashboard: a page that displays what assets back USDf (the reserves), the collateral ratio, and the amount of USDf circulating — which is important to verify the security of the currency. Falcon added a dashboard displaying large reserves and details about holdings like BTC and Stablecoins.
3) How to use Falcon step by step
Step 1 — Open your wallet and back it with assets you want to convert into liquidity
It can be USDT/USDC or ETH or BTC (depending on the accepted assets within the protocol at the time of use). Ensure that those assets are supported via the official documentation page.
Step 2 — Go to the Falcon website (app.falcon.finance or docs) and connect your wallet
Use your wallet (Metamask or the supported wallet) and go to the "Mint" or "Create USDf" interface.
Step 3 — Choose the collateral and specify the amount of USDf you want to mint
The system will show you the allowed funding ratio (LTV) and what amount of collateral is required. Remember: Falcon operates on an over-collateralization system — meaning you need to put in more value than the value of USDf you want to mint, to protect the protocol from price fluctuations.
Step 4 — Mint USDf and receive liquidity
After confirmation, USDf is created in your wallet — you can trade it or use it in other DeFi protocols or deposit it within Falcon to earn sUSDf.
Step 5 — Get yields (optional)
If you wish to earn yield, you can deposit USDf in the vaults within Falcon to receive sUSDf. The value of sUSDf gradually increases to reflect the yields generated from the protocol's strategies (like CeDeFi strategies, arbitrage, or yields from listed assets).
4) Why might you use Falcon? — Practical use cases for beginners
Converting part of your portfolio to instant liquidity without selling (for example: you want to liquidate part of BTC but do not want to lose exposure to the price increase); minting USDf provides instant liquidity.
Exploiting short-term trading or investment opportunities on exchanges using USDf instead of selling the asset.
Investing in yields via sUSDf which automatically collects the protocol's yields.
Managing a project treasury: USDf is used as a means to maintain flexible liquidity without withdrawing reserve assets.
5) Important numbers and indicators (verifiable now)
Falcon announced that the supply of USDf exceeded $500M early in its public launch and publishes regular updates on supply growth.
The official transparency dashboard showed reserves worth hundreds of millions (for example: a report indicated reserves totaling ~ $708M with a coverage ratio of 108% in their announcement), which is important information to verify that USDf is backed by actual collateral. Always check the latest numbers on the transparency dashboard before making any decisions.
Note: these numbers change quickly with protocol activity, so it is essential to check the official dashboard and news files before publishing or making an investment decision.
6) Profit/yield model: where do "yields" from sUSDf come from?
Falcon announces that its strategies gather yields from several sources, including controlling funding rate differentials in perpetual markets, arbitrage between platforms, and investment policies on digital assets and tokenizing real-world assets (RWA) if they exist within the collateral portfolio. When you deposit USDf and receive sUSDf, part of these yields accumulates in the price of sUSDf over time.
7) Risks you should know — do not ignore them
Collateral risk: in the event of a collapse in the price of the collateral (for example, BTC or ETH), you may need to add collateral or your position may be liquidated. Over-collateralization reduces the risk but does not eliminate it.
Smart contract risk: any DeFi protocol may contain technical vulnerabilities or be susceptible to hacks. Verifying security audits is important before depositing large amounts.
Market and liquidity risks: in harsh market conditions, the price of USDf may be affected or you may face difficulty withdrawing collateral at a good price.
Expansion and dependency risks: some of the protocol's yield strategies may depend on specific markets; changes in conditions there may reduce expected yields.
8) How do you check the integrity of USDf before you use it?
1. Open the Transparency Dashboard and check the reserve value, its components (BTC, Stablecoins, RWA if any), and the coverage ratio. This is the first indicator.
2. Check for external audit: review if there is an independent audit report assessing the reserves and smart contracts.
3. Review the liquidation terms and LTV: ensure you understand at what level you may be liquidated.
9) FF token — what do you know about it briefly
Its function: governance, incentives, and rewards within the system, and it may be used for loyalty programs (Miles) or to reduce fees.
Notes for beginners: holding FF does not guarantee automatic profits — it grants voting power and participation in some incentive programs; check the token distribution and the issuance schedule before making a purchase decision.
