DWF Labs will reveal details about the $630 million cryptocurrency asset portfolio supporting the USDf stablecoin next week.
USDf is a stablecoin issued by Falcon Finance, with its reserve assets mainly off-chain, while the collateralization ratio ensuring liquidity and price peg of the token is attracting significant attention from professionals and investors.
MAIN CONTENT
USDf has $630 million in reserves, with 96% of the assets off-chain at custodians like Binance.
The reserve asset ratio consists of 89% stablecoins and Bitcoin, and 11% are other cryptocurrencies, all insured through perpetual contracts.
Falcon Finance is about to publish an ISAE 3000 audit report, but this report does not include a detailed financial audit.
What is USDf and how is its reserve portfolio composed?
DWF Labs CEO, Andrei Grachev, asserts that USDf is a stablecoin backed by a portfolio of cryptocurrency assets worth $630 million, of which 89% are stablecoins and Bitcoin, while the remaining 11% consists of other altcoins. This is reflected in the official data on the Falcon Finance website.
Analysis shows that 96% of assets are stored off-chain through reliable custodians like Binance, with only 4% of assets being verifiable on-chain. This reserve model aims to balance safety with risk management efficiency.
Why is 96% of USDf's reserve assets off-chain?
According to Mr. Grachev, storing 96% of assets in cold wallets managed by third parties like Binance enhances security and minimizes the risk of hacker attacks. These assets are monitored daily by the auditing firm Harris & Trotter.
"Data on the amount of assets held by custodians is published daily; however, the detailed composition of the assets remains confidential for safety reasons."
Andrei Grachev – CEO of DWF Labs, 10/07/2024
Nevertheless, some experts also question the actual transparency and liquidity given that most assets are off-chain and rely on external partners.
Audit report and concerns about USDf's riskiness?
Falcon Finance is preparing an ISAE 3000 audit report to enhance credibility; however, this standard does not include detailed financial statement audits, focusing solely on internal control systems. This raises community concerns about the transparency level of the reserves.
Data from LlamaRisk shows that Falcon Finance has full control over reserve assets, some of which have low market values, posing liquidation risks under volatile market conditions.
"Market-neutral strategies and arbitrage mechanisms help USDf maintain a stable price peg despite temporary fluctuations."
Andrei Grachev – CEO of DWF Labs, 10/07/2024
Experts believe that using perpetual contracts for risk mitigation is a necessary solution but still poses many challenges in the volatile cryptocurrency environment.
What measures has USDf taken to reinforce its price peg after the event of deviating from the $1 mark?
Following USDf's drop to $0.992 on July 7, Falcon Finance increased the collateral ratio to 116.98% to ensure liquidity and market stability.
This move is seen as a strong commitment to maintaining the stablecoin's pegged value while helping investors feel more assured about the sustainability of the token.
What are the potential risks associated with USDf's reserve assets and liquidity?
Statistics show that USDf largely depends on off-chain assets, with liquidity primarily concentrated at Binance and major custodians. This raises concerns about the potential for concentrated sell-offs that could adversely affect the token's value.
At the same time, the level of transparency is not sufficiently complete, making it difficult for investors to accurately assess the status of asset reserves, increasing risks in adverse scenarios.
Comparison table of USDf's reserve characteristics with popular stablecoins
Criteria USDf USDT USDC Reserve value $630 million $68 billion $55 billion On-chain asset ratio 4% Not publicly disclosed Mostly on-chain Stablecoin/Bitcoin asset ratio 89% Mainly stablecoins Stablecoins dominate ISAE 3000 audit report (not financial audit) Quarterly financial audit Quarterly financial audit
Frequently Asked Questions
What type of assets back USDf? 89% stablecoins and Bitcoin, 11% are other cryptocurrencies insured through perpetual contracts.
Where are most of USDf's assets stored? 96% of the assets are off-chain at custodians like Binance, with only 4% being verifiable on-chain.
Does USDf's audit report include a financial audit? Falcon Finance publishes reports according to ISAE 3000 standards, which do not include financial statement audits.
How did USDf handle the price peg disruption? The collateral ratio was increased to 116.98% to reinforce liquidity and stabilize the peg.
What are the main risks when investing in USDf? Risks include low liquidity due to assets being concentrated off-chain and a lack of transparency in reserves.
Source: https://tintucbitcoin.com/dwf-labs-sap-cong-bo-danh-muc-usdf/
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