Falcon Finance launches an on-chain insurance fund with an initial capital of 10 million USD, enhancing the protection of the USDf stablecoin ecosystem and strengthening the risk governance mechanism.
Falcon Finance has officially launched a 10 million USD on-chain insurance fund using USD1 stablecoin, marking a significant advancement in building protective infrastructure for the company's decentralized finance ecosystem. This move aims to enhance resilience and transparency for the protocol, while providing a solid layer of protection for participating institutional partners.
The insurance fund is designed as a structural protection mechanism, operating as a financial buffer during market volatility phases. This mechanism is particularly important in mitigating negative yield risks and can act as a 'lender of last resort' to support the price stability of the yield-bearing token sUSDF. By holding significant stablecoin reserves, the fund will offset unexpected risks and ensure the fulfillment of promised yields.
This initiative comes against the backdrop of Falcon Finance achieving a series of notable milestones recently. The company has just received a strategic investment from World Liberty Financial, announced an ambitious 18-month development roadmap, and witnessed the USDf stablecoin surpass 1 billion USD in circulating supply. These milestones affirm Falcon Finance's increasingly solid position within the DeFi ecosystem.
Integrating resilience from the core infrastructure
Andrei Grachev, Managing Partner of Falcon Finance, emphasizes the strategic importance of the insurance fund in integrating resilience right from the company's core infrastructure. He asserts that Falcon Finance is proving its ability to build trustworthy and verifiable assets as a foundation for on-chain insurance, creating a new precedent for the industry.
The fund's sustainable funding model is designed by allocating a portion of recurring protocol fees to the fund, ensuring long-term growth alongside the development of the Falcon ecosystem. This approach not only creates a verifiable layer of protection but also strengthens user trust through high transparency.
Falcon Finance also reveals plans to build universal collateral infrastructure, an advanced technology that allows the conversion of custodial assets into on-chain liquidity pegged to USD. This vision positions the company as a core infrastructure layer, acting as a vital bridge between traditional finance (TradFi) and decentralized finance (DeFi).
