How does USDf maintain its peg?

USDf is an over-collateralized synthetic dollar launched by Falcon Finance. Its stability design comes from two aspects: the collateral structure and safety buffer.

Stablecoin Collateral

When users deposit stablecoins (USDT, USDC, DAI, etc.), the system mints USDf at a 1:1 dollar ratio. This method is simple and direct, carries no additional risks, and ensures the most basic stability.

Non-stablecoin collateral

When users use non-stablecoins such as BTC, ETH, SOL as collateral, the protocol will require an Over-Collateralization Ratio (OCR). This ratio is dynamically set based on the risk level of the assets; for example, the greater the volatility, the higher the amount of collateral required. The role of the OCR is to provide a safety buffer, ensuring that even if market prices decline, the collateral value of USDf is still sufficient to cover its issuance.

Dual benefits

OCR not only ensures the security logic of the collateral > issuance volume, but also allows Falcon to deploy funds across various yield strategies on this basis:

※ Liquidity Pool Earnings
※ Staking of blue-chip and selected assets
※ Arbitrage (Funding Rate Arbitrage / Inter-Market Spread Arbitrage)

In this way, USDf can provide users with an optimized yield experience while maintaining a stable peg.

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Summary

The stability of USDf comes from the 1:1 minting of stablecoins and the over-collateralization buffer of non-stablecoins, which allows it to maintain its peg while ensuring safe and sustainable returns in different market environments!

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