As Falcon Finance has expanded exponentially, we've noticed increased interest and curiosity, both from our valued clients and from the broader industry, regarding our strategies, reserves model and commitment to transparency. We want to take this opportunity to reaffirm some key aspects about our product:
1. How does Falcon decide the LTV for a given collateral asset?
Falcon sets internal TVL caps based on the type and quality of asset. Factors including, but not limited to, open market liquidity, circulating supply, concentration of supply, and total open interest are considered when determining caps.
Falcon will not accept new mints against any asset once it reaches the internal limits.
2. How are Falcon's mints linked to the underlying collateral?
Falcon accepts a diverse range of collateral assets across multiple blockchains. To support minting of USDf against these assets, Falcon adopts a CeDeFi model.
Clients deposit collateral into Falcon's custody accounts with Ceffu and Fireblocks, subject to AML/CFT screening. This collateral is then used to back "preCollateralizedMint" calls on the Ethereum blockchain, where USDf is minted.
All collateral assets are subject to haircuts and TVL caps based on current market conditions and the type of mint exercised.
3. Transparency attested by H&T
All on-chain wallets and off-chain custody accounts have been reviewed and verified by our independent auditor, H&T, providing routine attestation on our Falcon Transparency dashboard. H&T is the same auditor that is also widely trusted by other protocols. As of the latest report dated 7 July 2025, Falcon has a 116.98% overcollaterization ratio.
We invite you to visit our Transparency Page for more detailed information, including the latest H&T report: https://app.falcon.finance/transparency
4. What are the components of Falcon collateral reserve assets?
Falcon collateral reserve assets are composed of three main components, with a clear breakdown of respective allocations. Bitcoin and Stablecoins dominate the reserves, making up approximately 89% of the total holdings, valued at around $565 million. The remaining 11% consists of various altcoins, approximately $67.5 million, which adds diversification to the protocol. This structured allocation ensures a balanced mix of competitive yield, stability, and risk diversification of the reserve assets.
5. Regarding the concern of bad debt
Falcon is not a lending pool, but a market-neutral, low-risk, yield-bearing synthetic dollar project. Any assets deposited by clients (e.g., altcoins) must be 100% hedged with opposite positions on CEX against price risk, plus falcon further require the non-stablecoin clients to deposit additional over-collateralization for extra buffers.
Eg., if altcoins are deposited, they will be hedged on Binance etc - say if its price drops by 99%, the asset value remains unchanged, with no liquidation risk or deterioration of value eg. bad debt, not in the case at all. Hope it's self explanable
If you have any further questions or concerns, please feel free to ping me. Thanks!