Falcon USD (USDf) has depegged from its $1 valuation, trading as low as $0.9783, raising alarms throughout the decentralized finance ecosystem. The stablecoin’s instability stems from severe liquidity constraints, with available reserves shrinking to approximately $5.51 million.
While Falcon Finance maintains USDf is overcollateralized at 116%—with 89% allegedly stored in stablecoins and Bitcoin—community distrust persists. Skeptics cite governance transparency issues and potential contamination from risky assets like the MOVE token. This crisis of confidence follows substantive criticisms from LlamaRisk highlighting systemic vulnerabilities.
The blockchain research collective warned USDf faces structural dangers including undisclosed collateral exposure and unchecked issuance practices. These warnings amplified existing doubts regarding oversight mechanisms within Falcon Finance’s stablecoin operations, intensifying scrutiny of USDf’s fundamental resilience.