How It Works
Falcon Finance mints USDf by taking delta-neutral positions: users or the protocol deposits spot assets (BTC, ETH, SOL, BNB) while simultaneously shorting equivalent perpetual futures on tier-1 CEXs. The combined long spot + short perp position is market-neutral — gains and losses on the underlying cancel out. Funding payments from the short perp positions are collected and distributed to sUSDf stakers. Falcon differentiates from Ethena by using a wider set of collateral assets (adding SOL and BNB perp funding), which provides diversified funding rate exposure and potentially higher blended yields when SOL and BNB funding rates are elevated.
Backing Type: Synthetic
Synthetic stablecoins use derivative strategies — typically delta-neutral positions combining spot holdings and short futures — to maintain their peg without holding traditional reserves. Yield is generated from the funding rate differential.