Falcon USD Stablecoin Depegged, Raising Concerns Over Liquidity and Collateral Quality

According to ChainCatcher, citing a report from Cointelegraph, the over-collateralized stablecoin Falcon USD (USDF) issued by the DeFi protocol Falcon Finance fell below its $1 peg on July 9, reaching a low of $0.9783. Data shows that the on-chain liquidity of this stablecoin has dropped to $5.51 million, a decline of more than 80% from its peak.

Andrei Grachev, Managing Partner at Falcon Finance, responded that 89% of USDF’s collateral consists of stablecoins and Bitcoin, with an over-collateralization ratio of 116%. However, DeFi research firm LlamaRisk reported that the project team has unilateral control over the collateral assets and there is a risk of over-issuance.