Falcon USD, the quickly rising “synthetic dollar” backed by controversial market maker DWF Labs, is faltering simply months after launch.
The $540 million market-cap USDf is “backed by diversified crypto assets,” however issues over the standard of a few of that collateral have led to worries in regards to the first collapse of a significant stablecoin for the reason that implosion of Do Kwon’s UST.
USDf’s value has been off-peg through the course of the morning, hitting a low of $0.98, in keeping with CoinMarketCap knowledge.
USDf depegging from $1 in a single day amid rumours surrounding the standard of its collateral base
On-chain liquidity seems to be dwindling shortly too pic.twitter.com/HgJFBI1dEE
— parsec (@parsec_finance) July 8, 2025
Decentralized finance (DeFi) danger advisor LlamaRisk highlighted points with USDf in a submit to the Resupply governance discussion board, concerning its onboarding as collateral to the lending platform, which fell sufferer to a $9 million hack final month.
The submit, printed in Might, highlights a scarcity of transparency and the questionable high quality of belongings that can be utilized as USDf backing, amongst different components.
DWF Labs’ Managing Accomplice, Andrei Grachev, responded to renewed issues with a submit to X, explaining Falcon’s “reserves, transparency, and risk management strategies.”
Grachev states that, whereas USDf backing can embrace “any assets that can be hedged properly by perps,” 89% is made up of stablecoins and bitcoin (BTC), with roughly 11% backed by “altcoins.”
He additionally means that “some competitors” are operating “coordinated FUD against us,” as they’re “not able to compete fairly.”
USDf’s value hit a low of $0.98, in keeping with CoinMarketCap.
Based on Falcon Finance’s so-called “Transparency Dashboard,” USDf is 117% collateralized by $635 million of crypto belongings.
Nonetheless, $610 million value of those reserves are held off-chain and damaged down into simply two classes, specifically “Stablecoins,” making up simply 15%, and “Others,” making up the rest.
On-chain belongings whole simply $25 million of reserves.
Within the newest reserve report, dated yesterday, assessor HT Digital states that the worth of belongings is “based on the quantity of collateral at the timestamp above, multiplied by pricing data obtained from CoinGecko at the end of previous day.”
It makes no point out of the liquidity, volatility, or estimated value affect in liquidating the backing belongings.
HT Digital additionally states that it has “not performed any procedures over the control and ownership of the above assets, nor any procedures over whether any security has been placed on these assets.”
Replying to criticism on X, Grachev added that they’ve “learnt a lot today” and that the Dashboard can be up to date to incorporate itemization by stablecoins, BTC, and altcoins “by next week.”
DWF Labs
Regardless of being a relative newcomer to the crypto market making scene, DWF Labs has already seen its justifiable share of scandals.
Whether or not known as out for missing transparency, being suspected of pumping-and-dumping struggling crypto tokens, or accused of wash buying and selling by a former Binance worker, DWF has by no means been removed from controversy.
In October, the agency got here underneath scrutiny when a associate was accused of making an attempt to drug a possible new rent in Hong Kong.
Some theorize that DWF could also be utilizing illiquid or low-cap tokens, with which they’ve market making preparations, to mint USDf as a sneaky manner of cashing out from their holdings.
An analogous tactic, utilized by Curve Finance founder Michael Egorov, blew up final 12 months in a spectacular liquidation cascade that noticed the CRV token’s value plummet by 30%.
