Falcon FUD
1. The author of the Tweet is a Streamfi fund operator.
2. The main point is that Falcon's stablecoin, USDf, was issued with ‘illiquid’ assets as collateral, while the information regarding the collateral was not transparent.
According to Llamarisk's analysis:
- Falcon's mismanagement could lead to a collateral shortage if damages are incurred.
- USDf can also be issued using altcoin collateral such as DOLO, and minting can exceed its market cap.
- A detailed collateral composition dashboard is missing.
- The oracle for collateral is not specified, exposing it to attacks such as oracle manipulation.
- There is a risk of using external DeFi (collateral losses if those DeFi platforms collapse).
- There is a lack of transparency regarding yield sources.
- There is a lack of explanation regarding the arbitrage strategy.
- An Insurance Fund is mentioned but is not open to the public.
- Innovative Minting is akin to buying and selling call options, but the exact process is not specified, raising centralization concerns.
- There is no unstaking period, so an MEV attack is possible when rewards (currently Miles) are distributed (which seems to be the case).
Pagu's Opinion:
Most of these are valid 'risks', but I think it’s up to whether or not to trust DWF.
Especially the lack of explanation regarding the arbitrage strategy and the issue of centralization in the Innovative Minting process, um... I think it’s a bit nonsensical.
Regarding the unstaking period, if it accumulates based on time weighted on the server, there shouldn’t be a problem in terms of points.
Mismanagement is also a concern for all other projects.
I hope Falcon can fill in the remaining information gaps regarding collateral composition, oracle transparency, and the deposit status of external DeFi assets other than the arbitrage mentioned in the report.
It’s a reasonable 'risk', but it’s a 'possibility', so keep an eye on the situation and make a judgment wisely.
By the way, 0xlaw, who posted the tweet, is also an on-chain fund manager in a competing position.
Usually, this kind of FUD from competitors is a good signal that the project is growing well, since FUD usually stems from zeal.
I’m just going to say it since others haven’t posted this on here yet although it’s widely known. Falcon Stable holds tens of millions of dollars in bad debt and is a scam;
•Their “stablecoin” is backed by illiquid assets and holds tens of millions in bad debt as a result, and will likely be put into more
•It’s effectively an exit scheme for large baggies of some of the collateral tokens that they have deals with (including Move lmao) to extract money from retail (DWF/Rushi tag team at it again!)
•They are paying yield to users with zero clear revenue, even promising funds 40% apr deals (lol) to draw in liquidity for this
Here is a risk report by the llamarisk team highlighting these fundamental risks
Be very aware of the risks associated if you plan on or have deposited any funds here, this is not to discourage from playing this Ponzi, just to cast awareness that it is one
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