Collateral Acceptance & Risk Framework

Falcon Finance maintains a data‑driven framework for selecting the Supported Collaterals that can be pledged to mint USDf. The objective is to safeguard USDf’s peg and ensure that all accepted assets exhibit sufficient market liquidity, price transparency, and risk‑adjusted resilience.

These guidelines are reviewed periodically and may be updated in response to evolving market conditions or regulatory requirements.

Eligibility Screening Workflow

	Stage	Check	Decision Logic
1	Primary Listing	Is the token listed on Binance Markets?	No → Reject Yes → proceed to Stage 2
2	Market Availability	Is the token available in both Spot and Perpetual Futures on Binance?	Yes → Accept Only Spot or Only Futures → proceed to Stage 3 Neither → Reject
3	Cross‑Exchange Verification	Is the token listed on Top‑10 CEXs or leading DEXs with verifiable depth and non‑synthetic volume?	Yes → Accept No → Reject

Tokens that pass all three stages are classified as eligible collateral and can be accepted on Falcon Finance.

Quantitative Risk Assessment

Each token is scored across four market‑quality dimensions.

A color‑coded tier (🟢 Low, 🟡 Medium, 🔴 High) is assigned per factor.

Risk Factor	Low Risk 🟢	Medium Risk 🟡	High Risk 🔴
Liquidity on Binance - Daily Spot + Futures volume	More than USD 5M	USD 1M - 5M	Less than USD 1M or only illiquid pairs
Funding Rate Stability	Consistently positive/neutral Minimal spikes	Occasional negative or spiky funding Slight inconsistencies	Highly negative or volatile funding rates Historically unstable
Open Interest	Stable and high Open Interest (more than USD 5M), indicating sustained trader interest	Moderate Open Interest (USD 1M - 5M), with noticeable fluctuations	Low Open Interest (less than USD 1M) or frequent drops, with sudden wipe-outs
Market Data Sources	Cross-listed on Top 10 CEXs & DEXs Low slippage Deep books and consistent volume	Listed on mid-tier exchanges Moderate slippage Lower depth	Illiquid DEX listings only Poor price discovery Lack of external validation

Composite Risk Grade

• An asset is Eligible when no factor is rated 🔴 and ≤ one factor is 🟡.

• Assets with two 🟡 scores are Conditionally Eligible and may receive a higher overcollaterization ratio.

• Any 🔴 score triggers Rejection or immediate review if already listed.

Overcollaterization Ratio

Falcon applies dynamic overcollaterization ratios that reflect the composite risk grade and underlying asset volatility. Specific ratios are published on the Falcon Finance Mint page and may change as market conditions evolve.