Insurance Fund

Falcon will maintain an on-chain, verifiable insurance fund to act as a safeguard for all protocol users. A portion of Falcon's monthly profits will be allocated to the insurance fund, reinforcing its commitment to users’ asset protection.

This ensures the insurance fund grows in tandem with the protocol’s adoption and Total Value Locked (TVL). The insurance fund operates as a financial buffer, designed to mitigate rare periods of zero or negative yields and function as the last resort bidder for USDf in open markets.

In an unlikely scenario, Falcon may augment reserves during periods of exceptional market stress to ensure the protocol’s stability. Besides serving as a financial buffer, the fund also serves multiple other purposes, including compensation for unforeseen risks, and mitigation of potential losses.

The insurance fund is held in a multi-signature address comprising of internal Falcon members and potential external contributors.