How to Earn Higher Returns on Stablecoins Using Falcon Finance

Earning on stablecoin holdings can often feel like a challenge, with traditional options on centralized exchanges or within DeFi protocols sometimes offering modest returns. Falcon Finance is designed to increase earnings from stablecoins through a next-generation synthetic dollar protocol using advanced yield generation strategies. This article will guide you through the step-by-step process of earning yield with Falcon Finance using stablecoins as collateral.

The Dual Token System: USDf and sUSDf

Falcon Finance operates on a dual-token model to facilitate its yield generation and synthetic dollar functionalities:

• USDf: This token serves as an overcollateralized synthetic dollar, pegged to the U.S. dollar. It is minted when users deposit eligible collateral into the protocol. For stablecoin deposits, USDf is minted at a 1:1 ratio to the USD value of the deposited assets. When non-stablecoin assets like Bitcoin or Ethereum are used as collateral, an overcollateralization ratio is applied, meaning the value of the deposited collateral is higher than the value of the USDf minted, providing a buffer against market volatility.
• sUSDf: This is the yield-bearing token within the Falcon Finance ecosystem. Users receive sUSDf when they stake their USDf tokens. These sUSDf tokens represent a user’s share in the staking pool and accrue value over time as the protocol generates yield. Essentially, as Falcon Finance earns, the value of sUSDf increases relative to USDf.

Step 1: Deposit Stablecoins

To begin the process of earning yield with Falcon Finance, the first step is to deposit your stablecoins, which will act as collateral. As of June 2025, the synthetic dollar protocol accepts a wide variety of stablecoins: 

• Tether (USDT);
• USD Coin (USDC);
• First Digital USD (FDUSD);
• DAI;
• USDS (Sky Money’s stablecoin);
• USD1 (World Liberty Finance’s stablecoin).

There are two ways to deposit your crypto to Falcon Finance.

Connect a Wallet

You can connect your Web3 wallet (like MetaMask) to the Falcon Finance app. Once connected, you will need to specify the stablecoin and its amount you wish to deposit, then confirm the transaction directly from your wallet. You’ll need to wait for the transaction to be processed on the blockchain (it usually takes under 1 minute).

Crypto Exchange Transfer

Alternatively, the protocol provides an option to transfer crypto from a centralized exchange. If this option is chosen, Falcon Finance will provide a unique deposit address for your account with a QR code for easier copying, to which you can send your stablecoins.

Step 2: Mint USDf

Once your stablecoins are successfully deposited into your Falcon Finance account, the next step is to mint USDf tokens. This process involves swapping your deposited stablecoins for USDf.

Users can mint USDf directly on the Falcon Finance “Mint” page. As an alternative, it’s also possible to swap USDf tokens in a decentralized exchange CoW Swap. Recently, Falcon also introduced an “Innovative Mint” service, allowing experienced investors more flexibility by adjusting risk levels and collateral lockup durations when minting USDf.

Step 3: Stake USDf

With USDf tokens in your connected wallet, you are now ready for the final step to begin earning: staking your USDf. This is where the sUSDf token comes into play. When you stake your USDf tokens in the Falcon Finance app, you will receive sUSDf tokens in return. These sUSDf tokens are locked in an on-chain vault and represent your staked principal plus any accrued yield. Falcon Finance offers different ways to stake, catering to varying risk appetites and investment horizons.

Classic Yield

This standard staking option in Falcon Finance called  “Classic Yield” allows you to earn a base yield rate. While this rate is designed to be competitive, a key feature is its flexibility: there is no lockup period, meaning you can choose to unstake your capital at any time.

Boosted Yield

For users willing to increase APY rate and get bigger returns, Falcon Finance offers a “Boosted Yield” feature. By choosing a fixed lockup period, you can receive a percentage “boost” on top of the basic yield rate. The available options are:

1. 3-month lockup: 5% higher APY.
2. 6-month lockup: 25% additional boost to the current yield rate.
3. 12-month lockup: 50% boost to the yield.

For example, if the basic yield APY is 10% and you stake 1,000 USDf, then:

• With a 3-month lockup, your APY would effectively be 10.5%.
• With a 6-month lockup, your APY would effectively be 12.5%.
• With a 12-month lockup, your APY would effectively be 15%.

It’s important to note that the underlying yield rate in Falcon Finance is not fixed and can fluctuate based on the protocol’s performance and market conditions. However, the percentage boosts for the lockup periods will remain active for the duration of your chosen term. This strategy allows Falcon Finance greater certainty for capital allocation into time-sensitive strategies, thereby enhancing potential returns.

Step 4: Unstaking

When your locked staking period matures (for Boosted Yield positions), or at any time if you opted for Classic Yield, you can unstake your funds. This process involves exchanging your sUSDf tokens back to USDf tokens based on the prevailing sUSDf-to-USDf value, which reflects your initial stake plus the accumulated yield.

After confirming the unstaking operation, USDf tokens get deposited to your connected wallet’s address.

Step 5: Redeem

The final step is to redeem your USDf tokens back into the stablecoin of your choice. With the unstaked USDf tokens in your account or connected Web3 wallet, you can navigate to the “Redeem” page on the Falcon Finance platform. Here, you will need to specify the amount of USDf you wish to redeem and select the stablecoin you want to receive in return (e.g., USDT, USDC, USD1, or other supported stablecoins). This allows you to convert your earnings and initial capital back into a familiar stablecoin format. After a 7-day cooldown period, you will get stablecoins back in return for USDf.

Final Thoughts

Falcon Finance presents a structured pathway for users looking to earn yield on their stablecoin capital. The protocol has all the necessary tools for efficient depositing, minting, staking, and redeeming crypto capital, with several steps offering multiple options to cater to diverse user preferences and risk profiles. 

By supporting a wide range of stablecoins and altcoins, employing a range of institutional-grade yield generation strategies and a robust risk management framework, Falcon Finance aims to deliver competitive and sustainable returns for individual, professional or even institutional crypto investors.