USDF, a stablecoin with a market capitalization exceeding $540 million, briefly lost its peg earlier today. The incident raised concerns due to USDF’s ties to DWF Labs, a firm closely linked to Donald Trump’s crypto initiatives.

Falcon Futures, the issuer of USDF, stated the stablecoin is 116% over-collateralized. However, transparency around the reserves remains limited. Most collateral appears to be held off-chain, and the specific assets backing the stablecoin have not been disclosed.

Community Concerns Around USDF

Thanks to its partnership with DWF Labs, Falcon Finance’s USDF stablecoin had a strong start, reaching a $570 million market cap less than four months after launch.

However, its recent depeg has drawn considerable community scrutiny. For most of an hour, the USDF completely lost parity with the dollar, falling as low as 94.3 cents per token.

A closer look at the project’s financials has raised even more questions. Falcon Futures and DWF Labs both made statements about the stablecoin, claiming that it has 116% over-collateralization.

However, Falcon’s own data shows that more than $609 million of this is stored off-chain, compared to a measly $25 million in on-chain reserves.