Algorithmic / under-collateralized stablecoin

Evidence summary #

USDf is NOT algorithmic or reflexively under-collateralized. Backed by real assets (stablecoins, BTC, ETH, altcoins, RWAs) via off-chain custody. Key structural risks: (1) yield and peg stability depend on funding rates being non-negative or offset by altcoin staking; (2) insurance fund is ~$10M (~0.62% TVL) — thin; (3) custody concentrated in 2 venues (Binance/Bybit) vs Ethena's 4–5; (4) overcollateralization ratios dynamic and undisclosed. No depeg events in 12 months. sUSDf APY declined from ~21.7–22.6% (early 2025) to ~8.7% (2026) — normal market compression, not distress. Peer (Ethena) also scored yellow.

Detail #

Docs confirm overcollateralization: 'value of the collateral consistently exceeds the value of the USDf issued.' Insurance fund on-chain: 10,000,000 USD1 + 1,256 USDf at 0x432CDcc4516B21302985b639Ef9a7853727A4e49 = ~$10.0M. Coverage ratio: $10M / $1.618B = 0.62%. Ethena peer: $62M / $3.79B = 1.64%. APY data: MEXC article cites 21.7–22.6% APY (early 2025); WebSearch 2026 results cite ~8.7–11.8% current. Docs confirm 9 yield strategies including negative funding rate arbitrage (reversed positions) as mitigation. Venues: Binance + Bybit only (docs confirm, no third venue publicly disclosed). Custody: Fireblocks CVA + Ceffu MirrorX (docs confirm).

Sources #

Methodology #

Classify whether the protocol is an algorithmic or under-collateralized stablecoin design per curator classification.

See the full factor methodology and distribution across all protocols →