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Falcon Finance, the synthetic dollar protocol that’s been on a tear all through 2025, has just shipped another new product – and this one’s sure to tempt DeFi users looking to have their cake and eat it. Or to be more precise, looking to have their crypto and earn from it. The protocol, whose TVL now exceeds $2B, has unveiled staking vaults that deliver an alluring APR paid out in the form of its native USDf stablecoin.

The move is likely to tempt DeFi users looking to do more with their assets while capitalizing on the upside in potential growth of their crypto collateral. After depositing their chosen crypto into Falcon’s staking vault, users can earn passive interest on their holdings without needing to do anything else. This “set and forget” strategy offers returns of up to 12% APR, which far exceed those available from other onchain activities such as Layer 1 staking.

Staking for Hardcore Holders

Falcon’s new staking vaults have been designed to address the binary choice that DeFi users currently face: hold a volatile asset to capture potential long-term price appreciation or swap it for yield-bearing stablecoins, thereby losing exposure to the original asset’s upside.

Falcon’s staking vaults solve this dilemma by allowing users to lock governance tokens, starting with $FF, and to earn yield in USDf. While savvy DeFi investors will be the primary beneficiaries of this innovation, it naturally benefits Falcon too, since it will effectively remove a significant proportion of its governance token from circulation while simultaneously expanding its utility.

Productive Escrow for the People

The crypto staking vaults developed by Falcon utilize a “productive escrow” model. They essentially eliminate many of the risks associated with liquidity provision, such as impermanent loss, and in the process overcome the issue of over-collateralization, which makes DeFi lending an inefficient use of capital. Instead, users just need to choose their crypto – once the vaults are expanded to accept more than just $FF – and then let time take care of the rest.

Speaking of time, it should be noted that these vaults aren’t designed for high time-preference yield-chasers looking to jump between protocols: there’s a minimum 180-day staking period, followed by a three-day cooldown. Once assets are locked into a vault, they can’t be touched for six months. The sweetener, however, is the 12% APR that will be earned in the interim, coupled with the potential for the underlying asset to rise in price.

Yield on Tap

Falcon Finance believes the model it’s pioneered represents a divergence from the standard yield farming mechanics widely used in DeFi. It’s more common for protocols to incentivize staking by emitting their own governance tokens. While this produces headline APYs, the flipside is that it creates long-term sell pressure on the token since stakers liquidate rewards to realize profit.

Because it’s paying yield in USDf rather than printing more $FF, however, Falcon is able to mitigate the inflationary dilution of its governance token while providing stakers with steady earning opportunities. This structure will naturally appeal to high-conviction holders who have a longer time horizon rather than active traders seeking agility. 

While it takes a brave analyst to predict where the crypto market will be by mid-2026, this much can be said for certain: Falcon has demonstrated that it’s a shrewd operator in developing products that resonate with DeFi users. If it can keep innovating at its current rate, its staking vaults are likely to fill up fast while helping to reduce sell pressure on $FF. In the process, it will spotlight Falcon’s ability to generate sustainable yield whatever the weather.