After working in traditional finance for over ten years, I only started to get involved in the DeFi space this year. A friend told me that not understanding blockchain finance is out of date, so I forced myself to start learning various decentralized protocols. After trying out several mainstream platforms, I recently focused my attention on Falcon Finance. My experience using it over the past month can be described as mixed feelings.
As a traditional finance practitioner, what I value the most is risk control and asset security. My first impression of Falcon Finance is that its risk control mechanism is relatively complete, at least much more reliable than a small platform I used before. The platform has a clearing mechanism that automatically triggers when the collateral ratio falls below the safety line, which feels somewhat familiar to me, similar to the margin system in traditional finance. However, during actual operations, I found that the setting of the clearing threshold is a bit too aggressive. One time, when I was borrowing against my collateral, the market fluctuated slightly and triggered a clearing warning, which scared me into quickly adding more collateral.
Compared to Compound, Falcon Finance has a higher collateral requirement. On Compound, I can borrow with a 75% collateral ratio, but on Falcon, it is only about 65%. This means I can borrow less money for the same amount of assets. Although this is safer, the efficiency of capital utilization is indeed lower. I understand that new platforms need a more conservative strategy to reduce risk, but I hope that as the platform matures, this ratio can be adjusted appropriately.
The lending rate is another point that troubles me. Falcon Finance uses an algorithmic interest rate model, where the rate is automatically adjusted based on the utilization of the fund pool. It sounds reasonable in theory, but in practice, I found the rate fluctuations to be too frequent. I borrowed a stablecoin last week, and the annualized interest rate was 6%, but after two days it soared to 12%. Although it eventually dropped back down, this uncertainty makes it difficult for me to make long-term plans. In contrast, Maker DAO's stable fee rate adjustments are much more moderate; although they also change, at least there is a governance proposal process that gives users ample time to prepare psychologically.
Speaking of governance, this is also something I want to complain about. Falcon Finance has its own governance token, and in theory, token holders can participate in platform decision-making. I also bought some tokens to participate in governance, but found that the voting threshold is set too high. A certain amount of tokens is required to initiate a proposal, which is basically unattainable for ordinary users. Moreover, voter participation is very low; many proposals have a voting rate of less than 10%. This reminds me of traditional company shareholder meetings, where most retail investors have no voice, making the DeFi concept of decentralization feel compromised here.
Let’s talk about cross-chain functionality. Falcon Finance supports multi-chain operations, which I really need because my assets are spread across different chains. However, the cross-chain bridge experience is not ideal; not only are the fees relatively high, but the speed is also not fast enough. I waited almost an hour for assets to transfer from Ethereum to the BSC chain, and at one point it showed the transaction failed, which gave me a scare. Later, I used the Multichain cross-chain bridge; although the fees were similar, it was much faster, generally completing in about ten minutes.
I think the data display is done quite well. As a finance practitioner, I am accustomed to viewing various charts and data analyses. Falcon Finance’s dashboard provides relatively detailed information on asset distribution, yield curves, etc., which allows me to monitor my investment portfolio better. However, I have a small suggestion: I hope they can add a historical data export feature to facilitate further analysis and tax reporting.
Finally, let's talk about the token economic model. I researched Falcon's token distribution plan and found that the proportion of the team and early investors is not too high, which is commendable. However, I think the rhythm of token releases can be optimized; currently, the amount released each month is a bit too much and can easily cause selling pressure. Taking a cue from Curve’s veCRV model, reducing circulation through locking tokens while providing more benefits to long-term holders may be more conducive to stabilizing token prices.
After a month of use, my feeling about Falcon Finance is that it has good potential but still needs time to grow. For someone like me who has transitioned from traditional finance, this platform offers a relatively easy entry point, but there is still a long way to go to truly make it user-friendly.
@Falcon Finance #FalconFinance $FF
