Old players in the crypto space understand a pain point: holding appreciating assets that they don't want to sell, but urgently needing cash. The traditional routes either involve painful losses or tedious lending processes—over-collateralization, liquidation risks, interest rate fluctuations... Not to mention the hassle, it’s also easy to miss market opportunities.
Recently, there’s a project called Falcon Finance that has come up with a quite attractive slogan: 'No need to sell coins, still get cash.' Upon closer examination, it’s actually working on an 'upgraded version of mortgage loans,' but the gameplay design is somewhat interesting.
1. Core Logic: Put your assets 'out there' to exchange for stablecoins.
Falcon's basic approach is not complicated: you deposit your assets (like BTC, ETH, or even tokenized treasury bonds) as collateral, and it mints a synthetic dollar stablecoin called USDf for you at a certain ratio. You can withdraw these USDf to use them for buying coins, payments, or mining, while your originally deposited assets remain locked in the protocol, allowing you to continue enjoying price fluctuations—doesn't it sound a bit like 'monetizing assets'?
The key here is the collateralization ratio:
If it's a stablecoin like USDC or USDT, you can almost exchange it 1:1 for USDf without any loss.
But if it's something volatile like BTC or ETH, then you need to 'over-collateralize' (for example, if it's worth 10,000 dollars, you can only borrow 6,000 to 7,000), leaving a safety cushion to prevent insolvency from a sharp drop in coin prices.
Not only can you borrow money, but it can also 'automatically generate money.'
If it's just collateralized lending, then there's not much difference from Aave or Compound. Falcon has created a dual-token model:
USDf: the stablecoin that can be used anytime.
sUSDf: if you stake USDf back into the protocol, you will receive this yield token. It does not pay fixed interest, but rather appreciates in value itself—the protocol takes the collateralized assets to implement some 'institutional-level strategies' (like arbitrage, neutral trading, etc.), and the profits reflect in the price of sUSDf, so when you want to exit, 1 sUSDf can be exchanged for more USDf.
In simple terms, you can borrow money against collateralized assets and also deposit the borrowed money for automatic wealth management, without delaying either side. Of course, the returns don't come for free; there are agreements behind the scenes helping you invest, and you have to bear the risks.
Ambition is not small: not only cross-chain, but also bringing 'real assets' onto the chain.
Falcon has put effort into interoperability: USDf is designed to circulate across chains, usable on Ethereum, Arbitrum, Polygon, etc., making liquidity less likely to be fragmented.
Moreover, it has already started accepting tokenized U.S. Treasury bonds and institutional financial instruments as collateral for these 'real-world assets.' This means that in the future, you might even use bonds or stock tokens to collateralize borrowing USDf—if this works out, it would mean integrating the asset pools of DeFi and traditional finance, which opens up significant possibilities.
Wool and risk coexist: why do they say it's 'not simple'?
Falcon has designed an incentive system called 'Falcon Miles' to encourage users to deposit assets, provide liquidity, stake, etc., likely a prelude to issuing governance tokens in the future.
But the risks are also apparent:
Cascading liquidation risk: if the collateralized volatile asset (like BTC) crashes, even over-collateralization may trigger liquidation, and your position may be sold off at a discount.
Where the yield comes from: the appreciation of sUSDf entirely depends on the protocol's investment capabilities; if the market is bad or strategies fail, the returns may not meet expectations.
Regulatory gray area: once tokenized treasury bonds and other real-world assets are introduced, compliance issues become complicated, and it might be halted one day.
Tethered trust: whether USDf can always maintain 1 dollar depends on whether the collateral is sufficient and whether the arbitrage mechanism is responsive—any story of an algorithmic stablecoin collapsing, we have all heard.
What problem does it actually solve?
In my view, Falcon is not just addressing the surface demand for 'borrowing,' but is attempting to resolve the deeper contradictions of 'capital efficiency' and 'continuity of returns.' Many large holders and institutions are reluctant to frequently trade assets, yet have cash flow needs while not wanting to leave funds idle. Falcon essentially provides a channel where 'assets can keep moving, and money can also flow,' and attempts to automatically generate returns through strategies, allowing funds to self-accumulate within the channel.
Conclusion: worth paying attention to, but don't get too carried away.
Falcon Finance is essentially a synthetic protocol of 'collateralized debt + asset management strategies,' with the ambition to bridge multiple chains and asset classes, creating a universal on-chain liquidity hub. The approach is quite avant-garde, especially suitable for players who are optimistic about long-term holdings but need flexible cash flow.
But after all, it is a complex system, and both returns and risks are embedded in the mechanisms. If you are interested, it is recommended to start with a small amount to understand the liquidation conditions and sources of returns—don't just rush in because of the phrase 'no need to sell coins.' In the DeFi world, new stories are always emerging, but those that survive long-term are always the projects with sound risk control that can genuinely generate real returns.
Will Falcon become the next infrastructure giant? Time will tell. But at least it points to a trend: the future of on-chain finance must be about asset interoperability and automated returns. And we are all on that journey.
@Falcon Finance #FalconFinance $FF
