If one day you lay out all your 'earning USD' products on the table — bank wealth management, CEX Earn, various on-chain pools, plus Falcon — you will discover a painful fact: the vast majority of people only care about one number, the APY points, and very few seriously ask: in this relationship, who owes whom, and which side of the contract do I stand on?
Let’s start with the most familiar bank wealth management. Whether it’s wealth management, structured deposits, or those fancy products, the essence is the same: you hand your money over to the bank or asset management institutions, and in return, you get a contract that specifies the returns, default responsibilities, and payment priorities. Legally, you hold a debt claim against the institution, and your risks and rights are outlined in the contract terms — it can be 'principal and interest guaranteed', or 'non-principal floating income', but ultimately, you are asking: will this institution pay me back, and where do I stand among all its creditors? The sense of security in bank wealth management mostly comes from the implicit safety net provided by regulation and licenses, rather than the underlying assets being completely risk-free.
Looking again at CEX Earn, the reason this thing is dangerous is that it looks very similar to bank investments: you click in, choose a product, lock in days, show an expected yield, and that's it. But ask yourself: do you really know what your money is being used for? Most of the time, you are providing a source of funds to centralized exchanges and their counterparties—maybe for market-making, maybe for institutional lending, maybe for various internal business configurations of the platform. How is the contract written? It's written in a very vague user agreement: 'The platform has the right to use assets for..., and you agree to bear the related risks.' The risk is concentrated in one point: platform credit and opaque counterparties. Once the platform has issues, even if the blockchain is transparent and the returns look good, you may not even be able to tell where your money stands in the bankruptcy queue.
Then we shift our perspective to Falcon. Here, the contract relationship takes on a different flavor. You are not simply 'lending money to some institution', but rather stuffing a basket of qualified assets into an over-collateralized framework, allowing them to transform into two different forms of synthetic USD: USDf and sUSDf, on a visible asset-liability table. What you provide is collateral, and in return, you receive a dollar position with a strategy engine, with the main risks written in three lines: the volatility and quality of the collateral assets themselves, the security and parameters of the protocol and custodians, and the performance of the strategy combination. What you need to worry about is no longer 'will this company run away without returning my money', but rather 'is the asset structure on this table healthy, are the parameters conservative, and is the strategy diversified enough?'. This does not mean that institutional risks have disappeared—after all, custodial and CeDeFi architectures still have specific service providers—but it means that single-point credit risk is spread back into the entire system of 'collateral + rules + execution'.
If we summarize these three relationships using a 'verbal form', it would look like this:
In the bank section, when you hand over money, you receive a written debt contract in return; you owe the other party trust, and the other party owes you repayment of principal and interest according to the contract.
In the CEX Earn section, you hand money over to the platform, providing actual funds to support a bunch of businesses you cannot see, and you also owe it a trust of 'I believe you won't run into trouble', and if something goes wrong, whether you can escape entirely mainly depends on how the platform ranks you as a creditor.
When it comes to Falcon, the relationship changes to: you let the assets enter a transparent collateral and strategy table, and what the system owes you is the responsibility to 'maintain Peg according to the rules, execute risk control, and disclose externally', while you accept the overall volatility and drawdown of this table. You are not just a simple creditor; you are more like someone who has moved assets into a machine you can understand, willing to bear part of the risk budget for its structure.
When you compare it this way, you will find that the 'contract differences' are actually written in that one crucial sentence—if something goes wrong, who owes whom, what is owed, and where do you stand. Bank investments ask 'Will this institution default, and will regulation cover it?'; CEX Earn asks 'If the platform has issues, will my name still be on the bankruptcy list?'; Falcon asks 'Do I understand the security boundaries of this entire collateral and strategy system, and can I accept the worst outcomes?'. They all call it 'yielding USD', but the underlying legal relationships and risk structures are completely different.
Behind this, there is actually a significant change in rules. In the past, the order in which everyone made decisions was often: who offers me the highest APY → throw money in first → then slowly ask 'what exactly is this thing?'. Now, if you want to incorporate Falcon into your toolbox, the order should be reversed: first, look at which side of this relationship you are on, whether you're a creditor, depositor, or mortgagor; then check where the risks are written, whether it's about the credit of a single institution or a complete combination of assets + parameters + strategies; finally, look at the APY, whether it is within this structure and in the range you can accept. You are no longer just picking the 'sweetest rate', but choosing a contract relationship that you are willing to bear and understand.
Azu's own experience is: once you clarify 'who owes whom', your fears and greed regarding various USD products will quiet down a bit. You will know that bank investments are suitable for putting in that kind of money that 'I don't want to manage the structure, I just want extremely high security'; CEX Earn is only suitable for taking a small piece of 'I am willing to bet on the platform's credit but cannot be too large'; while Falcon's system of over-collateralization + transparent parameters + multi-strategy combination is suitable for that portion of funds you plan to hold long-term in USD terms and are willing to spend time understanding the risk structure. Different positions naturally lead to different uses.
So for today's action suggestion, I really hope you take action rather than just watching and liking it: list all your current 'USD investment' products— including banks, CEX, on-chain protocols, and Falcon— and for each one, write one sentence: here, am I the lender, depositor, or mortgagor? Who is the counterparty? What would the worst-case scenario look like? After you write these sentences, look back and see which ones are truly worth increasing your position, which ones are only suitable for a small trial, and which ones you should exit completely; you will have a much clearer understanding.
When you start to differentiate yielding USD using 'contract position' and 'where the risks are written', rather than just looking at whose annualized return looks better, you have already upgraded from a retail investor chasing interest rates to a participant who selects battlefields. At that point, adding Falcon is only appropriate when it is at the right position.
