Not relying on liquidation for stability: Falcon Finance's risk control logic
In most collateral agreements, risk management is almost synonymous with the "liquidation mechanism".
Once the market declines, liquidation becomes the only means.
Falcon Finance has chosen a different path.
It does not deny the necessity of liquidation, but does not regard it as the only safety valve; instead, it disperses risk through a more proactive and structured approach.
First, there is over-collateralization and differentiated parameter design.
Different assets are not treated "equally"; rather, they are assigned different weights based on volatility, liquidity, and correlation. This practice prevents systemic risk from being amplified by a few high-risk assets.
Second, there is a buffer design between collateral value and USDf issuance.
This buffer is not static but can be adjusted according to market conditions, allowing the system greater self-repair space during extreme fluctuations.
Additionally, Falcon Finance emphasizes on-chain transparency and automatic execution.
Rules are written in contracts rather than relying on human judgment. This approach, while seemingly cold, is precisely the foundation for long-term stability.
Risk has not been eliminated; instead, it has been decomposed, dispersed, and quantified in advance.
This is a risk management approach that leans more towards "infrastructure thinking".
@Falcon Finance #FalconFinance $FF
