Falcon Finance is a new innovative decentralized finance (DEFI) protocol that is created to access liquidity of a vast number of real-world and tokenized assets and provide users with sustainable yield. It has its own native currency, FF, which is available on Binance and used as a governance and utility currency in the ecosystem. The main innovation of Falcon is that idle collateral could be turned into productive capital, which is conceptually represented as the process of the Borrow-Deploy pipeline.
By its very nature, the Borrow - Deploy pipeline within Falcon Finance is based on a universal collateralization infrastructure that allows users to borrow liquidity with respect to the assets they already hold, i.e., they do not need to sell them, but deploy that liquidity into yield-producing strategies. This pipeline makes use of synthetic assets, overcollateralization, and sophisticated financial engineering to ensure that capital is working more effectively on-chain.
Issue: Borrowing Synthetic Dollars (USDf)
The initial phase of the pipeline is the one that most users assume to be called as borrowing, however, it is actually the process of minting a synthetic dollar pegged asset, which is referred to as USDf. USDf is a dollar-like stable, which can be used in the entire DeFi without losing your original collateral.
Collateralization
In order to issue USDf, users post collateral that is supported, including:
Stablecoins (e.g., USDC, USDT)
Blue-chip cryptocurrencies (e.g., BTC, ETH)
Fungible assets of the real world (not mandatory, roadmap).
Usually the USDf is minted at a 1:1 ratio, although other assets have to be overcollateralised, i.e. deposited value must be greater than the USDf minted. Such over collateralization ratio is vital in ensuring stability of the system and preventing risk of price volatility.
The risk engine at Falcon regularly compares the quality of collateral, liquidity and market dynamics and real time alters the collateral requirements to maintain solvency. What comes out is a strong borrowing system that ensures that under collateralized positions do not disrupt the system.
Deploy: Borrowed USDf into Yield (sUSDf and Beyond).
Following the minting of USDf, the remaining action to be taken will be to invest this liquidity in productive strategies instead of letting it remain idle. Falcon achieves this through sUSDf - a yield bearing derivative of USDf.
Yield Generation via sUSDf
stake USDf mint sUSDf, which gains value as time passes and gains yield.
The yield is based on diversified strategies that are implemented by the inner engine of Falcon including arbitrage trades, delta-neutral strategies, funding-rate strategies and staking rewards.
This is similar to the giving of liquidity but the added advantage is that the yield will not depend on the mere liquidity provision charges. Rather, sUSDf is a proactively managed portfolio of yield sources which is responsive to fluctuating market conditions - a structure that is designed to achieve both stability and returns.
In such way, the users deploy USDf, which enhances their efficiency in terms of capital. The productivity of USDf is made possible by the sUSDf and yield accrued increases with the increase in the share value of the sUSDf in relation to USDf.
Capital Efficiency and Secondary Deployments.
The borrow - deploy pipeline does not end with sUSDf. After users contain assets of yield or USDf, they have the capability to re-invest or lever again:
Secondary Strategies
Liquidity provisioning: USDf or sUSDf may be deposited into the pools of liquidity that are decentralized.
Leveraged positions: With integrations like Euler Frontier, sUSDf can be borrowed as security to borrow other assets (e.g. USDC) to re-invest in other yield strategies.
Cross-chain applications USDf can be integrated to various networks including Base and Ethereum, so the liquidity can be transferred and implemented into other DeFi networks.
The examples of these extensions are demonstrative of the composability of DeFi - where assets are moved in and out of various protocols, where lending and borrowing, staking, and trading activities are compounded.
Risk Management and System Integrity.
The Borrow- Deploy pipeline poses several areas of vulnerability unless handled with a lot of care. Falcon Finance incorporates real-time risk controls in all the steps:
Overcollateralization buffers: It is important to note that in the event that the price of collateral moves, USDf is not going to be fully backed.
Mechanized liquidation is put in place to insure against under-collateralized borrowing positions in the system.
The accurate valuation of the collateral and liabilities is sustained by continuous re-pricing and oracle feeds.
Such protection is necessary to ensure reliance on synthetic assets such as USDf and yield mechanisms such as sUSDf.
The Role of FF Token
The FF token, which is listed on Binance and is part of the Falcon ecosystem, promotes the Borrow - Deploy pipeline by:
Offering governance rights to holders so that they can vote on collateral policies, risk parameters and strategy allocations.
Providing incentives, e.g., increased yield, decreased fees in case of participation in minting, staking, or liquidity actions.
This encourages the users incentives to the protocol health and makes them participate but keeps the governance decentralized.
Conclusion
Falcon Finance The Borrow - Deploy pipeline is a different approach to capital working in DeFi by integrating issuing synthetic assets (borrow), yield conduit layers (deploy) and secondary utility (composability) into one fluid lifecycle. Falcon extends the boundary of capital efficiency in decentralized finance by allowing users to unlock value of the current assets without selling them and redeploying liquidity in diversified yield engines.
What will come out is a complex and interdependent financial infrastructure that depicts how DeFi keeps developing to surpass mere lending and borrowing to dynamic capital orchestration - supported by sound technical and risk management structures.
