Capital Efficiency Optimization in Falcon Finance
One of the most significant contributions of Falcon Finance lies in its approach to capital efficiency. Traditional DeFi lending protocols often lock assets in static positions, leading to underutilization of collateral. Falcon Finance enables users to unlock liquidity without liquidating their underlying assets, allowing capital to remain productive. This dual utility of assets aligns with financial theories on optimal capital allocation, where maximizing output per unit of capital is critical. By reducing idle collateral, the protocol enhances system-wide efficiency while maintaining conservative risk parameters through overcollateralization.
