The first time I had to sell an asset which I believed in, I remember. It wasn't a choice. I did not have another choice but to take money immediately. I could observe the price grow some months later, and I acquired the silent lesson of how painful the untimelyness is. The reason why most of us sell is not that we want to, life requires liquidity when it is needed the most.
Falcon Finance was developed as a solution to that particular pain. It satisfies one impatient idea we are all in, and that is: I want the money, but I do not want to sell.
The idea is straightforward. You make collaterals out of your real-life assets in the form of crypto or tokens. You, in your turn, mint USDf, the stablecoin which retains its value. You are not selling off your long term holdings to gain any spending power.
However, I have observed that another stable coin is not the true ambition. Falcon is working to develop a collateral engine that is universal. It accepts various resources, being both volatile crypto and tokenized Treasury bills, and composes all these into a single entity, stable, usable liquidity.
This is important in that crypto has never been unified. Years of belief have been built by a group of believers based on the system that promotes continuous trading. The majority of protocols forcefully put you into selling. Falcon has the more complicated way out: he borrows you instead.
There are two tokens. USDf is what you will use and sUSDf is what you will receive in case you stake USDf to earn your yield. The two-need design differentiates two needs. One is in the form of instant cash. The other one is emotional- you desire to see your parked money increase as you wait.
I have heard of yielding stablecoins, and most of them are typically backed by weak incentives. The yield of falcon is based on actual performance of strategy. It is accrued to holders of sUSDf. That was a key detail for me. The system is not running in one smart-contract loop, but runs between venues with the trust being provided by the use of transparency.
This is unlike a simple on-chain model of borrowing. The old school systems are viciously unsophisticated: over-secure and automatic liquidate. Benefits Falcon also employs over-collateralization although it presents this in the form of a managed balance sheet. Constant collateral mints at an almost one to one. A huge buffer is necessary in volatile assets.
Such a buffer is a border of relationships. It states that first protecting the system is itself. What you acquire depends upon rules you assented to the issuing of.
There are two minting paths offered by Falcon. Classic Mint is direct to the point. Innovative Mint is more similar to organised finance. You secure collateral over a determined term on varying efficiency. This variety is refreshing. Different individuals desire different credit profiles and Falcon attempts to accommodate the two.
Then there is the actual challenge; departure. Falcon has seven days of redemption. I felt frustrated first of all. We desire our money at our own disposal.
However, I saw that the cooldown indicates the truthfulness of Falcon regarding yield systems. When collateral is in the field, you cannot always undress at the spot without castrations. The cool-off period is a precautionary measure on hectic days. It safeguards the timid user not the sedate one.
KYC is another useful piece of information. You directly need to be verified to mint and redeem with Falcon. USDf is still available to purchase in exchanges such as Binance. This constrains the direct arbitrage which typically sustains a peg. It is the decision that slopes more towards compliance, so that the system is not entirely permissionless.
The structure employs custodian associates and off-chain implementation. In the case of such a hybrid system, transparency is all. Falcon focuses on the attestations of proof-of-reserves and regular dashboard refreshments. In case part of the assets is off-chain, establishing that they exist is the basis of trust.
They also have an insurance fund. It backs rare bad periods. Since you like or hate such funds, they are hardly financial, at least in purpose. They want to prevent a temporary decline into a death spiral.
It is the real frontier the collateral. Falcon discusses the incorporation of real-life tokenized asset such as Treasuries, sovereign bills and gold. This shifts the thesis. It is not only the act of lending against crypto. It is collateraling a diversified and tokenized portfolio. It makes on-chain finance experience like the advanced balance-sheet control of conventional wealth.
The last test will be governance. The FF token is to be used in the future governments. The difficult question is what an administration is able to control in a custodian partners system where and how functioning is limited. Systems of credibility are explicit regarding these borders.
and what do you measure of this without being mesmerised at ease? I put it under the human flack test.
What becomes of time when the low lying land gets lost? Is the system risk taking or yield falling?
When attempting to stampede out what occurs? Is the cooldown implemented as a safeguarding process or does it create a crisis since people wanted cash immediately?
How does it work when tokenized physical assets encounter the actual realities such as delays in settlement, or issuer risk? Does the structure adhere to it, or feign that it is as liquid as crypto?
What happens after a shock? Does this make the transparency reports sufficient to regain trust in the shortest time possible?
In case Falcon is successful, it will be boring in the best sense. You will use it without drama. It will not make you to sell your belief.
In case of failure it is probable that it is not due to one universal collateral. It is a dance of danger, caring, action and delegate. Markets just require one weak point at the wrong place.
That is as unadulterated as it gets. Falcon is struggling to create infrastructure to a very human want. We would like not to lose interest in what we believe in, and we live in the world where liquidity is of daily concern.
$FF #FalconFinance @Falcon Finance #falconfinance
