In the world of DeFi, when you collateralize assets to borrow money, does your coin just 'lie flat'? Most platforms indeed operate like this—your BTC and ETH are locked in contracts, serving only as collateral and nothing more.
However, Falcon Finance (FF) did something disruptive: it allows your collateralized assets to earn money secretly while lending to you.
This is not magic, but a clever financial design. I spent a week deeply researching it and finally understood what is so impressive about its 'innovative minting model'.
1. Core concept: When collateralization turns into 'risk renting'
In the traditional model, mortgaging is like 'pawn' — you put the asset there, exchange it for cash, and the value fluctuations of the asset itself are irrelevant to you (until liquidation).
FF's 'innovative model' is more like 'renting.'
You mortgage assets like BTC, ETH, etc., to the protocol to borrow stablecoins USDf. But the protocol won’t let your coins sit idle — it will use professional strategies to continue 'working' and making money in the market.
A simple analogy:
Traditional model: mortgaging a house to borrow money from the bank, with the house left vacant.
FF's innovative model: mortgaging a house to borrow money, while the bank helps you rent the house out, and you can share in the rental income.
You earn from both ends: the cash borrowed + the income generated from the collateral.
Two, how is money 'born'?
FF is backed by a professional market-making team. They use your collateral for various market-neutral arbitrage strategies, such as:
Funding rate arbitrage: capturing the funding fee differences of perpetual contracts across different platforms.
Cross-exchange price differences: leveraging small price differences of the same asset across different exchanges.
Options strategy: hedging unilateral risks through combinations of options to earn volatility income.
The key is that these strategies all pursue 'market neutrality' — regardless of bull or bear markets, as long as there are market fluctuations and price differences, one can make money. It's like running a casino, not betting on price increases or decreases, but only making money from the rake.
Three, dual returns: one mortgage, two returns.
FF has designed a clever dual-token system:
Step one: you mortgage assets to mint stablecoins USDf (which can be withdrawn for use at any time).
Step two: if you are not in a hurry to use cash, you can deposit USDf back into the protocol vault to earn sUSDf (yield-bearing token).
The value of sUSDf will automatically grow over time because it accumulates all the profits from the strategies behind it. The more sUSDf you hold and the longer you hold it, the more you share in the profits.
In simple terms, you get:
✅ Immediate liquidity (USDf)
✅ Collateral income (strategy profit)
✅ Stablecoin compound interest (sUSDf appreciation)
Four, why is this model more sustainable?
Many DeFi projects rely on crazily issuing tokens to pay high yields, which are destined to be unsustainable. FF's profit sources are completely different.
Not relying on token inflation: profits come from real financial market arbitrage.
Proven strategies: the team has many years of institutional market-making experience.
Risk control first: all strategies come with hedges and require over-collateralization (110%-116%).
This means that even in a bear market, the strategy may still be profitable. The returns may not skyrocket, but they will be more consistent and robust.
Five, what does this mean for ordinary users?
Say goodbye to 'opportunity cost' anxiety: mortgaging assets no longer means missing out on price increases. Your coins continue to participate in the market while lending you money.
Enhancing capital efficiency: one asset that simultaneously addresses 'liquidity needs' and 'yield needs.'
Suitable for long-term holders: if you are optimistic about certain assets but need money in the short term, this is currently the most elegant solution.
Final thoughts
Falcon's innovative model actually addresses a fundamental question: can the value of assets on the blockchain be more fully realized?
In traditional finance, your stocks and bonds become dead after being mortgaged. But on a programmable chain, assets can be 'mortgaged while still working.'
This may be what DeFi should look like — not simply copying traditional finance, but using code and smart contracts to create a more efficient and flexible new form of finance.
If you are also a long-term holder or tired of the 'mortgage equals freeze' experience, FF's system is worth your in-depth study. In the wildly fluctuating crypto world, allowing assets to safely do two things at once is itself a huge advantage.
After all, in this era, the most expensive thing is not money, but the ability to make money never sleep.
@Falcon Finance #FalconFinance $FF
