In the current DeFi ecosystem, the fragmentation of collateral and the disconnection of liquidity have become the core bottleneck hindering large-scale development.
Traditional lending protocols typically only accept a few blue-chip assets as collateral, resulting in a large amount of liquid assets (LP Tokens, yield-bearing tokens, and even RWA) being 'locked up' and unable to efficiently participate in lending and leverage cycles. Falcon Finance addresses this pain point from the ground up by launching the world's first Universal Collateral Infrastructure.
The core innovation of Falcon Finance lies in its 'Collateral Abstraction Layer + Dynamic Risk Engine.' Users can deposit almost all on-chain assets with liquidity—including Uniswap V3 LP, Pendle YT/PT, Yearn vault shares, various LSTs (such as stETH, mETH), and tokenized U.S. Treasuries, real estate, private equity, and other RWAs that are on-chain—into a unified collateral recognized by the protocol. These heterogeneous assets will be converted into standardized 'collateral value' through oracles and real-time liquidity assessment models. Subsequently, users can mint over-collateralized synthetic dollars USDf at a collateralization rate of up to 150%-160% (dynamically adjusted based on asset risk levels).
Unlike traditional stablecoins, USDf is not an algorithmic stablecoin pegged to the US dollar, but a synthetic asset fully backed by on-chain physical collateral, with a collateralization ratio consistently maintained above 150%, completely avoiding forced liquidation risks. Even when the prices of underlying collateral assets fluctuate dramatically, the protocol will absorb these through a buffer pool, insurance fund, and dynamic interest rate mechanisms, rather than directly liquidating user positions. This means that users can finally "borrow without fear of liquidation," truly achieving long-term, certain on-chain liquidity.
Furthermore, Falcon Finance is collaborating with institutions such as BlackRock BUIDL, Ondo Finance, and Backed.fi to introduce more high-quality RWA into the collateral whitelist. In the future, when compliant tokenized national bonds and private equity fund shares are scaled onto the chain, institutional users will be able to directly mint USDf with these assets, participate in DeFi high-yield strategies, and achieve real returns ranging from 10% to 30% annually, without bearing the counterparty risks and withdrawal restrictions of traditional CeFi.
From a technical architecture perspective, Falcon Finance adopts a modular design: a Collateral Registry, an Isolated Risk Vault, and a USDf minting/redeeming engine, decoupled into three layers, ensuring that even if a single collateral pool experiences an extreme black swan event, it will not infect the entire protocol. The protocol is currently live on the Base mainnet and is expected to complete multi-chain expansion on Arbitrum and Ethereum L1 by Q1 2026, with a total locked value exceeding $300 million, ranking among the top three lending protocols in the Base ecosystem.
Falcon Finance is transforming "assets with liquidity value" into interest-bearing collateral, upgrading on-chain liquidity from "fragmented islands" to a "global unified market." This is not only an upgrade of lending protocols but also a reconstruction of the underlying collateral paradigm of the entire DeFi ecosystem.
