As a pragmatic builder in Web3, I was once overwhelmed by a 'behemoth' from the traditional world: my 30-year mortgage. Faced with dwindling savings each year and seemingly endless loans, I realized that relying solely on the meager returns from the bank's financial management was utterly insufficient to accelerate this long repayment cycle. It wasn't until I delved into a certain strategy from Falcon Finance that I discovered the returns from digital assets could begin to alleviate this traditional burden in such a 'plain and simple' manner. I calculated that if executed properly, it could shorten my repayment period by 5 to 7 years, which is almost unimaginable in traditional finance.
Today, I want to break down which mechanisms of Falcon Finance have provided the soil for this seemingly 'foolish dream' scenario to take root. We will start from the pain points of traditional mortgages, analyze the new ideas provided by Falcon Finance, and discuss the balance of risks and rewards in practical operations.
Do you remember in the second half of 2023 when I almost 'cryingly' purchased a property at a high price, and then most of my monthly salary went directly to the bank? During that time, I invested my limited idle funds into bank wealth management products, with annualized returns hovering between 2% and 3%, which couldn't even beat the fractional interest of my mortgage rate, let alone the inflation that kept rising during the same period. This feeling of waiting passively, allowing my wealth to be diluted, made me very anxious. I began to think: as a senior player deeply involved in Web3 for many years, could I only watch as the 'blunt knife' of traditional finance cuts away? Until the end of 2024, I turned my attention to the continuously developing Falcon Finance ecosystem.
Falcon Finance, as a decentralized financial protocol adhering to pragmatism, is focused on providing efficient capital efficiency and diverse yield opportunities. It is not simply about depositing money to 'earn interest'; rather, it offers a complete 'toolbox' that allows you to become the 'architect' of your own wealth. After my research, I discovered that Falcon Finance's core advantages lie in its decentralized stablecoin lending protocol and yield aggregator. You can use mainstream digital assets with good liquidity (such as Ethereum and wrapped Bitcoin) as collateral to borrow the native stablecoin FFUSD issued by Falcon Finance at a relatively low lending rate (usually between 3% and 5%, fluctuating based on market supply and demand). The key point here is that the borrowed FFUSD can be invested in high-yield liquidity pools within the Falcon Finance ecosystem or its partner protocols, generating returns that far exceed the borrowing costs.
After my personal practice, I found that the key is to establish a reasonable leverage framework. My strategy is as follows: I will deposit a portion of Ethereum into Falcon Finance's lending pool, but intentionally control my loan-to-value ratio (LTV) at a relatively conservative level, such as not exceeding 50% of the collateral value. This is to leave enough buffer space during market fluctuations to avoid liquidation of collateral due to price declines. Subsequently, I will invest the borrowed FFUSD into a relatively stable FFUSD-USDC liquidity mining pool on the platform. This pool has very low impermanent loss risk due to the characteristics of its stablecoin pair, and the annualized return was stable between 12% and 15%. Even after deducting lending interest and potential gas fees, I was still able to achieve a net annualized return of about 8% to 10%. I did not choose to reinvest this net income but set it for automatic or manual regular withdrawals, directly increasing my monthly mortgage repayment. Originally, I found it challenging to pay an additional 1000 yuan each month, but through this strategy, I could generate an average of an additional 2000-3000 yuan in net income each month, which directly allowed me to accelerate repayments, reducing my 25-year mortgage to about 18 years.
Of course, as pragmatic builders, we must be fully aware of the risks involved. First is the risk of smart contracts; although Falcon Finance has undergone multiple professional code audits, there is still a theoretical possibility of vulnerabilities. Second is liquidation risk; if the price of collateral (such as Ethereum) plummets, and you do not replenish or repay part of the loan in time, your collateral may be liquidated. Therefore, real-time monitoring of LTV and setting liquidation alerts are essential. Moreover, there is the risk of stablecoin decoupling; FFUSD, as a native stablecoin, relies heavily on the stability of its anchoring mechanism. Although Falcon Finance has performed well in this regard, it is still necessary to be vigilant under extreme market emotions. Finally, the yields of DeFi are not fixed; they are influenced by various factors such as market sentiment and the number of liquidity providers, requiring us to continuously monitor and dynamically adjust our strategies.
In summary, Falcon Finance offers not only a high-yield investment channel but also a shift in financial thinking. It teaches us how to utilize Web3 tools to maximize the capital efficiency of digital assets, actively responding to various challenges in the traditional financial world. It enables an ordinary person to transform substantial passive debts into a manageable financial goal that can be repaid more quickly through clever strategies. This is no longer about waiting passively but about proactive construction.
Dear friends among the stars, have you explored similar innovative strategies on Falcon Finance or other Web3 protocols that can address the pressures of traditional finance? Or do you think this model of 'DeFi supporting traditional debt' will face new challenges in the future? Looking forward to hearing your insights in the comments.
Disclaimer: This article only represents personal views and does not constitute any investment advice. The Web3 and cryptocurrency markets are highly volatile; investing carries risks. Please conduct independent research and make cautious decisions.
