Decoding Figure: The On-Chain Transformation Experiment of the 12 Trillion Mortgage Market
TechFlow Selected TechFlow Selected
Decoding Figure: The On-Chain Transformation Experiment of the 12 Trillion Mortgage Market
Judge by "cash flow, efficiency, market size," not just by "cycle, sentiment."
Navigating Web3 tides with focused insightsAuthor: btyc
Translation: TechFlow
Today’s financial markets are being driven by two structural forces: on one hand, the "Big Beautiful Policy" (referring to U.S. economic stimulus through interest rate cuts and credit easing) is strongly supporting the real estate sector—a cornerstone of the U.S. economy accounting for nearly 20% of GDP; on the other hand, the tokenization of real-world assets (RWA) is moving mortgage and credit assets onto blockchains, directly challenging the traditional financial market valued at over $12 trillion.
Figure is betting on both of these levers: it leverages the policy tailwinds of “Made in USA” while building blockchain-based infrastructure to reshape transparency and efficiency in mortgage lending and real estate finance. The key question is whether this model can scale from small pilots into the mainstream, or whether it will be constrained by structural issues such as liquidity, governance, and regulation.
Team and Capital Background
CEO Mike Cagney is a co-founder of SoFi, where he scaled loan origination to over $50 billion, bringing student loans and mortgages online and pulling these services directly away from traditional banks—effectively launching the FinTech era. He earned his undergraduate degree from UC Santa Barbara and later became a Sloan Fellow at Stanford Graduate School of Business, focusing on applied economics and management. For Cagney, Figure isn't a new startup but rather a continuation of SoFi's unrealized vision—bringing asset digitization and on-chain integration into mainstream finance.
COO June Ou previously served as Chief Operating Officer at SoFi, overseeing risk management and compliance and navigating some of the industry’s strictest regulatory challenges. A graduate of UC Berkeley with a major in computer science and mathematics, she excels at transforming engineers' code into products compliant with regulatory requirements.
Figure is backed by heavyweight investors including Ribbit, DST Global, and a16z. Notably, a16z launched a $7.5 billion fund dedicated to blockchain and related industries back in 2018, successfully investing in Coinbase, Solana, Uniswap, and OpenSea, positioning itself as a leading force behind the "real-world assets on-chain (RWA)" narrative. a16z’s support for Figure goes beyond capital—it represents a strategic bridge connecting Silicon Valley, Wall Street, and Web3.
Pain Points in Traditional Mortgage Lending
To understand why Figure chose to enter this market, we must first examine the structural inefficiencies in traditional mortgage lending. This is a $12 trillion market still operating largely through paper-based processes and multiple intermediaries.
Low Liquidity and Inefficiency
A typical mortgage takes 30 to 60 days from application to disbursement, involving document verification, credit assessment, asset registration, and multi-party approvals. For borrowers, this means long wait times and high fees; for investors, it results in capital stagnation and inefficient asset allocation.
Excessive Intermediaries
Banks are just the first layer—behind them sit credit rating agencies, custodians, investment banks, and secondary market investors. Each layer extracts fees and extends settlement timelines, creating a vicious cycle of high costs, opacity, and low efficiency.
Lack of Transparency
Investors often cannot monitor collateral conditions in real time, relying instead on ratings reports or bank disclosures. As seen during past financial crises, this information asymmetry poses significant systemic risks.
Figure’s Solution and Challenges
In response to the inefficiency and opacity of traditional mortgage markets, Figure proposes to rebuild the entire process using blockchain. Rather than discarding existing financial systems, it aims to find a new path balancing compliance and efficiency.
Technological innovation: Figure uses Cosmos SDK to build its own blockchain and employs PoS (Proof of Stake) consensus to reduce mortgage settlement times from 30–60 days to just days or even hours. It standardizes loans, collateral, and payments into smart contracts, enabling automated execution and modular packaging, trading, or splitting in secondary markets. This offers institutional investors a more flexible toolkit than traditional securitization.
Another critical aspect is open-source development. Figure’s core protocol, built on Cosmos SDK, is designed to be auditable and verifiable—an essential feature in blockchain for several reasons:
-
Different source of trust: Traditional finance relies on regulators and intermediaries, whereas blockchain trust comes from code and consensus. Closed-source code undermines external verification of security and fairness.
-
Community collaboration: Open-sourcing attracts developers and institutions, fostering network effects and preventing technology lock-in by a single company.
-
Regulatory scrutiny: Regulators and auditors can inspect open-source code to verify transparency and security, reducing risks of opaque operations.
Compared to Bitcoin’s PoW (Proof of Work), Figure’s PoS design emphasizes efficiency and lower energy consumption:
-
PoW mechanism: Relies on computational power for security, highly decentralized and censorship-resistant but energy-intensive.
-
PoS mechanism: Validators are chosen based on staked tokens, enabling faster transaction processing and lower energy use—better suited for financial applications.
However, this design also faces challenges:
-
Governance risks: PoS may concentrate decision-making power among large stakeholders, leading to centralization through “voting with money.”
-
Insufficient node distribution: Current validators are concentrated among a few institutions, raising concerns about “centralized finance wrapped in blockchain.”
-
Compliance transparency: Despite strong team and investor credentials, Figure’s on-chain disclosure standards have not yet reached those of traditional public markets.
In my view, the advantages outweigh the drawbacks. This is a “relatively optimal solution” balancing disruptive innovation with market coexistence. Overall, Figure enhances efficiency and transparency via smart contracts, open protocols, and PoS—but its ultimate challenge lies in maintaining long-term trust from markets and institutions amid governance concentration and regulatory scrutiny.
Competitors and Differentiation
The market is full of attempts to “reinvent finance,” and RWA (tokenization of real-world assets) remains a hot area. To assess Figure’s position, we must evaluate it across three landscapes: traditional finance, DeFi (decentralized finance), and RWA.
Within the traditional financial system, the U.S. mortgage market is dominated by Fannie Mae and Freddie Mac, which package mortgage-backed securities (MBS) for secondary market investors. As previously analyzed, this is a massive but inefficient “pipeline system” ill-suited to modern demands for speed and transparency. Figure’s goal is to digitize and move this pipeline on-chain, making it transparent and instantly verifiable.
In the Web3 space, several protocols focus on RWA and DeFi:
-
Ondo Finance tokenizes low-risk fixed-income assets like U.S. Treasuries and money market funds (e.g., OUSG, USDY), creating “on-chain liquidity management” infrastructure for institutional and crypto-native capital. It currently leads in scale, though its focus on short-term debt and liquidity differs significantly from complex, long-cycle mortgage assets.
-
Maple Finance targets institutional lending, offering on-chain pools for crypto-native companies with outstanding loans in the hundreds of millions to over a billion dollars. It provides credit channels within the crypto ecosystem but remains disconnected from traditional finance.
-
Centrifuge tokenizes receivables and small business loans, bringing non-volatile collateral to DeFi. With TVL in the hundreds of millions, it proves tokenization feasibility but focuses on niche assets far removed from mainstream mortgages.
On the other end, traditional asset managers are rapidly entering on-chain finance:
-
BlackRock | BUIDL (USD Institutional Digital Liquidity Fund) A tokenized liquidity fund issued by Securitize. Its AUM surpassed $1 billion on March 13, 2025; since June 18, 2025, it has been accepted as collateral on platforms like Crypto.com and Deribit. By mid-2025, multiple reports placed its AUM around $2 billion, with a snapshot on September 18, 2025, showing approximately $1.9 billion—making it a de facto standard for on-chain dollar money market funds.
-
Franklin Templeton | BENJI (Franklin OnChain U.S. Government Money Fund, FOBXX) The first U.S.-registered money market fund to record shares on a public blockchain, investing ≥99.5% in government securities, cash, and fully collateralized repos. As of September 2025, its AUM was around $730–740 million. On September 18, 2025, it partnered with DBS and Ripple (XRP) to launch sgBENJI in Singapore, enabling trading/lending on DBS Digital Exchange and exploring tokenized collateral use.
These protocols share a fully DeFi-driven logic: transparent processes, community governance, and avoidance of traditional regulation. Their technical approach typically involves wrapping “existing legal rights (fund shares, SPV debt, notes)” into compliant, restricted on-chain tokens, then integrating institutional capital via KYC, whitelists, “NAV/cash flow oracles,” and “restricted transferability standards.” Advantages include verifiability, composability, and automation; limitations involve legal/regulatory boundaries, due diligence complexity, and gaps from core traditional financial assets.
Figure’s Core Differences from Competitors
-
Positioning and scope: Figure does not merely “wrap” existing assets on-chain; instead, it standardizes the entire mortgage lifecycle—from asset origination → registration → contracts → servicing → settlement → secondary circulation—into open-source smart contracts, targeting the long-cycle, process-heavy U.S. mortgage market.
-
Asset class comparison: Figure targets core assets like mortgages; Centrifuge and Maple focus on private credit and receivables; Ondo specializes in Treasuries/money funds, leaning toward liquidity and asset allocation.
-
Compliance and access strategy: Figure adopts an institution-friendly approach, integrating with existing systems (custody, KYC, service integrations); most DeFi-RWA solutions rely on community governance and token wrapping, remaining loosely coupled with traditional finance.
-
Infrastructure depth: Figure attempts end-to-end reconstruction of primary and secondary mortgage markets; protocols like Ondo primarily focus on standardizing and circulating existing products, with limited involvement in front-end origination and servicing.
-
Technology and auditability: Figure emphasizes open-source, verifiable, and auditable systems—like opening a transparent factory where every step from input to output is observable; other RWA protocols resemble outsourced manufacturing—you see the final product, but the process requires checking multiple vendors.
In conclusion, while competitors remain at the “hundreds of millions to low billions, crypto-native or liquidity-focused” stage, Figure is among the few attempting to build on-chain infrastructure for core U.S. mortgage assets. Whether it becomes “unique” depends on actual regulatory clearance and institutional adoption, but in terms of asset scope and infrastructure depth, Figure has clearly differentiated itself from mainstream DeFi protocols and aligns more closely with Fannie Mae/Freddie Mac as an “on-chain infrastructure provider” rather than a single product.
Simplifying: Figure is building “roads,” not selling “cars.” Success hinges on compliance and institutional adoption.
Market Size and Outlook
Underlying Market & Cyclical Tailwinds
Mortgage market size
U.S. residential mortgage debt stands at $13–14 trillion. Secondary market issuance of mortgage-backed securities (MBS) reached $1.19 trillion annually (up 21.7% YoY), with agency MBS averaging $345.1 billion in daily trading volume—indicating strong recovery in transaction flows.
Interest rate inflection point
30-year mortgage rates have fallen to 6.39% (as of the week ending September 12, 2025). Markets widely expect the Fed to begin rate cuts, driving a rebound in refinancing applications—creating structural tailwinds for home equity lines of credit (HELOC) and re-lending.
Annual origination volume (MBA forecast)
Total originations in 2025 are projected at $2.1–2.3 trillion, a significant increase from 2024. Every 50–100 basis point decline in rates amplifies refinancing elasticity, further boosting secondary market issuance and trading.
Figure’s Actual Growth Rate
-
Revenue performance: Figure achieved $191 million in net revenue in H1 2025 (up 22.4% YoY), turning profitable with $29 million in net income.
-
Lending momentum: Over the 12 months ending June 30, 2025, Figure originated approximately $6 billion in home equity loans (including HELOC), growing nearly 30% annually, with $1.3 billion matched via the Figure Connect platform.
-
Capital markets validation: In June 2025, Figure completed a $355 million on-chain HELOC securitization (FIGRE 2025-HE3), the first to receive AAA ratings across tranches from S&P, broadening institutional participation.
-
Public listing benchmark: Figure listed on Nasdaq on September 11, 2025, raising $787.5 million, with an IPO valuation of approximately $5.29 billion.
Efficiency → Cost → Margin: Why On-Chain “Makes Economic Sense”
-
Settlement time: Traditional secondary market cycles take T+30 to 60 days; on-chain standardization and smart contracts compress this to same-day or a few days, reducing idle capital and manual processing costs.
-
Actual cost savings: Official and case data show per-transaction savings of hundreds of dollars—or over 100 basis points in end-to-end fees—extendable to automated issuance, servicing, and refinancing.
-
Interoperability benefits: Once debt is tokenized with restricted transferability and whitelisting, it enables “capital efficiency stacking” with on-chain money funds like BUIDL, BENJI, and OUSG—turning traditional “idle cash” into T+0/T+1 liquid fund shares, further boosting gross margins.
Reverse Valuation: 1-Year / 5-Year Scenarios
-
Revenue baseline: Extrapolating $191 million in H1 2025 to full-year yields $380–420 million; taking $400 million as midpoint.
-
Share count baseline: Based on IPO valuation of $5.29 billion and $25 share price, circulating shares are approximately 212 million (excluding future dilution from stock-based compensation).
A) 1-Year Target (by 2026) Revenue Assumptions (reflecting rate cut recovery + market share growth):
-
Bear: +15% → $460 million
-
Base: +25% → $500 million
-
Bull: +35% → $540 million
Valuation method: EV/Sales reflecting FinTech/RWA growth premiums during upcycles:
-
Bear: 9x; Base: 14x; Bull: 18x
Market cap = PS × revenue; Share price = market cap / shares
Based on 212 million shares:
-
Bear: $4.14 billion → $19.5/share
-
Base: $7.0 billion → $33.0/share
-
Bull: $9.72 billion → $45.9/share
If diluted to 230 million shares: Bear $18.0 / Base $30.4 / Bull $42.3.
B) 5-Year Target (by 2030) Revenue CAGR Assumptions (on-chain penetration × product expansion):
-
Bear: +15% CAGR → $804.5 million
-
Base: +25% CAGR → $1.221 billion
-
Bull: +35% CAGR → $1.7936 billion
Valuation method: Mature-stage EV/Sales (post-bubble normalization):
-
Bear: 6x; Base: 8x; Bull: 10x
Results based on 212M / 230M shares:
-
Bear: $4.83 billion → $22.8 / $21.0
-
Base: $9.77 billion → $46.1 / $42.5
-
Bull: $17.9 billion → $84.6 / $78.0
Intuitive interpretation: Rate cuts boost volume; on-chain adoption improves efficiency. If Figure can deliver auditable, composable, open-source contracts across “origination → servicing → securitization → secondary circulation,” and as institutions integrate BUIDL/BENJI/OUSG into collateral ecosystems, the efficiency → margin → valuation multiple transmission becomes smoother. Conversely, if rates remain sticky and compliance/adoption slow, multiples will converge to lower ranges.
This model is based on revenue × EV/Sales, with multiples drawn from historical peer ranges and cycle positions. It excludes temporary multiple expansions driven by FOMO or narratives. If narrative premiums emerge (media attention, one-way capital inflows, index/institutional passive allocations), they would mainly affect multiples, not short-term cash flows, and thus are not included in base assumptions.
Strategic Positioning and Risk Triggers
Dual Tailwinds: Policy and Infrastructure
-
More predictable policy: The federal Stablecoin Innovation and Growth for the Nation Act (GENIUS Act) has been signed into law, establishing a foundation for compliant tokenized assets with “restricted transferability + KYC whitelisting.” SEC Chair Paul Atkins’ regulatory stance favors “clear rules and predictable enforcement,” encouraging institutional adoption of on-chain tools within compliance frameworks. These changes shift “moving existing processes on-chain” from theoretical discussion to institutional reality.
-
Expanding institutional collateral interoperability: BlackRock’s BUIDL is now accepted as collateral on Crypto.com and Deribit; Franklin Templeton, together with DBS and Ripple, launched sgBENJI, allowing qualified investors to trade, borrow, and explore collateral use on DBS Digital Exchange. These milestones indicate that “compliant funds ↔ on-chain collateral” channels are forming, creating external conditions for Figure’s secondary market liquidity and capital efficiency.
-
Narrative alignment: Figure uniquely combines Made in USA × RWA × FinTech; under a Republican administration emphasizing onshore financial innovation and dollar digitization, it sits at the intersection of policy and industrial narratives—and stands to benefit accordingly.
An exciting potential shift: While the real estate market is large, its upside is already priced in because it's visible and well-understood. What’s truly worth watching is whether Figure will eventually allow loans to purchase other assets (such as Bitcoin), or enable increased loan limits by mortgaging Bitcoin.
Risk: Being On-Chain Doesn’t Immunize Against Macro Volatility
-
Real estate’s “hard liquidity”: Depends on legal foreclosure processes and market depth; blockchain can streamline workflows but cannot shorten judicial timelines. As of Q2 2025, the average time to complete a foreclosure in the U.S. remains around 645 days. If the housing market weakens, Figure’s faster processing might shorten turnover but fail to match liability-side cash outflows, putting it at greater risk than traditional giants.
-
Regulatory and policy dependency: While the GENIUS Act lays a foundation, complementary legislation (e.g., CLARITY Act) is still pending in Congress. Although the SEC’s tone has shifted toward predictability, past experience shows that regulatory emphasis can shift with personnel and events—short-term volatility remains a concern. Narratives don’t generate cash flow; valuation sustainability depends on detailed rulemaking and adoption pace.
-
Technical governance and centralization: PoS enables high performance but brings risks of stake concentration and governance centralization. Financial-grade applications must achieve a stable balance between throughput, decentralization, and operational risk—earning market trust through open-source development and continuous third-party audits.
Author’s Reflection
I’m a long-time believer in blockchain, having participated early and witnessed its evolution. But honestly, outside buying homes and researching mortgage rates, I haven’t engaged with real estate stocks—that’s my blind spot.
I’ll also admit a bias: I’ve long viewed blockchain markets through a “four-year cycle” lens. In the last cycle, I gradually exited positions during the Mara/Coinbase/Riot IPO wave. That experience made me cautious—I now constantly ask myself: “Is this time really different?” This skepticism helped me avoid several sharp downturns, but it may also make me overly conservative toward new developments.
Figure has made me rethink repeatedly. It doesn’t hype token prices or push “empty narratives”—it quietly rewrote financial processes. The user experience feels like a regular bank; unless you dig deep, you wouldn’t realize it runs on blockchain. I appreciate this “invisible tech, normal experience” feel—it suggests the market is genuinely adopting, not being forced to learn. So I remind myself: blockchain ≠ cryptocurrency. I should judge based on “cash flow, efficiency, market size,” not just “cycles and sentiment.”
My biggest concern remains the SEC’s regulatory stance, which could trigger volatility. Ethereum (ETH) has seen rollercoaster price swings in recent years due to shifting SEC positions—even appearing “weak” for long stretches, nearly missing the entire bull run. So with Figure, I prefer starting small, waiting for stronger confidence signals before committing further.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
