Institutional investors have anchored the first $10 million in first of its kind RWA financing on a DeFi marketplace as traditional finance continues to adopt decentralized rails.
San Francisco, CA [date] Figure Markets today announced the launch of a $20 million on-chain senior lending facility backed by Figure home equity lines of credit (HELOCs).The facility uses Figure Market’s Democratized Prime marketplace, where borrowers access capital directly from lenders using public blockchain digital assets as collateral. This transaction marks the first time that digitally native real-world assets (RWA) can be used as collateral on a decentralized lending protocol and marketplace.
Democratized Prime uses hourly Dutch Auctions to allocate capital. Lenders set their target loan rate, can auto-roll their loans and redeem on the hour. The first $10M of financing has come from an institutional partner of Figure Markets with a funding rate of 8%. Any Figure Markets member can join that offer or set higher or lower loan rates. Using the Dutch Auction, all lenders receive the highest loan rate that is borrowed irrespective of their offer rates.
“Democratized Prime is allowing us to make the $[15] billion in Figure real world assets (RWAs) on Provenance Blockchain usable,” said Mike Cagney, CEO of Figure Markets and Chairman of Figure. “Figure Markets members can lend against these assets and soon will be able to buy, borrow and use Figure loans as collateral for other exchange activity, like buying Bitcoin. And the process is truly democratized – individuals can participate side-by-side with the major hedge funds and banks.”
Lenders get a security perfection against collateral using Figure’s Digital Asset Registry Technology platform – the same tool used by Goldman Sachs, Jefferies and others on Figure loans. The yield earned by lenders on Democratized Prime is additive to the enhanced yield they already can earn by holding YLDS – Figure Market’s SEC-registered yielding stablecoin – while keeping funds in the Figure Markets app.
“We plan to bring as many loans onto Democratized Prime as there is demand,” said Cagney. “We are adding over $700M a month to Provenance Blockchain and hope to leverage Democratized Prime extensively – we’ll make sure there are always enough RWAs to match demand.”
Similar to other DeFi lending protocols, the hourly loans are bilateral between borrower and lender. Each marketplace has its own automated liquidation methodology to manage lender risk. In the event there isn’t sufficient liquidity to meet a lender redemption, the rate on that marketplace rises to 30% to either de-lever the borrower or attract new capital.
About Figure Markets
Figure Markets is democratizing finance through blockchain. The company is building the exchange for everything – a decentralized custody marketplace for crypto, stocks, bonds, credit, and more. By offering best-in-class leverage, margin trading, and liquidity, Figure Markets provides members with extensive borrowing options and unique investment opportunities. With its decentralized custody exchange, they put members in control of their own assets and data, disintermediating legacy brokers, exchanges and lenders. To learn more, visit www.figuremarkets.com or their LinkedIn, Telegram, X, and Discord.
About Figure Technology Solutions
Founded in 2018, Figure Technology Solutions (“Figure”) is a blockchain–based technology platform built to enhance efficiency and transparency in financial services. Its subsidiary, Figure Lending LLC, is the largest non-bank provider of home equity lines of credit; its software has been used to originate more than $14B of home equity. Figure’s technology is embedded across a broad network of loan originators and capital markets buyers and is used directly as well by homeowners in 50 states and Washington, DC. With Figure, homeowners can receive approval for a HELOC in as fast as five minutes and receive funding in as few as five days.
Democratized Prime uses a dutch auction method for its borrowers/lenders. There is an inherent risk due to interest rate volatility in a Dutch auction interest rates in the auction may rise rapidly. At the time of acceptance, your loan may be filled with a different or higher interest rate than offered at the time of selection. The interest rate is only fixed at the time of loan approval and not at the time of loan acceptance.
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