Blockchain lending company Figure debuted on the US stock market via IPO on September 11. On its first day, shares soared as much as 44%, with the company’s market cap peaking at roughly $7.8 billion before closing at $6.5 billion.

Below is an open letter from Figure’s founder, Mike Cagney, regarding the IPO:

In late 2017, I had my own “aha” moment with blockchain. Back when I was CEO at SoFi, I’d often make casual remarks about Bitcoin or blockchain—“It’s going to change financial services!”—but I honestly didn’t know how. This time was different.

Ask any full-stack engineer, and most will tell you they’d rather not build on blockchain: it’s slow, unwieldy, and its immutability means strict fault tolerance. But blockchain has a superpower—it replaces trust with truth.

Financial services have always been, and remain, trust-based markets. These markets require layers of intermediaries: in a public equity trade, as many as seven middlemen might be involved; even a debit card transaction can have five parties in between. Many of today’s largest companies have grown by capitalizing on this rent-seeking structure. Blockchain has the power to compress these multi-party markets down to just two: buyer and seller. All rent-seeking can be eliminated.

But blockchain does more than disrupt existing markets. By bringing historically illiquid assets—like loans—and their performance history on-chain, blockchain enables liquidity these markets never had. This new liquidity, combined with true digital completeness and asset control, opens entirely new financing opportunities. The disruption blockchain brings is significant—but the opportunities it creates are even greater.

That was my “aha” moment. You can create native digital assets, where everyone can verify true ownership, composition, and history—without relying on trust. Assets can be traded instantly, peer-to-peer, with no counterparty or settlement risk. Lenders gain immediate, fully digital control over collateral. Blockchain fundamentally transforms how assets are originated, traded, and financed. This isn’t a superficial financial technology upgrade—it’s a brand new capital markets ecosystem. I want to be on the front lines driving this change.

Figure: Reinventing Capital Markets with Blockchain

In early 2018, I cofounded Figure with my wife, June Ou, and several like-minded partners. Our goal was straightforward: transform capital markets with blockchain. To achieve that, we needed to bring a real, measurable use case to market.

2018 was the year of the ICO—crypto startups were seemingly raising endless funding by selling tokens. We chose a different path. We believed we could originate, aggregate, and securitize loans on blockchain, saving up to 85 basis points in transaction costs. When we pitched this to banks, they all responded, “That’s great! We love it! We’ll be the tenth bank to do this…” Clearly, “if you build it, they will come” didn’t apply—just launching the system wasn’t enough to attract users.

Given our lending leadership at SoFi, we weren’t eager to build another lender, but we knew we had to prove to the market that blockchain was better. In 2018, we became one of the first teams to launch consumer loans on-chain. Figure started by originating loans directly to consumers, but with a blockchain backend. We chose home equity line of credit (HELOC) as our first product—no one was originating HELOCs efficiently, and we didn’t want to compete head-to-head with major consumer or mortgage lenders right away. We needed time to convince both buyers and sellers to adopt this new technology.

We soon expanded the model to B2B2C. Today, more than 168 third parties use our technology to originate loans on-chain—including half of the top 20 retail mortgage originators. Recently, we opened up on-chain capital markets to these originators: now, with our technology, they can sell assets directly and bilaterally to the on-chain capital market—and soon, they’ll be able to raise financing the same way—without Figure as an intermediary.

In 2020, we completed the industry’s first native on-chain digital asset consumer loan securitization; in 2023, we achieved the first AAA-rated securitization. Since launch, we’ve originated over $15 billion in loans and facilitated more than $50 billion of on-chain transactions. We are the leading participant in the RWA (Real World Asset) space on public blockchains.

In 2018, most major blockchains were still based on Proof of Work (PoW), which posed real challenges for financial services: cost, speed, and—critically—predictability. Proof of Stake (PoS) was just emerging as an answer to those barriers. After an experiment with a quasi-permissioned chain, June and her team built and launched Provenance Blockchain—a public, PoS, decentralized blockchain. Figure doesn’t control Provenance, though we hold 20% of the $HASH utility token and continue to support protocol development. Provenance is purpose-built for financial services and essential to our institutional adoption efforts.

Blockchain and Capital Markets

We believe blockchain delivers three core benefits to capital markets. First is at the transaction layer—cutting costs for audits, QC, third-party reviews, and more; we already see substantial gains here. Second, liquidity—enabling 24/7, real-time, peer-to-peer markets. Together with our partners, we’re building this greenfield trading market for loans. Finally, financing—this is blockchain’s greatest value.

Native on-chain digital assets (like loans) let lenders perfect and control their security interests (for example, via Figure’s Digital Asset Registration Technology, DART). Lenders can directly assess collateral liquidity, volatility, and advance rates to assess risk, rather than just underwriting borrowers. Connecting capital directly to users enables Pareto-efficient markets—both lenders and borrowers benefit, as they no longer pay for inefficient capital allocators or middlemen. We first brought this decentralized (DeFi) approach to our crypto exchange for secured lending, and recently added Figure’s loans to our DeFi lending market—Democratized Prime. Just as we’re doing in trading and liquidity, we utilize our own assets to demonstrate DeFi’s effectiveness in financing.

We’ve always believed DeFi will ultimately become the mainstream method for asset financing, and recent legislation is accelerating this. After the GENIUS Act passed, the US Treasury noted that trillions of dollars could flow into US Treasuries via stablecoins—funds coming mostly from bank deposits. In 2022–2023, $1 trillion in bank deposit outflows nearly broke the financial system. If Treasury’s projections are right, something new needs to fill the gap. We believe that’s DeFi, and we’re leading the way in the RWA sector.

The Blockchain Endgame

We see blockchain’s value proposition expanding to all asset classes. Take public equities: beyond improved trading efficiency and liquidity, blockchain’s financing innovations may be the most impactful. Imagine seamlessly cross-collateralizing stocks and other non-equity assets for leverage, or letting investors control and profit from lending out their own shares. Blockchain levels the financial playing field. We pioneered on-chain lending, and next, we aim to bring new asset classes like equities on-chain as well.

Just as Web 2.0 has its seven tech giants, I believe Web 3.0 will have its own class of leading blockchain firms. Our IPO brings us closer to becoming a leader in that group. Even after building a profitable, fast-growth blockchain company in an extremely challenging regulatory climate, we remain very optimistic: regulatory changes and public market acceptance will drive the industry and open new opportunities in the coming years. Our IPO is just one step in the much longer journey to embed blockchain in every facet of capital markets.

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