Figure’s sudden crash triggers $13 billion surge in blockchain loan activity – DL News

The token is issued by blockchain lender Figure, which uses the Provenance blockchain to back loans such as Home Equity Lines of Credit (HELOCs) via its YLDS stablecoin. The firm has a market capitalization of $8.5 billion after raising nearly $800 million in a U.S. initial public offering last month. No official explanation for the crash has been given by Figure.

Market data from Figure Markets, the trading platform linked to Figure, shows only $1,516 in token transactions in the 24 hours around the crash. Such low liquidity can cause large price swings when relatively small trades happen. Typically, assets of similar size support daily trading volumes in the hundreds of millions.

Figure promotes the use of blockchain technology to increase liquidity and reduce costs for illiquid assets like loans. Its co-founder Mike Cagney stated in September, “By taking historically illiquid assets — such as loans — and putting these assets and their performance history onchain, blockchain can bring liquidity to markets that have never had such.” However, critics have noted a lack of on-chain transparency for the loans. The crypto data platform DefiLlama’s lead, known as 0xngmi, said earlier this year that much of the loan volume Figure claims is conducted in fiat currency and is difficult to verify on the blockchain.

The tokenization of real-world assets, including consumer loans and government debt, is a growing market. According to DefiLlama, it has expanded to about $18 billion in 2024. Proponents envision tokenization could eventually reach a $19 trillion industry by 2033, as predicted by Ripple and Boston Consulting Group.