Why Figure Leads the RWA Revolution: Inside the Tokenization of Traditional Finance

In the rapidly evolving landscape of decentralized finance, one company has emerged as the undisputed leader in Real-World Asset (RWA) tokenization: Figure Technology Solutions. By bridging the $20+ trillion traditional finance market with blockchain infrastructure, Figure has engineered a transformation that goes far beyond typical fintech innovation. The company’s Q3 2025 performance reveals not just strong financial metrics, but a fundamental shift in how financial services operate—and why RWA integration represents the future of asset markets.

Figure’s latest financial snapshot is staggering: $156.37 million in net revenue, $90 million in net profit, and an extraordinary 57% net profit margin. These numbers are particularly striking when compared to traditional financial institutions. What makes Figure’s performance even more compelling is that this profitability stems directly from its blockchain-native approach to RWA management, where automation and transparency replace manual processes and opacity.

From Traditional Finance Friction to Blockchain Efficiency: The RWA Advantage

The foundation of Figure’s dominance lies in solving one of traditional finance’s most persistent problems: the middle and back-office inefficiency that inflates costs and extends timelines. By leveraging its proprietary Provenance Blockchain—built on the Cosmos SDK—Figure has fundamentally reimagined how real-world assets are originated, registered, and traded.

Consider the stark contrast: Traditional loan origination typically requires 30-45 days and costs financial institutions an average of $11,230 to $12,000 per transaction. Figure’s blockchain-powered system accomplishes the same task in under 5 days with costs as low as $730 to $1,000. This isn’t marginal improvement—it represents a 90% reduction in processing costs and an 85-90% reduction in time.

The mechanism is elegantly simple yet powerful. By minting, registering, and trading loans directly on the Provenance chain, Figure transforms illiquid debt instruments into standardized, fungible digital tokens. Borrowers benefit from faster capital access, institutions reduce overhead by over 100 basis points, and retail participants gain access to previously exclusive investment opportunities. This is the real value proposition of RWA: democratization without sacrificing institutional-grade security.

The technological backbone enables genuine 5-minute loan approvals through an Automated Valuation Model (AVM) that replaces time-consuming property appraisals. Digital lien verification, automated title searches, and remote notarization complete the automation. Every transaction creates an immutable cryptographic record on the blockchain, ensuring that RWA assets possess verifiable credit attributes from inception.

Breaking Down RWA Asset Creation: HELOC, First Lien, and DSCR Strategies

Figure’s RWA business model rests on three core product pillars, each addressing distinct market segments but operating within the same blockchain infrastructure framework.

Home Equity Lines of Credit (HELOC) represent Figure’s flagship product, accounting for the majority of its origination volume. Since inception, Figure has disbursed over $19 billion in HELOC funds, establishing itself as America’s largest non-bank originator in this category. The elegance of HELOC as an RWA vehicle lies in its revolving structure—borrowers can withdraw and repay repeatedly, avoiding the one-time, closed-loop nature of traditional refinancing. On the blockchain, these assets are tokenized and sold to institutional buyers who value the transparency and speed that RWA markets provide.

First Lien HELOCs emerged as a surprise growth engine in 2025. This product reimagines cash-out refinancing by positioning Figure’s solution as a superior alternative to traditional bank refinancing. The distinction matters: first liens carry lower default risk than second liens (traditional HELOCs), making them attractive to capital market buyers. In Q3 2025, first lien transactions represented 17% of Figure’s consumer credit volume—up from just 10.5% a year earlier. This 650 basis point increase demonstrates explosive growth momentum. The transaction volume for first liens nearly tripled year-over-year, suggesting that American homeowners are actively choosing the Figure alternative to traditional bank refinancing.

DSCR Loans (Debt Service Coverage Ratio) target real estate investors seeking non-qualified mortgage solutions. Rather than evaluating personal income, DSCR loans assess the cash-flow potential of rental properties. This product category demonstrated the scalability of Figure’s RWA platform: from near-zero volume in Q2 2025, DSCR loans surged to over $80 million in Q3. The market opportunity is substantial—the Non-QM securitization market alone exceeds $20 billion annually, and it’s characterized by precisely the inefficiencies (low transparency, extended cycles) that blockchain solves.

The underlying economics are consistent across all three products. Each loan is originated through Figure’s white-label Loan Origination System (LOS), which has processed over $16 billion in cumulative volume. This historical data enables rapid scaling—new product categories leverage the same underwriting infrastructure that proved successful with HELOCs.

The Securitization Multiplier: How RWA Assets Achieve Institutional Credibility

One of the most underappreciated aspects of Figure’s RWA strategy is its securitization capability. By pooling tokenized assets and issuing asset-backed securities (ABS), Figure has demonstrated that blockchain-originated loans can achieve AAA ratings from Standard & Poor’s and Moody’s—the same credit quality as prime mortgages.

This achievement required building what might be called a “safety mechanism” into the RWA ecosystem. Figure established Fig SIX Mortgage LLC as a joint venture with Sixth Street Partners, a top-tier investment firm. Sixth Street committed $200 million in recyclable equity capital to act as a “buyer of last resort” in the secondary market. The mechanics are crucial: when Figure securitizes a pool of RWA loans, Fig SIX absorbs the first-loss tranche—the most subordinated portion of the capital structure. This subordination protects all senior investors, explaining why securitized Figure assets receive AAA ratings.

For borrowers and originators, this mechanism creates guaranteed market liquidity. A regional bank no longer needs to hold HELOC assets on its balance sheet for 20+ years or seek expensive warehouse financing. Instead, it can sell assets immediately to Fig SIX at competitive prices, recycle capital, and originate new loans. The efficiency gains are cascading: lower origination costs translate to better terms for borrowers, which attracts higher origination volume, which improves securitization economics.

This is the RWA flywheel: better data transparency (blockchain) → better credit ratings → lower funding costs → competitive consumer pricing → higher origination volume → improved asset pools → even better ratings. Figure has engineered each component of this loop.

The Democratization Layer: RWA Lending for Everyone

While securitization serves institutional capital markets, Figure’s DeFi innovation democratizes the liquidity-provision side of RWA. The Democratized Prime protocol allows ordinary crypto participants to lend capital to asset originators—a function previously limited to $1 million-minimum institutional LPs.

The mechanism is straightforward: Banks and lenders deposit tokenized RWA assets as collateral into smart contracts. Retail participants provide liquidity at variable rates (1-30% annually) determined by hourly Dutch auctions. This design ensures that market-clearing rates reflect genuine supply and demand, rather than relationship-based pricing in traditional prime brokerage.

The appeal is quantifiable. By mid-2025, DeFi lenders earned nearly 9% annualized returns through the Democratized Prime protocol—substantially above the returns from YLDS stablecoins or traditional money market funds. This yield differential attracted retail capital at scale, particularly after Figure expanded the protocol to Layer 1 blockchains like Solana and Sui, introducing PRIME as a liquid staking token to amplify returns.

Risk management is hardwired through DART technology, which guarantees investors’ legal and technical recourse to underlying RWA collateral. Real-time LTV monitoring auto-triggers liquidations when leverage hits 90%, preventing cascading defaults. Should liquidations exceed market liquidity, interest rates automatically spike to 30%, forcing rapid deleveraging. This combination of technology and economic incentives has kept the protocol robust despite billions in assets under management.

The Settlement Layer: YLDS and the On-Chain Financial System

The final piece of Figure’s RWA ecosystem is the settlement infrastructure. Most stablecoins operate through offshore structures offering limited transparency or regulatory oversight. Figure inverted this model.

YLDS is issued by Figure Certificate Company (FCC), registered as an investment company under the U.S. Investment Company Act of 1940. The regulatory status matters enormously: every YLDS token is backed 100% by a portfolio of U.S. Treasury securities and money market instruments, creating an on-chain asset that institutional investors can trust. Holders earn SOFR minus 50 basis points—a yield that’s genuinely competitive against traditional money market funds, particularly in high-interest-rate environments.

The utility is equally important. YLDS serves as the settlement currency on Figure’s exchange, enabling atomic on-chain settlement of RWA transactions. Users can purchase Bitcoin directly using YLDS, with the system managing currency hedging and settlement automatically. By late 2025, the YLDS ecosystem had grown from approximately $4 million in Q2 to nearly $100 million—evidence that institutional-grade on-chain settlement infrastructure is finding real demand.

Q3 2025 Revenue Architecture: Parsing Figure’s Profitability

The path to a 57% net profit margin becomes clear when examining revenue composition. This isn’t a single-product business; it’s a multi-revenue stack where each component reinforces the others.

Loan Sales contributed $63.56 million—Figure’s largest revenue component. Of this, $51.72 million came from full loan sales (Figure sells all rights and cash flows to institutional buyers), while $8.27 million derived from securitized loan proceeds. The securitization path is particularly instructive: Figure originating loans, pooling them into RWA securities with AAA tranches, and collecting fees from both the origination and the securitization process. This full-cycle approach to asset origination and monetization represents a departure from traditional fintech, where lenders typically pocket origination fees and pass long-term duration risk to institutional buyers.

Technology and Ecosystem Fees totaled $35.69 million, distinguishing Figure from conventional mortgage companies. Of this, $15.55 million came from technology licensing (other firms use Figure’s LOS system), while $16.25 million represented ecosystem fees—essentially a “market access” premium for using Figure’s RWA trading infrastructure. This revenue stream demonstrates how blockchain infrastructure can create recurring, scalable income separate from lending.

Loan Origination Fees reached $21.42 million, encompassing direct processing fees, disbursement expenses, and loan discount income. This channel reflects Figure’s operational automation: the faster loan processing and lower per-transaction cost structure enable aggressive origination volume without sacrificing margins.

Interest Income contributed $17.86 million from Figure’s retained HELOC portfolio (roughly 5% of assets sold), returns on digital asset-backed loans, and a portion of securitization risk premiums. This “strategic risk retention” model allows Figure to participate in long-term appreciation of high-quality RWA assets while maintaining liquidity.

Servicing Asset Value and Fees generated $9.33 million and $8.50 million respectively. These categories reflect Figure’s role as a long-term asset manager: after selling loans to institutional buyers, Figure retains the right to service them (collecting monthly payments, managing accounts, distributing to investors). This creates a 30 basis point recurring revenue stream on managed assets—low-margin but stable and durable.

Collectively, these revenue streams total $156.37 million with $90 million in net profit—a 57% margin that’s extraordinary for any financial business, let alone one managing $19+ billion in originated loans.

The RWA Moat: Why Figure’s Competitive Advantage is Durable

What prevents competitors from replicating Figure’s success? The answer lies in a moat composed of three reinforcing elements:

Technological Integration: Figure owns its blockchain infrastructure (Provenance), its origination platform (LOS), its trading venue (Figure Markets post-merger), and its settlement layer (YLDS). This full-stack control eliminates dependency on third parties and enables rapid innovation cycles.

Scale Dynamics: With $19+ billion in lifetime originations and $16+ billion in LOS system volume, Figure possesses historical data that improves credit underwriting and securitization outcomes. Larger pools of data produce more accurate risk pricing, justifying better credit ratings, which attracts more institutional capital, which funds more originations. This creates a self-reinforcing cycle increasingly difficult for competitors to penetrate.

Ecosystem Lock-in: Figure’s 2025 merger with Figure Markets created a closed-loop ecosystem where borrowers, asset originators, institutional buyers, and DeFi lenders all interact within the same platform. This ecosystem stickiness—particularly once billions in YLDS stablecoins and PRIME tokens are deployed—creates friction for user migration to competitors.

Institutional Credibility: SEC registration, AAA-rated securitizations, partnerships with Sixth Street, and endorsement from major Layer 1 ecosystems (Solana, Sui) provide regulatory and market legitimacy that nascent competitors lack.

Market Position and Future Implications

Figure’s Q3 2025 results position it as the leading platform for RWA tokenization, not merely because of financial metrics, but because of the infrastructure it’s built. The company has effectively created what might be termed a “blockchain-native financial institution”—one that applies blockchain’s efficiency benefits to traditional financial products without sacrificing institutional-grade security or regulatory compliance.

The broader market implications are substantial. If RWA tokenization continues to mature, traditional assets (mortgages, equipment loans, trade receivables, royalties) will increasingly migrate on-chain. Figure’s infrastructure—its blockchain, its origination system, its securitization track record—positions it to capture a disproportionate share of this migration.

The competition remains fragmented. Other RWA platforms focus on specific asset classes (Ondo on credit, Maple on corporate lending) or remain primarily on-chain native without traditional origination capabilities. Figure uniquely bridges both worlds: it originates real loans through traditional banking partners while tokenizing everything on blockchain.

By Q3 2025, Figure had validated the thesis that real-world asset tokenization is not a niche cryptocurrency experiment but a fundamental productivity upgrade to financial markets. Its profitability, revenue scale, and strategic positioning suggest it will remain the leading platform as RWA adoption accelerates through 2026 and beyond.