Figure Heloc becomes 10th biggest crypto — but critics say it shouldn’t be there

Figure’s Home Equity Line of Credit token, or Figure Heloc, is getting big.

The asset, which represents loans taken out through Figure against real estate, has grown to more than $15 billion in recent months, making it the 10th-largest crypto token listed on platforms like CoinGecko.

Yet as its supply swells, critics argue it shouldn’t be compared to other crypto assets such as Cardano’s ADA and the $16 billion memecoin, Dogecoin.

They argue that the token’s lack of onchain use and poor liquidity raises questions about whether it should be counted among similar tokens that are used more frequently and widely.

“We’re unsure how $12 billion in assets are being traded when there are so few assets in the chain to trade them against,” 0xngmi, the pseudonymous head of DefiLlama, said in September.

“As it seems that a majority of holders are not transferring these assets with their keys, are they just mirroring their own internal database into the chain?”

The problem is that anyone with a large amount of cash or financial derivatives could spin up a token backed by those assets and claim to have the largest blockchain-based real-world asset, even if those assets aren’t actually being traded and the issuing entity controls the vast majority, if not all, of them.

Figure CEO Mike Cagney has hit back at the criticism, maintaining that Figure Heloc and the other assets his firm issues should be classified as blockchain-based real-world assets.

“Figure loans are on Provenance. They are traded every day,” he said. “They now are used as collateral in Figure Markets. While they aren’t BTC, they are assets on a public chain.”

RWA surge

The growth of Figure’s controversial token comes as interest in tokenising traditional financial assets and putting them on blockchains mounts following a surge in interest from Wall Street.

There’s more than $17 billion worth of these so-called real-world assets in circulation, according to blockchain data provider DefiLlama. RWA.xyz, another data provider, puts that figure at over $23 billion.

Figure, a buzzy fintech firm that uses its Provenance blockchain to streamline its home equity loan service, places itself at the intersection of crypto and traditional finance.

The firm says putting loans on blockchains can reduce costs and increase liquidity and efficiency.

“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,” Cagney said in a September letter.

More nuance

One answer to the controversy surrounding Figure Heloc is more nuance from data providers.

Since September, RWA.xyz has changed how it records blockchain-based real-world assets. It has split them into distributed and represented, separating assets that can be bought and sold by investors from those primarily used for recordkeeping and transparency.

The platform has put Figure Heloc into the “represented” category alongside Broadridge DLR, a blockchain-based repo platform that hosts $350 billion in onchain real-world assets.“We’re cooking up new metrics to show the nuance on things like Tradable and Figure,” Adam Lawrence, co-founder of RWA.xyz, said on X.

“They’re legitimate, institutionally-focused companies that will ultimately drive a majority of volume in crypto.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at [email protected].