Figure and Navra: Blockchain Capital Markets Strategy
Mike Cagney discusses Figure's 150 Rule of 40 performance and the launch of Navra. The analysis covers DeFi disintermediation, institutional custody solutions, and the $6 trillion asset-based finance opportunity.
Executive Overview
Figure has achieved a Rule of 40 score of 150, outperforming nearly all S&P 500 companies, by leveraging blockchain to disintermediate traditional capital allocators in asset-based finance. This strategic shift eliminates the 250 basis point spread typically captured by banks, creating a Pareto optimal outcome where borrowers pay less and investors earn more. The company’s ability to process over $2.5 billion in monthly assets on-chain demonstrates the viability of DeFi for wholesale finance, though current liquidity pools remain insufficient for full-scale adoption.
Strategic Infrastructure: Navra
To bridge the gap between DeFi liquidity and institutional capital, Figure co-founder Mike Cagney launched Navra, which recently raised $19 million in Series A funding. Navra addresses three critical barriers to institutional adoption: poor user experience, lack of qualified custody, and insufficient enterprise controls. By implementing multi-party computation (MPC) wallets, Navra enables self-custody that satisfies SEC qualified custodian requirements. This allows institutions to maintain asset autonomy while meeting regulatory compliance, a key differentiator from traditional custodial models that introduce significant release delays.
Market Opportunity and Expansion
The addressable market for asset-based finance is estimated between $6 trillion and $20 trillion. Figure’s low-cost origination model, particularly in HELOCs, provides a significant competitive advantage over traditional mortgage lenders. The company is expanding into first-lien mortgages and other credit asset classes, leveraging its blockchain-native capital markets to provide partners with certainty of execution. Furthermore, Navra’s AI agents are designed to optimize yield across DeFi protocols while maintaining strict transactional guardrails, enhancing operational efficiency for both individual and institutional users.
Outlook and Regulatory Stance
Despite the current macro headwinds and the failure of the Clarity Act, Figure and Navra operate on the premise that economic utility drives adoption more than legislative clarity. The focus remains on de-risking security issuance and capital allocation through proven infrastructure. As tokenized stocks face skepticism due to inferior execution in current wrappers, the industry must shift toward native on-chain issuance that offers tangible benefits in margining and stock loan economics. The path forward involves bridging the liquidity gap to unlock the full potential of blockchain in wholesale capital markets.
Key insights
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Blockchain eliminates the need for traditional capital allocators by managing risk and liquidity directly on-chain, removing the 250 basis point spread and creating superior returns for both borrowers and investors.
Impact: This disintermediation creates a sustainable structural alpha for early adopters in asset-based finance, significantly improving profit margins compared to traditional banking models.
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Institutional adoption of DeFi is hindered by poor user experience, lack of qualified custody, and insufficient enterprise controls, which Navra addresses through MPC wallets and AI-driven interfaces.
Impact: Solving these three barriers unlocks the $6 trillion asset-based finance market, allowing institutions to self-custody assets while remaining compliant with SEC regulations.
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Figure’s low-cost origination model for HELOCs, costing under $1,000 compared to $11,000 for traditional mortgages, enables profitability in small-balance loan segments that traditional lenders have abandoned.
Impact: This cost advantage allows Figure to scale rapidly in the mortgage market and expand into first-lien positions, capturing market share from legacy institutions.
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Tokenized stocks currently lack economic utility because they rely on automated market makers with slippage, whereas native on-chain issuance with limit order books offers superior execution and stock loan economics.
Impact: For tokenized equities to gain traction, they must provide tangible benefits such as better margining and control over stock loan revenue, which current wrappers fail to deliver.
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Regulatory clarity is not a prerequisite for blockchain business success; economic use cases and de-risked infrastructure drive adoption, allowing companies to operate effectively regardless of legislative outcomes.
Impact: This approach reduces dependency on political winds, enabling companies to build robust businesses that can survive regulatory shifts and capitalize on market opportunities early.
Action items
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Implement multi-party computation (MPC) wallet infrastructure to enable institutional self-custody that satisfies qualified custodian requirements without key loss risks.
Impact: This removes a major regulatory barrier to institutional DeFi adoption, allowing firms to maintain asset autonomy while complying with SEC and state regulations.
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Develop AI agents with explicit transactional rails and guardrails to automate routine financial tasks such as yield optimization and tax reporting across DeFi protocols.
Impact: Enhances operational efficiency and user experience, reducing the complexity of managing multiple DeFi positions and ensuring safe, authorized execution of financial actions.
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Focus on low-cost origination models for credit assets, leveraging blockchain to reduce friction and eliminate the need for traditional capital allocators in the middle.
Impact: Improves profit margins by capturing the spread previously earned by banks, creating a competitive advantage in asset-based finance and enabling profitability in smaller loan segments.
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Prioritize native on-chain issuance of securities over wrapper-based tokenization to ensure superior execution, margining, and stock loan economics for investors.
Impact: Addresses the lack of utility in current tokenized stock products, making blockchain a viable alternative for equity trading by offering tangible economic benefits.
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Build business models based on economic use cases and de-risked infrastructure rather than waiting for regulatory clarity, ensuring resilience against legislative changes.
Impact: Allows companies to capture early market share and establish sustainable revenue streams before regulatory frameworks are fully codified, reducing dependency on political outcomes.
Quotes
“We use blockchain for three things. We use the immutability of the ledger to reduce friction around transactions. We use the ability to support bilateral, self-settle, self-clear marketplaces to create liquidity. And we use DeFi.”
“The reality is when we go to the DeFi pools, there's a couple billion on Morpho, there's six billion on Aave in terms of available stablecoin. There's a billion dollars on Demo Prime. In blockchain, we tend to think of those as big numbers. In wholesale finance, those are not big numbers. Those are tiny.”
“We need to be very pragmatic when we think about putting markets on blockchain or putting businesses on blockchain. We need a real economic reason to do it.”