The secret behind Figure's $90 million annual profit: examining the RWA business cycle through BWIC liquidation

When a traditional financial lending business can achieve a 57% net profit margin, it is no longer an improvement—it’s a revolution.

Figure Technology Solutions delivered an impressive Q3 financial report in 2025: nearly $90 million in net profit, with total net revenue of $156.37 million. This figure shatters many industry assumptions—blockchain is not just a token issuance tool; it is becoming a cost-cutting sword for traditional finance. But the business logic behind the numbers is even more worth noting: How does Figure, through Provenance blockchain, transform a mortgage from the industry norm of “30-45 days, $11,230 cost” into an “5 days, $730 cost” ultimate experience?

Turning Point: A Disruptive Leap in Cost and Speed

The entire US mortgage market has long been plagued by a stubborn problem—inefficient back-end processes. Banks need to handle paper documents, conduct on-site appraisals, and perform multi-party notarizations, resulting in a typical approval-to-funding time of 30-45 days and costs reaching $11,230.

What has Figure done? It digitized this process using blockchain.

By replacing on-site appraisals with automated valuation models (AVM), enabling automatic income verification through bank account connections, and utilizing digital liens and online notarizations, Figure compresses the entire loan initiation process to under 5 days, with an average cost of only $730. This is not a 10% improvement; it’s a 93% cost reduction—enough to rewrite the economics of the entire industry.

Looking at specific figures, Figure has become the largest non-bank originator of US home equity lines of credit (HELOC), with over $19 billion in loans issued. But even more critical is the horizontal expansion of its product lines:

HELOC products contributed most of the core volume in Q3, but the fastest-growing segment was First Lien HELOC—an innovative product serving as an alternative to traditional cash-out refinancing. The cost of this product is only $1,000, 90% lower than the industry average of $12,000. Q3 transaction volume grew nearly threefold year-over-year, now accounting for 17% of total consumer credit.

DSCR loans (designed specifically for real estate investors) demonstrate Figure’s product expansion capability. In Q3, it contributed over $80 million in transaction volume, with an average loan size of $174,000. This exemplifies how Figure leverages its already established automated loan system (LOS) for horizontal replication—a system that has processed a total of $16 billion in loans and is now used across multiple asset classes.

Closed-Loop Empire: From Origination to Settlement in a Vertical Integration

The key to Figure’s high profit margins lies in its creation of a complete closed loop.

Asset side: from loans to tokens

Borrowers apply for loans via Figure → automated approval process → assets tokenized on Provenance chain → institutional buyers bid on Figure Connect platform. Throughout this process, ownership transfer and risk transfer are atomically executed on-chain, reducing settlement time from traditional T+30 to T+0.

To ensure liquidity and market pricing, Figure partnered with top investment firm Sixth Street to establish a joint venture, Fig SIX Mortgage LLC, which commits to providing $200 million in equity capital. Fig SIX acts as a “permanent buyer” on Figure Connect, providing certainty of transaction execution for originating banks. More importantly, Fig SIX holds the “first-loss portion” of the asset pool—becoming the primary absorber of risk, bearing losses first in case of borrower defaults. This architecture enables Figure to issue securitized products rated AAA by S&P to institutional investors.

Funding side: from DeFi to traditional finance

But Figure’s optimization does not stop at the asset side. It has opened a second track: through the Democratized Prime protocol, allowing ordinary DeFi users to participate in private credit market financing.

The cleverness of this protocol lies in: institutions (like banks or asset managers) can use their RWA assets as collateral to access liquidity via Democratized Prime. Ordinary users can become “creditors” with just $100, earning about 9% annualized yield—completely unimaginable in traditional finance.

To protect liquidity providers, Democratized Prime has established an automated risk management system. The protocol monitors LTV (loan-to-value ratio) in real-time, and when it hits a 90% threshold, the smart contract automatically initiates liquidation. Here, the BWIC—“Bid Wanted In Competition”—mechanism comes into play. Weekly, the protocol auctions off assets needing liquidation via BWIC, with proceeds used primarily to repay principal. This periodic, competitive liquidation process ensures that even in liquidity crunches, DeFi users’ funds are protected in a timely manner.

Regulatory Breakthrough of Interest-Bearing Stablecoins

The third segment involves $YLDS interest-bearing stablecoin.

Unlike most offshore stablecoins on the market, $YLDS is issued by the SEC-registered Figure Certificate Company (FCC), fully backed by high-quality assets like US Treasuries. Holders earn a yield of SOFR minus 50 basis points—making it a more attractive choice than traditional non-interest-bearing stablecoins in a high-interest environment.

$YLDS, as the default settlement currency of Figure Exchange, bridges traditional finance and crypto markets. Users can directly purchase Bitcoin with $YLDS, and the system automatically matches trades between $YLDS and USDC in the background via the Figure Payments Corporation (FPC)’s mirror order mechanism. This arrangement ensures compliance and cross-market liquidity.

As of November 2025, the $YLDS balance has surged from $4 million in Q2 to nearly $100 million, expanding to Layer 1 ecosystems like Solana and Sui.

Three Revenue Engines Empowering Each Other

Figure’s $156.37 million revenue in Q3 comes from three mutually reinforcing sources:

Loan sales net gains ($63.56 million) are the largest engine. Of this, $51.72 million comes from full loan sales (transferring entire loans to institutions), and $8.27 million from securitized loans (issuing bonds at various levels from AAA to B-). This demonstrates Figure’s strong asset liquidity in the secondary market—it can originate loans and efficiently convert them into liquid assets, accelerating capital recycling.

Technology and ecosystem fees ($35.69 million) form the real moat. Of this, $15.55 million comes from technology licensing (providing automated loan systems LOS and blockchain integration to partner banks), and $16.25 million from ecosystem fees (matching and market access premiums). This reflects Figure’s shift from “loan origination” to “financial infrastructure provider”—its business model has upgraded from “earning loan spreads” to “collecting platform fees.”

Loan origination fees ($21.41 million) are a direct benefit of high automation. Processing fees, miscellaneous charges, and loan discounts are significantly higher because Figure eliminates traditional manual costs.

In addition, interest income ($17.86 million), net income from serviced assets ($9.33 million), and service fees ($8.50 million, with an average rate of 30 basis points) constitute ongoing revenue streams. This diversified structure allows Figure to profit both from efficient “fast turn” sales and from asset retention for long-term appreciation.

Why Can Figure Achieve a 57% Net Profit Margin?

Traditional financial institutions typically have net profit margins between 5-15%. Why can Figure approach nearly 6 times that?

First, blockchain provides cost advantages. From loan origination (costs from $11,230 to $730) to back-end settlement (from 30-45 days to 5 days), the efficiency gains across the entire value chain directly translate into margins.

Second, vertical integration creates synergy. Borrower data, when minted on-chain, possesses “native credit attributes,” enabling the issuance of AAA-rated securities without additional credit enhancement costs. Democratized Prime’s BWIC periodic liquidation mechanism ensures liquidity on the DeFi side, reducing risk costs. $YLDS as a settlement currency eliminates FX risk and third-party custody fees.

Third, platform effects are emerging. Figure has attracted enough partner banks, institutional investors, and DeFi users to form a self-reinforcing network—more participants bring higher liquidity, which in turn attracts more participants.

Finally, Figure dominates the RWA private credit market. As the largest non-bank originator of US HELOCs, with an automated system processing $16 billion annually, it has become a market pricing entity rather than a follower.

Market Position and Long-Term Insights

By December 2025, Figure has successfully completed an IPO, with a market cap stable between $7.5 billion and $9 billion. From a fintech startup to a nearly hundred-billion-dollar “RWA leader,” Figure’s trajectory sends a clear signal to the industry:

The value of blockchain in finance is not about “decentralization” as a political ideal, but about cost reduction, efficiency enhancement, and asset homogenization—cold, hard economic facts.

Loan data on Provenance, being immutable and fully transparent, makes credit assessment more efficient, securitization easier, and capital market pricing more rational. Mechanisms like BWIC enable precise risk quantification and marketization, lowering systemic risk premiums. $YLDS, as a compliant interest-bearing stablecoin, addresses long-standing settlement bottlenecks between traditional finance and DeFi.

This is not just a success story of a crypto project; it is a real-world depiction of how traditional finance is being reshaped by blockchain technology. The Q3 financial report essentially states a fact: once data is on-chain, processes are automated, and settlement is atomized, the marginal cost of finance can be reduced to what level?

The answer is: reduced to the point where a 57% net profit margin becomes possible.