Figure disclosed a $149 million securitization conducted on Provenance

Figure Technologies disclosed on March 11, 2020 that it had sponsored an asset-backed securitization of more than $149 million in home-equity lines of credit using the Provenance blockchain. The transaction, identified as FLOC 2020-1, had been completed on March 5 and was announced with a case study current through March 10.

The development mattered because Figure presented Provenance as infrastructure for a live credit-market transaction, not a demonstration running beside conventional records. According to the sponsor’s account, the underlying loans were originated, serviced, financed and sold using the blockchain before being pooled into securities. That made the transaction a significant test of whether distributed ledgers could coordinate multiple institutions across an asset’s lifecycle.

From consumer loans to bonds

Securitization pools loans inside a special-purpose vehicle and issues securities backed by the resulting cash flows. The process normally involves originators, warehouse lenders, purchasers, servicers, trustees, underwriters and other intermediaries maintaining related but separate records.

Figure’s case study said it originated approximately $150 million of HELOCs, financed them through a Jefferies warehouse facility on Provenance and sold them to a third-party investor. That investor contributed the loans to the FLOC 2020-1 securitization through the same system. Jefferies and Nomura acted as initial purchasers, while Tilden Park Capital Management participated as a subordinate-note buyer. Dentons served as issuer counsel.

Provenance stored records supporting loan ownership and document integrity while smart contracts handled functions including compliance checks, collateral pledging and payment calculations. Borrower funds and bondholder payments still interacted with conventional banking and legal arrangements. The use of a blockchain therefore did not eliminate the securitization trust, contractual rights, fiat banking system or every transaction party.

That distinction limits the broadest interpretation of “on blockchain.” Provenance supplied a shared production record and automated parts of the workflow, but the loans remained claims against borrowers and the securities remained legally structured financial instruments.

The claimed savings require caution

Figure calculated 117 basis points of combined margin improvement: 23 basis points in origination, at least 26 in servicing, 45 in financing and 23 in securitization. One basis point equals 0.01 percentage point, so 117 basis points equals 1.17 percentage points.

The company attributed those efficiencies to reduced third-party expenses, automated diligence, faster settlement and more current performance data. It also extrapolated that a one-percentage-point saving across a $3 trillion annual securitization market could equal $30 billion. That arithmetic is correct, but the inputs were supplied by Figure. The $30 billion figure was a hypothetical market-wide extrapolation, not savings realized by FLOC 2020-1.

No independent audit in the surviving March 11 record reproduced the 117-basis-point calculation. The case study also said some benefits, including improved execution and secondary-market liquidity, remained to be demonstrated through subsequent issuances. Those qualifications prevent the transaction from proving that every securitization would achieve comparable economics.

What the milestone established

Contemporaneous coverage independently identified the pool at approximately $149 million and confirmed the participation of established capital-markets firms. It also supplied an important historical correction: blockchain-related asset-backed securities had previously been issued in China. FLOC 2020-1 should therefore not be described as the first asset-backed security ever to involve blockchain.

Its narrower claim was more defensible and more useful. Figure had applied one production ledger across origination, servicing, financing and sale of the collateral rather than attaching blockchain to only one stage or mirroring an off-chain transaction. The institutional significance lay in that end-to-end scope.

Later confirmation

In 2023, DBRS Morningstar described FLOC 2020-1 as an unrated securitization of approximately $149 million of HELOCs originated, serviced, financed and sold through Provenance. That later rating-agency record corroborates the transaction’s structure and size, but it was not available on March 11, 2020 and does not independently validate Figure’s cost-savings estimates.