Figure’s flash crash sends $13bn worth of blockchain loans flying

Core Insights - A significant price drop of 81% occurred for the Figure Heloc token, which represents $13 billion in home equity loans, raising concerns about the volatility of such digital assets [1][2] - The incident resulted in a temporary loss of over $10 billion in market value for the token, highlighting potential issues with liquidity and market resilience [2][3] Company Overview - Figure, the issuer of the Heloc token, has a market capitalization of $8.5 billion and recently raised nearly $800 million through a US IPO [3] - The company claims to have originated $13 billion worth of Home Equity Lines of Credit (HELOCs), which are loans secured against the value of homes [5] Industry Context - The tokenization of real-world assets, including consumer loans, has grown into an $18 billion market this year, with projections suggesting it could expand to a $19 trillion industry by 2033 [4] - Proponents of asset tokenization argue it can enhance speed and efficiency in the financial system, although liquidity issues remain a concern [4][5] Liquidity Issues - Figure utilizes the Provenance blockchain for issuing and recording loans, but market data indicates that liquidity for the Heloc token is notably low, with only $1,516 in transactions over the past 24 hours [5][7] - Low liquidity can lead to significant price fluctuations, particularly when large buy or sell orders are placed [7]