Blockchain-based lender Figure Technology is launching a new platform to issue on-chain equity, allowing investors to lend shares directly to one another without traditional intermediaries.
Figure shares surged 16.4% on Thursday, and gained another 4% in aftermarket trading.
The On-Chain Public Equity Network, or OPEN, will allow companies to issue equity on Figure’s Provenance blockchain, the company said in a Wednesday statement. Unlike many tokenization efforts, OPEN’s blockchain-based shares will not be synthetic versions of listed stock, according to Figure. Instead, the tokens will represent actual equity ownership that shareholders can lend or borrow against, reducing the role typically played by prime brokers.
Figure plans to be the first company to issue its own equity through OPEN, according to co-founder and Executive Chairman Mike Cagney. Once issued, the equity tokens will be tradable on Figure’s decentralized trading platform.
“We’re really cutting everything out,” Cagney said in an interview. He added that the platform would eliminate the need for a central securities depository, a centralized stock exchange or retail brokers acting as intermediaries.
“So it really is a reimagining and reinvention of the equity capital market in a true blockchain-data way,” Cagney said.
Founded in 2018, Figure went public in September, raising $787.5 million in an initial public offering. Cagney started the company to focus on blockchain-based lending products such as home equity lines of credit, after previously serving as chief executive officer of digital bank operator SoFi Technologies Inc.
Cagney said blockchain-based equity could also create new opportunities for prime brokers through cross-collateralization and lending services.
Figure has already seen interest from companies looking to issue shares through OPEN, including digital-asset treasury firms, or DATs. These are public companies that raise capital to hold cryptocurrencies on their balance sheets, with the most notable example being Bitcoin-focused investor Strategy.
An increasing number of DATs have seen their market value fall below that of their crypto holdings since a broad selloff in October. Cagney said OPEN could help alleviate the discount by allowing investors to buy shares directly using cryptocurrencies, such as buying shares in a Solana DAT using the Solana cryptocurrency.
When “you’re on OPEN, the shareholder has a digital wallet that can take digital assets, including tokens,” Cagney explained. “So you have an immediate mechanism to run that tender process and pull your price back up to” net asset value.
