Blockchain-Based Stock Lending and Equity Tokenization: A Paradigm Shift in Capital Markets

The capital markets are undergoing a seismic transformation, driven by blockchain technology's ability to dismantle intermediation layers and unlock liquidity in previously rigid systems. At the forefront of this shift is Figure Technology's OPEN platform, a blockchain-native infrastructure that reimagines stock lending, equity tokenization, and capital market efficiency. By leveraging its proprietary Provenance Blockchain, Figure is not only reducing reliance on traditional intermediaries but also creating a self-custody, self-settle ecosystem that aligns with the growing institutional demand for transparency and speed.

The Problem: Intermediation and Liquidity Constraints

Traditional stock lending markets are riddled with inefficiencies. Investors must navigate a labyrinth of prime brokers, custodians, and clearinghouses, each adding friction, cost, and counterparty risk. Settlements can take days, and the lack of real-time visibility into collateral and ownership creates systemic vulnerabilities. Meanwhile, equity tokenization-though promising-has struggled to gain traction due to regulatory ambiguity, illiquid markets, and the absence of a scalable infrastructure.

Figure's OPEN Platform: A Disruptive Solution

Figure's On-Chain Public Equity Network (OPEN) addresses these pain points by enabling direct peer-to-peer stock lending over a blockchain. Investors can lend shares directly to one another, bypassing intermediaries entirely. This is made possible through smart contracts that automate collateral management, enforce transparent rules, and facilitate real-time settlements. For example, the platform's integration with Figure's Provenance Blockchain has already demonstrated 10-day home equity loan funding (down from 42 days previously) and $869 million in December 2025 consumer loan volume, reflecting a 134% year-over-year growth.

Moreover, OPEN allows companies to issue tokenized equity representing actual ownership stakes, which can be lent, borrowed against, or traded on-chain. This innovation is part of a broader trend: 60% of institutional investors plan to increase digital asset allocations in 2025, with expectations of doubling exposure within three years. Tokenization's appeal lies in its ability to fractionalize ownership, reduce compliance costs, and enable instant trading-features that align with the GENIUS Act's push for regulated, asset-backed digital finance.

Liquidity and Efficiency Gains

The platform's impact on liquidity is profound. By tokenizing $16.2 billion in private credit and introducing $YLDS, a yield-bearing token backed by U.S. Treasuries, Figure has created a liquidity bridge between traditional and digital markets. These tokens operate similarly to money market funds but with blockchain-native advantages: instant trading, transparent auditability, and lower operational costs. For instance, Figure's Figure Connect platform reduces intermediary costs by up to 1% for loan sales, while its blockchain-based securitization of loans has cut transaction costs and settlement times significantly.

Institutional adoption further validates these gains. Firms like Jump Trading are preparing to provide market-making services on the blockchain, signaling confidence in OPEN's scalability. This aligns with broader market trends: 52% of institutional investors cite increased transparency as a key driver of tokenization adoption, while 39% highlight faster trading speeds.

Systemic Implications and Risks

While Figure's innovations are transformative, they also intersect with broader systemic risks. The EU Non-bank Financial Intermediation Risk Monitor 2025 warns of vulnerabilities in leverage, liquidity mismatches, and interconnectedness within non-bank financial systems. By reducing reliance on intermediaries and automating collateral rules via smart contracts, blockchain platforms like OPEN could mitigate these risks. However, the U.S. Treasury market's liquidity challenges in early 2025-marked by widening bid-ask spreads during tariff-driven volatility-underscore the need for robust, decentralized alternatives.

Conclusion: A New Era for Capital Markets

Figure's OPEN platform is more than a technological upgrade-it is a paradigm shift in how capital markets function. By democratizing access to prime services, accelerating settlements, and tokenizing equity, Figure is addressing the core inefficiencies of traditional systems. As institutional demand for digital assets surges and regulatory frameworks evolve, blockchain-based solutions will likely become the backbone of a more liquid, transparent, and inclusive financial ecosystem. For investors, the message is clear: the future of capital markets is on-chain.