Figure's Emerging Role in Blockchain Credit Markets: A Strategic Innovation Play in DeFi

The recent initiation of an "outperform" rating by Bernstein on Figure (FIGR) underscores the company's strategic positioning at the intersection of blockchain innovation and credit markets. With a $54 price target implying a 34% upside from its current valuation, Bernstein analysts have positioned Figure as a "Nasdaq of blockchain-based lending," a metaphor that captures its potential to become a foundational infrastructure player in decentralized finance (DeFi). This thesis is not merely speculative-it is rooted in Figure's dominance in tokenized credit, its fee-based business model, and the explosive growth of DeFi credit markets.

The DeFi Credit Boom: A $120 Billion Ecosystem

Decentralized finance credit markets have surged in 2025, with total value locked (TVL) surpassing $120 billion, driven by regulatory clarity in the U.S. and EU and the rise of real-world asset (RWA) integration, according to a Meme Insider report. Protocols like Aave and Ethereum-based platforms now dominate lending, but Figure's approach diverges by tokenizing traditional credit instruments-home equity, mortgages, and consumer loans-via its Provenance Blockchain. This innovation bridges the gap between legacy finance and DeFi, enabling fractional ownership and liquidity in previously illiquid assets.

Figure's market capture is already significant: it holds a 75% share of the $17 billion tokenized private credit market, with over $16 billion in funded loans to date, according to Bernstein. This leadership is underpinned by a joint venture with Sixth Street, which injects $2 billion in liquidity, and a regulatory framework spanning 180+ lending licenses-a critical advantage in an industry grappling with compliance challenges.

Strategic Innovation: From Balance Sheet to Fee-Based Model

Figure's transition from a balance sheet lending model to a fee-based marketplace via its Figure Connect platform is a masterstroke. By tokenizing loans and facilitating their trading, the company captures margins on every transaction while reducing capital intensity. Bernstein forecasts revenue will more than double from $341 million in 2024 to $754 million by 2027, with EBITDA climbing from $101 million to $427 million during the same period. This trajectory mirrors the shift in DeFi from collateral-heavy models to permissioned, undercollateralized systems, where efficiency and scalability reign supreme, as noted in the Meme Insider report.

The company's technological edge lies in its Provenance Blockchain, which automates loan origination, servicing, and trading. This infrastructure not only reduces settlement times but also aligns with broader DeFi trends, such as smart contract automation and interoperability with NFTs and metaverse platforms, according to a Grand View Research report. For instance, tokenized home equity loans can now be collateralized for yield farming strategies, a use case that aligns with the $13.1 billion market cap of yield-bearing stablecoins cited in the Meme Insider report.

Market Capture in a $178 Billion Future

The DeFi credit market is projected to grow at a 43% CAGR, reaching $178.63 billion by 2029, according to a StartUs Insights report. Figure's early mover advantage and institutional partnerships position it to capture a disproportionate share of this growth. Its collaboration with Sixth Street, for example, mirrors the institutional onboarding strategies of DeFi giants like Aave, which leveraged Horizon to onboard $50 million in TVL overnight. Similarly, Figure's regulatory infrastructure addresses a key pain point for traditional lenders, who are increasingly constrained by Basel III and other capital adequacy rules.

Critically, Figure's business model is agnostic to crypto volatility. Unlike protocols reliant on crypto-backed loans, Figure's tokenized assets are tied to real-world collateral, insulating it from the volatility that plagued earlier DeFi cycles. This stability is a key differentiator in a market where TVL has yet to recover to its 2021 peak of $50 billion, a point Bernstein highlights.

Investment Thesis: A 34% Upside in a High-Growth Sector

Bernstein's $54 price target reflects not just Figure's current metrics but its potential to become the "Amazon Web Services of blockchain-based lending." The company's 75% market share in a niche segment, combined with its scalable fee-based model, suggests room for expansion as tokenized credit adoption accelerates. Moreover, the broader DeFi ecosystem-now 63% of crypto borrowing-provides a tailwind, with institutional participation and regulatory clarity further fueling growth, as Bernstein observes.

For investors, Figure represents a rare confluence of first-mover advantage, regulatory foresight, and technological innovation. Its IPO valuation of $5.3 billion may seem lofty, but it pales in comparison to the $178 billion DeFi credit market it is poised to serve. As Bernstein analysts note, Figure's management team and distribution network are "best-in-class," a critical asset in an industry where execution often trumps ideas.

Conclusion

Figure's emergence as a blockchain credit infrastructure leader is not a flash in the pan-it is a calculated response to the structural inefficiencies of traditional lending. With Bernstein's endorsement, a 34% upside target, and a $120 billion DeFi TVL backdrop, the company is uniquely positioned to capitalize on the tokenization of real-world assets. For investors seeking exposure to the next phase of DeFi, Figure offers a compelling, well-defended thesis.