The Future of DeFi: Why Liquid Assets, Not Real Estate, Will Drive Blockchain Finance

The convergence of real-world assets (RWAs) and decentralized finance (DeFi) has sparked a paradigm shift in capital markets. Yet, as the sector matures, a critical question emerges: which asset classes will truly drive the next wave of innovation? While real estate tokenization has captured headlines, the data and strategic vision of industry leaders like Mike Cagney of Figure Technologies suggest a different trajectory. Liquid assets-tokenized treasuries, stablecoins, and high-grade credit instruments-are poised to dominate DeFi's future, offering superior scalability, institutional demand, and regulatory compatibility. This analysis argues that investors should prioritize liquid-asset-backed protocols over speculative real estate tokenization, leveraging Figure's market leadership and the broader RWA-

DeFi convergence.

Mike Cagney's Vision: Liquidity as the Foundation of DeFi

Mike Cagney, co-founder and executive chairman of Figure Technologies, has long championed a DeFi ecosystem built on liquid assets. In a recent discussion on X, Cagney dismissed real estate as a "red herring" in blockchain finance, emphasizing that DeFi protocols require assets capable of rapid liquidation to maintain trust and efficiency. His focus on liquidity aligns with the inherent demands of decentralized systems, where smart contracts rely on collateral that can be swiftly converted to value during defaults or market stress.

Cagney's vision extends beyond theoretical arguments. Through Figure Markets, his vertically integrated platform, he is building a system where tokenized assets-such as U.S. Treasuries, stablecoins, and high-grade loans-can be originated, traded, and collateralized on-chain. This approach enables real-time cross-asset interactions, such as using tokenized treasuries as collateral for yield-generating positions, a feature that institutional investors increasingly demand. By 2025, Cagney anticipates billions in total value locked (TVL) rotating through these systems, signaling a transformative shift in capital deployment.

Figure's Market Leadership in On-Chain Liquidity

Figure Technologies' Q3 2025 performance underscores its leadership in tokenized liquidity. The company reported $156.37 million in revenue for the quarter, driven by a 70% year-over-year increase in total consumer loan marketplace volume, which reached $2.5 billion. Of this, 76%-or $1.9 billion-stemmed from tokenized loan originations, with Figure Connect contributing 46% of all loan activity, a 48% quarter-over-quarter surge. These figures highlight the centrality of tokenized assets in Figure's business model and validate its role as a bridge between traditional finance and DeFi.

Figure's strategic moves further solidify its position. The launch of an RWA consortium on Solana in Q3 2025 enhanced cross-chain interoperability, enabling institutional-grade yields for global investors. This initiative aligns with broader market trends: the tokenized RWA market reached $30 billion in Q3 2025, with institutional participation accounting for 70% of deployed capital in 2024. By prioritizing liquid assets, Figure is not only capturing market share but also addressing the scalability and efficiency gaps that have hindered DeFi's growth.

The Rise of Tokenized Securities and Stable Assets

Tokenized securities and stable assets are rapidly becoming the bedrock of DeFi. As of October 2025, tokenized U.S. Treasuries and stablecoins like YLDS-backed by real loan performance-have attracted significant institutional demand. For example, BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) raised over $500 million within months of its 2024 launch, demonstrating the appeal of tokenized financial instruments. These assets offer advantages such as real-time settlement, lower operational costs, and seamless integration into smart contracts, making them ideal for DeFi's programmable infrastructure.

Institutional adoption is accelerating. By April 2025, 61% of tokenized assets were attributed to private credit, while 30% came from treasuries. This trend is supported by evolving regulatory frameworks, including the EU's MiCA legislation, which provides a unified framework for tokenized securities across 27 member states. In contrast, real estate tokenization, while growing, faces regulatory fragmentation in the U.S. and operational challenges like slow settlement times and limited cross-chain interoperability.

Real Estate Tokenization: Growth vs. Limitations

Real estate tokenization has seen impressive growth, with the market valued at $33 billion in 2025. Fractional ownership models and blockchain-based automation have lowered entry barriers, enabling investments as low as $1,000. However, this growth masks critical limitations. Unlike liquid assets, real estate tokenization struggles with inherent illiquidity, as property values are subject to local market conditions and require physical infrastructure for management.

Moreover, adoption rates for real estate tokenization lag behind those of liquid assets. While real estate tokenization projects grew from $120 billion in 2023 to $400 billion in 2025, tokenized treasuries and stablecoins saw an 80% year-to-date increase in money-market fund assets to $7.4 billion in 2025. Institutional investors, who dominate the RWA market, have shown a clear preference for liquid assets due to their stability and ease of integration into existing portfolios.

Strategic Capital Allocation: Prioritizing Liquid-Asset-Backed Protocols

For investors, the data is clear: liquid-asset-backed DeFi protocols offer superior scalability, institutional demand, and regulatory compatibility compared to real estate tokenization. Figure's market leadership, Cagney's strategic vision, and the explosive growth of tokenized treasuries and stablecoins all point to a future where liquidity-not physical assets-drives blockchain finance.

Investors should focus on platforms that facilitate cross-asset collateralization, real-time settlement, and institutional-grade yields. Figure's RWA consortium on Solana, for instance, exemplifies how liquid assets can be leveraged to create a globally accessible, 24/7 capital markets infrastructure. Meanwhile, real estate tokenization, while promising, remains constrained by regulatory uncertainty and operational inefficiencies.

Conclusion

The DeFi revolution is not a monolith; it is a mosaic of innovations, with liquid assets emerging as the most viable foundation for scalable, institutional-grade blockchain finance. As Figure Technologies and visionaries like Mike Cagney demonstrate, the future lies in protocols that prioritize liquidity, transparency, and programmability. For investors seeking to allocate capital strategically, the message is unequivocal: liquid-asset-backed DeFi protocols will outpace speculative real estate tokenization in both adoption and returns.