ASSET RISK REVIEW
Description
Executive Summary
Prime provides short-duration yield backed by financing against HELOC collateral originated through Figure’s ecosystem. The core return driver is the financing paid by originators from loan origination to securitization, with exposure centered on short-dated residential credit rather than traditional DeFi lending. Based on the structure described, this is best viewed as a moderate risk RWA allocation, with key risks in credit deterioration, extension risk, liquidity, and technical execution.
Project Overview
Figure is a blockchain-based lending and capital markets platform focused on consumer credit, especially HELOCs. It uses Provenance Blockchain for loan recordkeeping and transfer infrastructure, and Figure Lending is one of the largest non-bank HELOC originators in the U.S. Figure reports that its typical HELOC borrowers are relatively high quality, with an average FICO of 749 and average income of about $187,000 for 2024 originations. Figure also states that its HELOC origination process has been materially streamlined, with a median funding time of 10 days in 2024 versus an industry average of about 40 days.
On Figure Markets, the Democratized Prime marketplace offers lenders exposure to HELOC-backed financing through hourly Dutch auctions. The HELOC+ structure uses a repo framework where Figure Lending LLC acts as repo seller and Demo Prime Trust 2 holds the lender interest in the collateral; the disclosed maximum LTV ratio is 98%, with automated paydown mechanics if collateral coverage falls short.
Risk Assessment
Strengths
Backed by short-duration financing against HELOC collateral, rather than unsecured crypto credit.
Yield is ultimately sourced from interest paid by homeowners on first- or second-lien home equity loans, which is structurally different from incentive-driven DeFi yield.
Figure operates a scaled loan origination and capital markets platform, with established blockchain-based loan infrastructure and major institutional participants using its DART lien registry.
Repo structure is overcollateralized, and the HELOC+ documentation includes explicit LTV thresholds and automated paydown mechanics.
Short expected time from origination to securitization helps limit duration exposure relative to longer-dated credit.
Risks
Underlying credit risk: a rapid deterioration in borrower performance during the pre-securitization window could impair collateral quality before loans are securitized or repurchased.
Extension risk: if securitization markets slow or pause, what is expected to be short-duration financing could extend into a much longer exposure to residential credit.
Liquidity risk: insufficient on-chain liquidity could impair the unwind of looping or leveraged strategies during stress.
Technical risk: blockchain, smart contract, wallet, and bridging risks remain relevant even if the underlying collateral is off-chain credit.
Counterparty and operational risk: the structure depends on originators, trust mechanics, servicing, and the ability to enforce eligibility, substitution, and repurchase processes.
Our Assessment
Prime is best understood as a short-duration, RWA-backed credit strategy with stronger real-economy linkage than most DeFi yield products. Its main appeal is access to residential credit financing through a structured on-chain format. The main risks are not primarily DeFi market beta, but credit migration, securitization pipeline disruption, liquidity stress, and technical execution risk.
Overall Sentora Risk View:
Moderate risk allocation, appropriate for diversified RWA or stablecoin strategies with active monitoring of collateral performance, securitization cadence, and liquidity conditions.
Relationship to Sentora Vaults
This asset is used in these vaults as of March 2026:
Kamino - Sentora PYUSD: allocating partially part of its deposits to the PRIME Market