A cryptocurrency investor is assisting a publicly listed mortgage issuer in delving into DeFi, or decentralized finance. Better.com declared on Monday that Framework Ventures has reached an agreement to purchase 10% of its shares, which are valued at approximately $45 million at current prices. This action occurs as Better.com intends to enter tokenization, which is the process of placing non-crypto assets such as stocks into blockchain encasements, and as the company aims to issue a token backed by $500 million worth of mortgages and other loans.
The proposed mortgage tokens, which aim to provide returns to their holders, will initially only be accessible to accredited investors. However, Better.com intends to widen access to a more diverse group of participants. “We’re going to issue these, and then we’re figuring out ‘how we can get this into the hands of consumers,’” stated Vishal Garg, the founder and CEO of Better.com, in an interview.
Garg refused to disclose when the tokens will be launched or what they will be named. A person acquainted with the matter, who requested anonymity to reveal non-public details, mentioned that a possible name for the cryptocurrency targeted at retail customers is “Home Token.”
Removing intermediaries
The action by Better.com, which aimed to go public with a valuation of $7.7 billion in 2021, occurs as the company battles a declining stock price. The mortgage issuer positions itself as a digital-first housing finance provider and utilizes AI to assess potential homeowners. In 2023, when the company finally went public, its shares plummeted by more than 90% on its first day of trading. As of Monday, Better.com has a market capitalization of approximately $450 million.
The public mortgage issuer is also the latest financial institution to embrace crypto and tokenization. Financial behemoths such as [names omitted] have begun experimenting with tokenization and have launched their own money-market funds on public blockchains. Advocates of placing real-world assets “on chain” assert that this process eliminates intermediaries and lowers costs.
That is the same argument Garg put forth when explaining the reason for Better.com’s foray into DeFi. “There are numerous layers of intermediation that we will be able to eliminate,” he stated. “And if we can finance at a much lower cost than anyone else in the mortgage market, we will be able to offer consumers a much cheaper mortgage than anyone else in the market.”
As part of its strategy to tokenize mortgages, Better.com is collaborating with Sky, a DeFi ecosystem that employs real-world assets such as mortgages and other financial products to support stablecoins, which are cryptocurrencies intended to remain stable unlike more volatile tokens like Bitcoin or Ethereum.
Framework Ventures is among the largest supporters of Sky, which had approximately $18 billion in capital in its ecosystem as of Monday afternoon.
“We are connecting the universe denominated in crypto coins to the public equities universe, with a foundation of stablecoins,” declared Vance Spencer, co-founder of Framework Ventures.