A crypto investor is helping a publicly traded mortgage issuer dive into DeFi, or decentralized finance. Better.com announced on Monday that Framework Ventures has struck a deal to buy 10% of its stock, worth about $45 million at current prices. The move comes as Better.com plans to dive into tokenization, or the act of putting non-crypto assets like stocks in blockchain wrappers, and as the company plans to issue a token backed by $500 million worth of mortgages and other loans.
The planned mortgage tokens, which propose to grant yield to their holders, will at first be available just for accredited investors. But Better.com plans to expand access to a broader set of participants. “We’re going to be issuing these, and then we’re figuring out, ‘How do we get this in the hands of consumers?’” said Vishal Garg, founder and CEO of Better.com, in an interview.
Garg declined to say when the tokens will go live or what the tokens will be called. One possible name for the retail-focused cryptocurrency is “Home Token,” said a person familiar with the matter, who asked for anonymity to disclose nonpublic information.
Removing intermediaries
The move from Better.com, which planned to go public at a $7.7 billion valuation in 2021, comes as the company combats a flagging stock price. The mortgage issuer brands itself as a digital-first housing finance provider and uses AI to evaluate potential homeowners. In 2023, when the company finally went public, it saw its shares dip more than 90% in its first day of trading. Better.com has a market capitalization of about $450 million as of Monday.
The public mortgage issuer is also the latest financial firm to turn to crypto and tokenization. Financial giants like BlackRock and Fidelity have started to experiment with tokenization and have issued their own money-market funds on public blockchains. Proponents of putting real-world assets “on chain” say the process cuts out middlemen and reduces fees.
That’s the same pitch Garg made when explaining the rationale behind Better.com’s push into DeFi. “There are so many different layers of intermediation that we’re going to be able to take out,” he said. “And if we’re able to finance at a much lower cost than anyone else in the mortgage market, we’re going to be able to offer consumers a much cheaper mortgage than anybody else in the market.”
As part of its plan to tokenize mortgages, Better.com is working with Sky, a DeFi ecosystem that uses real-world assets like mortgages and other financial products to back stablecoins, or cryptocurrencies designed to stay stable as opposed to more volatile tokens like Bitcoin or Ethereum.
Framework Ventures is one of the biggest backers of Sky, which has about $18 billion in capital in its ecosystem as of Monday afternoon.
“We’re bridging the crypto coin-denominated universe to the public equities universe, with a substrate of stablecoins,” said Vance Spencer, cofounder of Framework Ventures.
