What Is LienFi? Inside the Platform Bringing Tax Liens On-Chain
For most of its history, the tax sale space has been defined by friction. To participate, you have to register for specific auctions, show up (in person or online) at the right moment, navigate state-by-state statutes that change constantly, and accept that your capital will be returned to you on the county's timeline — not yours. That friction has been both a barrier to entry and, for seasoned investors, a kind of moat.
A new platform called LienFi is betting that the moat is about to get a lot smaller.
On a recent episode of Tax Sale Insiders, Brian sat down with Michael Lee — co-founder of Gondola Partners and CapFi Partners, and one of the architects behind LienFi — to talk about what the platform is, why it exists, and what it could mean for the future of tax lien and tax deed investing.
From a $100 Tip to a $100M AUM Tax Lien Fund
Michael's path into tax liens didn't start with tax liens. It started with a restaurant table in Raleigh, North Carolina, in the summer of 2008.
Fresh out of college and unable to land a finance job during the global financial crisis, Michael was waiting tables when a couple left him a $100 tip on a $45 bill. That tipper turned out to be the co-founder of what is now the largest RIA in the country. Michael tracked him down, talked his way into an interview, and spent the next decade learning institutional finance from the inside.
In 2021, Michael left to launch Gondola Capital, focused on alternative investments and blockchain technology. His first client, PowerFi Capital, was a crypto-native fund spun out of KKR. But during conversations with a multifamily office about crypto allocations, Michael got an unexpected pitch back: Do you know what tax liens are?
He didn't. But the office was investing in them, and the reasons were compelling — consistent yield, property-backed security, and almost zero correlation to anything else in a typical portfolio.
That conversation eventually led to Gondola acquiring a small tax lien fund with about $2M in AUM. Today, that fund has grown to roughly $100 million in AUM, with custody relationships at Schwab, Fidelity, Goldman Sachs, and Pershing.
The Problem LienFi Is Solving
Running an institutional tax lien fund taught Michael something most experienced lien investors already know: this asset class is uniquely hard to scale.
The multifamily office that first introduced him to liens explained the problem perfectly. They wanted a 5% portfolio allocation to tax liens. But the moment they hit that target, redemptions started coming back as cash, dropping their exposure to 2.5%. There was no easy way to redeploy that capital quickly. Auctions are episodic. Sourcing is state-specific. Diligence is intricate.
For an allocator, that means tax liens are nearly impossible to hold as a stable percentage of a portfolio without significant operational infrastructure.
LienFi is Michael's answer to that problem — and it's built on a thesis about where capital markets are heading.
A Quick Primer: Real-World Assets On-Chain
To understand LienFi, it helps to understand what's already happened with stablecoins and tokenized treasuries.
There's now over $300 billion in U.S. dollars circulating on-chain as stablecoins — real dollars custodied at firms like Cantor Fitzgerald, with on-chain tokens representing that collateral. Once dollars came on-chain, they naturally sought yield. The first obvious destination was U.S. Treasuries, and today there's more than $10 billion in tokenized Treasuries on-chain, with Franklin Templeton, BlackRock, and Coinbase among the issuers.
Michael's insight: tax liens sit in a sweet spot on the risk spectrum.
- Above Treasuries (not backed by the full faith and credit of the U.S. government)
- Below private credit (property-secured, with statutorily defined interest rates)
- Yielding more than the risk-free rate, often meaningfully more
For on-chain capital that's already comfortable holding stablecoins and tokenized Treasuries, tax liens are a logical next step up the risk curve — if someone can build the rails.
How LienFi Actually Works
LienFi has two distinct components, and it's important not to confuse them:
1. The LienFi Platform. This is where tokenized tax liens (and eventually deeds) are bought and sold. Each token on the platform represents a specific off-chain lien, with all the metadata — interest rate, property details, redemption terms — encoded on-chain. Buyers transact in USDC (a U.S. dollar stablecoin), so there's no crypto price volatility affecting the yield. If you buy a lien yielding 6% in USDC, you're earning 6% in dollars.
2. The LienFi Coin (LFI). This is a separate token, traded on Coinbase's Base blockchain, with a fixed supply of 100 billion. The LFI coin isn't required to buy liens, but it creates alignment between platform users and the ecosystem. Two known features so far:
- Yield incentives on platform purchases
- Premium tier access to higher-yield instruments (Michael hinted at deeds yielding 15–25%, particularly in Texas)
For the off-chain tax lien holder, LienFi creates a new secondary market — a place to list liens and access on-chain capital. For the on-chain buyer, it's access to a property-backed, dollar-denominated yield product they couldn't easily get before. For LienFi itself, it's a fee-generating infrastructure business.
The Innovator's Dilemma
The most interesting strategic move here is that Michael and his partners are running a $100M tax lien fund — and they're building a platform that, by design, makes it easier for other people to compete with that fund.
Brian called this out directly in the interview: most tax lien investors treat the operational difficulty of the space as a moat. LienFi is deliberately lowering that moat.
Michael's response was that he sees two options when facing the innovator's dilemma: defend the status quo, or disrupt yourself before someone else does. They chose the latter.
If you believe — as Brian put it — that a rising tide lifts all boats, LienFi's success could meaningfully expand the pool of capital flowing into tax liens and deeds. More buyers means more competition at auctions, but also more liquidity in secondary markets and more institutional legitimacy for the asset class overall.
Launch Timeline and What's Next
Here's where things stand as of the conversation:
- LFI coin launched May 1st on Base
- Platform is in internal use, with early access invites going out in the coming days
- Full public launch expected within weeks, not months
- Initial liens: Florida
- Next states: New Jersey, Texas (likely including tax deeds), with Louisiana on the radar for June following statutory changes effective January 1, 2026
- By year-end: 10+ states (Michael noted his timelines tend to run two quarters long, so plan accordingly)
Texas deeds are the most intriguing piece on the horizon. Depending on how they're listed on the platform, yields could land anywhere in the 15–25% range — well above anything currently available in tokenized form on-chain.
Why This Matters for Tax Sale Investors
Whether or not you ever buy a tokenized lien yourself, LienFi is worth paying attention to for a few reasons:
- Secondary market liquidity is changing. If LienFi gains traction, lien holders will have a new option for exiting positions before redemption — and a new source of price discovery.
- Institutional capital is coming. The same allocators buying tokenized Treasuries are the natural next buyers of tokenized liens. That capital is patient, large, and yield-hungry.
- The competitive landscape is shifting. More accessible doesn't always mean more crowded at the local courthouse, but it does mean more dollars chasing the same statutory yields over time.
- State law changes are accelerating. The last five years have seen more legislative change in the tax sale space than the previous fifteen. Platforms like LienFi are both a response to and an accelerant of that pace.
Learn More
To learn more you can listen to the full Tax Sale Insiders episode with Michael for the complete story — including his thoughts on tax lien misconceptions, the "buy a lien, get a mansion" myth, and what it really takes to bring a complex asset class on-chain.
