Tokenization And Asset Tradeability For A Digitized Real Estate Industry

Tok­eniza­tion is the basis for dig­i­ti­za­tion and asset trace­abil­i­ty in the real estate indus­try. With RAAY RE we tok­enize real estate prop­er­ty and make illiq­uid assets trad­able. Today, our com­pa­ny RAAY RE starts the secu­ri­ty token sale of Con­nex Coin, the first tok­enized invest­ment com­pli­ant with EU reg­u­la­tions. In essence, Con­nex Coin rep­re­sents a loan towards the man­ag­ing enti­ty of a fully leased, a pre­mi­um com­mer­cial prop­er­ty named Con­nex, in cen­tral Munich: Tok­eniza­tion And Asset Trade­abil­i­ty For A Dig­i­tized Real Estate Indus­try.

Since the token qual­i­fies as invest­ment token (“Ver­mö­gen­san­lage” in ger­man), it is not trade­able on cryp­tocur­ren­cy exchanges. Token hold­ers receive a fixed inter­est of 3% and may sell the token back at nom­i­nal value.

Why Tok­eniza­tion?

Tra­di­tion­al­ly, real estate has been financed by own­ers, banks, or exter­nal investors par­tic­i­pat­ing in real estate funds. The invest­ment process in real estate is com­plex, takes time and effort. By using blockchain tech­nol­o­gy and cryp­tocur­ren­cies or tokens, this process can be sim­pli­fied and made much more effi­cient.

Liq­uid­i­ty

First, there is the secu­ri­ti­za­tion aspect of tok­eniza­tion:: by mak­ing an illiq­uid real estate asset com­plete­ly liq­uid, this type of invest­ment is made acces­si­ble for a much larg­er tar­get group of poten­tial investors. Tra­di­tion­al­ly, main­ly wealthy indi­vid­u­als or com­pa­nies could invest in real estate. With a liq­uid asset, such as the Con­nex Coin, an indi­vid­ual can become a real estate investor start­ing with a 10 EUR invest­ment.

Besides hav­ing a bank account in an EU coun­try and a reg­is­tra­tion, noth­ing else is required to buy this invest­ment token. Since Con­nex Coin is a non-tradable, sta­ble invest­ment token, the token hold­er receives a 3% inter­est paid direct­ly to her bank account. Infor­ma­tion about the per­son­al hold­ings is dis­played in the per­son­al account. By using tokens, secu­ri­ti­za­tion is made easy and effi­cient.

Pro­gram­ma­bil­i­ty

Tok­eniza­tion is much more than secu­ri­ti­za­tion: a token can be described as pro­gram­ma­ble money. In other words: tok­eniza­tion adds pro­gram­ma­bil­i­ty to an asset. This way, busi­ness logic can be intro­duced, reduc­ing the need for man­u­al set­tle­ments and smart con­tracts can have func­tions for auto­mat­ic trans­ac­tions, for­mu­las for cal­cu­lat­ing asset prices, and other spe­cif­ic fea­tures at mar­gin­al costs. So, what kind of busi­ness logic can you add? Sim­ple answer: any. And exact­ly this large num­ber of degrees of free­dom makes it some­what chal­leng­ing to start with.

At RAAY RE, we have start­ed by lever­ag­ing our pro­pri­etary (Cryp­to) Smart Wal­let by adding fea­tures that allow token hold­ers mak­ing use of spe­cif­ic property-related func­tions, such as grant­i­ng access or allow­ing for the use and pay­ment of facil­i­ties. We will elab­o­rate more on this aspect of pro­gram­ma­bil­i­ty in the next post. From our per­spec­tive, the pro­gram­ma­bil­i­ty of for­mer­ly sta­t­ic assets pro­vides great oppor­tu­ni­ties for the real estate indus­try.

Immutabil­i­ty

A dig­i­tal, inte­ger trail of trans­ac­tions proves a his­to­ry of own­er­ship and elim­i­nates data mis­use and fraud, such as double-spending. Fur­ther­more, the con­sis­tent his­tor­i­cal record of all trans­ac­tions allows for real­time, fric­tion­less report­ing. Just ask your asset man­agers and CFOs about their admin­is­tra­tive headaches that tra­di­tion­al­ly could only be healed by tremen­dous account­ing efforts. With a guar­an­teed com­plete his­toric data set of all trans­ac­tions, this headache can be elim­i­nat­ed com­plete­ly. Tok­eniza­tion helps to min­i­mize admin­is­tra­tive efforts, time­wise, and with regards to costs.

Tok­eniza­tion And Asset Trade­abil­i­ty For A Dig­i­tized Real Estate Indus­try

For RAAY RE, the tok­eniza­tion of a share of the Con­nex build­ing is the first proof of func­tion­al­i­ty in our tok­eniza­tion mod­ule, which is one part of our Dig­i­tal Oper­at­ing Sys­tem for the real estate indus­try. There will be more assets tok­enized – as well as in terms of secu­ri­ti­za­tion, and, specif­i­cal­ly regard­ing the pro­gram­ma­bil­i­ty aspect of tok­eniza­tion: our tokens will come with built-in busi­ness logic that will unleash the full value of real estate assets.

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