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Real Estate Tokenization

Tokenization will reshape the real estate industry by increasing accessibility, liquidity, and efficiency in property transactions.

Tokenized Real Estate currently represents a tiny fraction of the total market but is projected to grow exponentially with a significant shift towards digitalization and fractional ownership in the real estate sector over the next decade.

Context​

Value​

Global real estate market size in 2024 is approximately $4.12 trillion, projected to reach around $5.85-6.13 trillion by 2030, of those numbers Real Estate tokenization is only at $3.8 billion (less than 0.1% of total market) but that number will change significantly as protocols for the tokenization of assets become standardized and normalized.

Potential​

Tokenization in Real Estate

  • Key benefits: increased liquidity, fractional ownership, global accessibility
  • Challenges: regulatory compliance, market adoption, technological barriers

Tokenomics and Incentive Structures

  • Incentive mechanisms for various stakeholders
  • Governance models for tokenized real estate assets
  • Liquidity provision and trading considerations
  • Token distribution and vesting strategies

Operating Principles​

How does real estate tokenization work?

Learn more about tokenization process

Tokenization Process​

Any asset can be tokenized, but real estate is particularly well-suited to this process due to its high value and illiquidity. Tokenization involves converting the ownership of an asset into digital tokens that can be traded on a blockchain. This process allows investors to purchase fractional ownership of a property, enabling them to invest in real estate without the need for large amounts of capital.

  1. Legal Framework
  2. Consult legal counsel
  3. What legal contracts? protection?
  4. Select asset(s) to tokenize
  5. Partner with a qualified custodian
  6. Select accounting method
  7. Work with tokenization provider
  8. Perform audits
  9. List tokens on exchanges
  10. Integrate with DeFi

See Tokenization to learn the fundamentals of how assets are tokenized.

Business Model​

Platforms in this space typically provide the following features and services:

  1. White-label solutions for real estate companies to tokenize their assets
  2. End-to-end services from legal compliance to token issuance and management
  3. Secondary market solutions for token trading
  4. Integration with various blockchain networks
  5. Compliance and KYC/AML solutions

Marketing Challenges​

  • Scepticism: Bad publicity from rug-pulls and DEGEN behaviour does not feed credibility.
  • Building Trust: Convincing traditional investors and asset owners to adopt blockchain technology can be challenging.
  • Liquidity: Ensuring liquidity for tokenized assets is crucial. Without sufficient trading volume, the platform may struggle to attract users.

Technical Challenges​

Blockchains have different architectures so developing tokenization protocols with cross-cutting applications has been a challenge.

  • Scalability: Ensuring the platform can handle a large number of transactions efficiently.
  • Security: Protecting the platform from cyber threats and ensuring the security of users' assets.

Platform​

What does it take to create a platform for trading and developing tokenized real estate assets?

EVM vs SVM vs SUI. Which protocol has the best support for real estate tokenisation?

Software Components​

  • Crypto Wallets: Investors use digital wallets like MetaMask to store and manage their tokens.
  • Decentralized exchanges: Enable peer-to-peer trading of real estate tokens.
  • Standard Smart Contracts: Used to create fungible (ERC-20) and non-fungible (ERC-721) tokens representing real estate assets or shares.
  • Blockchains: Provides a decentralized, immutable ledger for recording token ownership and transactions.

Project Implementation​

Integration and Interoperability

  • Connecting DePIN technologies with existing real estate systems
  • Data standardization and sharing protocols
  • API development for seamless integration
  • Cross-platform compatibility and user experience
  • Addressing integration issues and ensuring smooth adoption of new technologies

Marketplace​

Major players in the Real Estate tokenization marketplace include:

ProtocolReviewIntentIncentiveImplementation
DigiShares24 Nov
Blockchain App Factory
Inoru
Infinite Block Tech
SoluLab
Propy
building.inc

Overviews:

  • Digishares: A leading provider of white-label tokenization platforms for real assets, particularly in real estate.
  • Blockchain App Factory: Recognized as a pioneer in real estate tokenization, offering comprehensive blockchain-based development and marketing solutions.
  • Inoru: Distinctive for its use of RFID tags in construction projects to monitor progress, which is recorded in smart contracts.
  • Infinite Block Tech: Offers a range of services including property listing platforms, hybrid tokenization development, and fractional real tokenization solutions.
  • SoluLab: Specializes in real estate tokenization services, offering end-to-end solutions from ideation to launch.
  • Propy: Focuses on luxury and residential real estate tokenization, with features like NFT markets and MetaAgents.
  • building.inc:

See Thinkers

Attachments​