Why bring IRL property on-chain?
Most of the sky-high yields in the existing DeFi ecosystem are not sustainable and will gradually revert to mean. In contrast, real estate generates its own yield, ensuring that the yield remains sustainable through productive real world rent.
Bringing real estate on chain would allow for sustainable, consistent yields (on top of additional DeFi use cases).
Stablecoins, especially those backed by currency, is inherently centralized. Currencies are held in the backing institution's bank accounts that are centralized in nature.
Moreover, coins tied to fiat currencies are affected by the inflationary dynamics plaguing those currencies; stablecoins are worth less over time.
Each collection of Real Estate Tokens on-chain is held by different entities globally, enabling them to be decentralized fundamentally. Additionally, real estate is a traditional inflation hedge – your underlying real estate increase in value over time.
Bringing real estate on-chain unlocks use cases that are not available in traditional real estate. For example, a physical real estate worth $100,000 can not be used to earn additional interest by depositing the title deed with a bank. Instead, the only return is via rental income and value appreciation. However, $100,000 in Real Estate Tokens can allow individuals to stake, farm, and earn rewards. Real Estate on-chain allows one to unlock the inherent value by composing with other DeFi projects, increasing demand, and ultimately the value of the Real Estate Tokens – Real Estate on chain will be worth more than real estate IRL.
Real Estate IRL has long been recognized as both an inflation hedge and a stable source of passive income. However, the industry has yet to embrace modern technological disruptions, which leads to some disadvantages including:
- Lack of Liquidity — Unlike other asset classes, it takes a long time to enter and exit a real estate position.
- Poor Accessibility — The high quantum of traditional Real Estate requires significant capital upfront and transaction fees can be high, creating a high barrier to entry to many individuals.
- No Composability — Leveraging a real estate property for additional use cases beyond securing a mortgage IRL is difficult. Even then, getting a line of credit involves tons of paperwork, doxxing, and bureaucracy. Processes are also not transparent, limiting the use cases and demand for the title deed and constraining the potential value of the property.
DeFi will improve the overall ecosystem by introducing:
- Ample liquidity — Automated Market Makers will leverage Liquidity Pools to enable anyone anywhere to swap their tokens for liquidity any anytime — unlocking 24/7 liquidity for Real Estate on Chain.
- Accessibility — Real Estate Tokens can be owned in any denomination, enabling anyone to own the rights to buyout other Real Estate Token Holders and redeem the title deed for a fraction of the full value of the property. The high quantum and transactional costs of traditional real estate are no longer a barrier to entry, empowering an entirely new class of landlords.
- Composability- Real Estate Tokens are ERC20 tokens designed to be composable with other DeFi projects on the public chain, increasing their use case and demand which will enhance the overall value of the Real Estate Tokens on-chain. CitaDAO platform (Knight) governance tokens will, serve as a foundation to incentivize a plethora of innovative DeFi primitives, such as collateralized loans, futures, indexes, options, etc.
- Ease of use — Crypto Natives will be empowered to diversify their portfolios with real estate globally without having to navigate cumbersome and restrictive local land laws.