Flagship (@flagshipfyi) • Hey
Flagship (@flagshipfyi) • Hey
Publications
- RWA's from Land to Ledger: Top 9 Real Estate Projects Leading Tokenization
Real Estate, one of the most coveted markets in the world has begun its ascension into tokenization. From land to ledger, Real Estate has arrived on-chain.
At an ever-increasing rate distributed technology continues to eat the world of finance, RWA Tokenization, the process of issuing digital tokens to represent the value of real-world assets has begun to permeate the consciousness of institutions and enterprises alike. Historically considered to be among the most stable and reliable asset classes in the world, an area that has been of particular interest is the digitization of Real Estate. Simply put, digitizing or tokenizing real estate is a multi-pronged process of transferring existing (paper-based) systems and processes of ownership to match the interconnected, high-speed demands of the modern world economy.
**Opportunities and Challenges of on-chain real estate**
Valued at an incredible >$325 Trillion USD and growing at a compounded annual growth rate of ~5.3%, this mammoth of a market eclipses the current digital economy ~300:1 and has the potential to redefine equity opportunities for the global population.
Tucked away behind a moat of regulation and operational inefficiencies, real estate has gone relatively unimpacted by the digital revolution of the past decades. Now, with the recent shift of the global economic environment into the exploration of de-dollarization and the exponential improvement in the capabilities of distributed ledger technologies, real estate has become a focal point for innovation.
**The Opportunities of Tokenizing Real Estate**
Tokenization introduces a redesigned “operating system” for real estate that will allow a new caliber of industry participants to take over the landscape and provide a fresh perspective on solving many pressing issues.
**Disintermediation**
It is no secret that the legacy system of real estate is overly saturated with rent-seeking middlemen that charge obscene fees and delay processes. Real Estate tokenization will streamline operations that were previously handled by 3rd parties and minimize the potential for human error.
**Fractional Ownership**
Ownership of real estate has always been an all-or-nothing approach. Singular entities had to possess the whole asset and carry full liability. Fractionalizing by tokenizing real estate inverts this model and introduces the concept of micro-ownership, whereby a single property can be owned by a pool of individual entities. Given that fractionalization also lowers the barriers to entry for investors, broader portions of the population will have the chance to enter this market segment.
**Enhanced Liquidity**
Due to the nature of it being a high-value asset, real estate is known to be highly illiquid. Transactions within the sector can easily take months, even years to complete. This illiquidity is the pinnacle upon which large third-party spreads and exorbitant fees have been generated. Whenever properties take on the form factor of a token, they will inherit the settlement assurances and transactional capabilities of their underlying distributed ledgers; which in the case of a network like Ethereum would condense a month-long underwriting into a 10-minute block time.
**Accessibility**
Real Estate markets have been exclusively localized, meaning that individual investors were denied the right to participate across government borders. Whenever in the form of a token, borders become irrelevant. Real estate becomes a digital asset class that is within reach of people on all layers of the economy.
**The Challenges of Tokenizing Real Estate**
While the transactional and settlement side of the equation might experience an order of magnitude of improvement, however, there still remain a slew of challenges that stand in the way of a seamless transition to a fully autonomous tokenized real estate market.
**Regulatory Clarity**
The single greatest hurdle is regulation. Traditional institutions and the largest market makers in the industry do not want to risk losing their dominance and have thus rooted their operations in the form of regulations. Billions of dollars are spent lobbying to protect their existing moats and odds are they will continue to do whatever it takes to maximize their benefits at the expense of the end consumer. Moreover, the slow-moving government organizations are still far from certain about the legal recognition of digital assets as a whole; delaying and stifling innovation.
**Due Diligence**
Even though transactions may become seamless to conduct, other due diligence processes such as property inspection would still remain a high-touch human operation. As the human factor still remains prominent, there comes the unforeseen curve of educating these humans on how to interact with the new systems. Given how permanent these systems are, errors can potentially materialize in new ways that will require the introduction of yet another layer of third-party human intervention for conflict resolution.
**Enforcement**
Considering all of the drawbacks in the traditional system of real estate, credit must be given to the strength of enforcement. After an asset has transferred ownership, the next immediate question arises around the protection of that ownership. Whether via a legal/court system, physical policing, or a mixture of both, enforcement is a uniquely human function that requires the conscious awareness of the full nuanced spectrum of the human experience. Hard coding this logic into smart contracts does not satisfy the chaotic variances of human behavior.
Top Projects in Real Estate Tokenization
In spite of the regulatory headwinds for tokenized real estate, the tremendous potentiality of tokenized opportunities has inspired many incredibly intelligent groups of people to pursue the development of projects in this burgeoning space. These are the top projects bringing land to ledger.
Blocksquare
Infrastructure provider with a keen awareness of the regulatory landscape. Blocksquare acts as a business-to-business entity that works to empower other startups with the necessary tooling to get into the tokenized real estate business. Based in Slovenia (EU), Blocksquare provides compliant technology to build marketplaces using blockchain as a backend management system.
RealT
An OG in this nascent sector, RealT has been operating since late 2018/early 2019 and focuses on fractionalized ownership and frictionless asset transfer. While there is no massive technological breakthrough, RealT does provide a great case study on the simplistic basic implementation of tokenization. RealT acquires real estate via its Delaware incorporation, then leverages Ethereum and Gnosis Chain to digitize the paper deeds into tokenized representations and goes on to offer these tokens to investors around the world. **US residents must pass accreditation requirements*
Ekta
A project that is looking to provide both a front-end real estate investment interface with low minimums as well as a purpose-built blockchain (Ektachain) for providing general purpose tokenization. Hefty promises with a very wide range of services, Ekta seems like a soup of great ideas. Scattered attention has resulted in most multi-purpose startups failing to attain their goals. Nevertheless, with a great vision, technological understanding, and deep industry insight, there is potential that Ekta will provide some promising solutions.
L.A.B.S.
Liquid Assets Brokerage System (LABS) is approaching real estate tokenization top-down, addressing every element from retail investments to property management to timeshares and everything in between. Their mission revolves around the enhancement of liquidity and inclusion of a worldwide audience that is interested in building real-estate portfolios.
Theopetra Labs
An extremely innovative project that caters to the full ecosystem of functionality necessary to provide shelter to the American market. Mostly focused on the consumer-facing front-end portion of the real estate process, through accessibility, Theopetra partners with two other projects (T-home Capital and REAT network) to provide a membership to its community that receives better-than-market living options.
REAT Network
Oriented as a pseudo-non-profit protocol/organization that is focused on providing solutions to the renters market in America; REAT protocol sports a novel architecture. REAT intends on leveraging the PoXL (proof of transfer-lite) consensus mechanism as a means by which to offset economic entropy. Recently, REAT consolidated into Theopetra Labs.
Parcl
Parcl is a Real Estate investment platform built on the Solana blockchain specifically designed for higher frequency trading activity. Parcl’s application synthesizes the grandeur of Real Estate markets with the liquidity and functionality of equity markets. Parcl provides a unique twist on traditional real estate portfolio capabilities through three major functions, micro-fractional investments (at null minimum), margin options up to 10x, and even allowing for inverse positions (shorting).
Robinland
Robinland transforms commercial real estate into tokenized assets and provides them to market participants as an alternative means for fixed income. The Robinland platform acts as a trusted intermediary connecting Real Estate developers looking to enhance their asset's liquidity profiles with passive investors looking to expand their portfolios.
Propy
Among the earliest innovators in the space, Propy is a market leader that seeks to displace the entire paper trail of documentation and streamline the transactional processes in real estate by transferring all activity onto a blockchain network. Every touchpoint, including property listings, property titles, support documents, purchase sale agreements, payments, and even the deed transfer is enabled through the Propy platform.
Closing thoughts
As the world continues to tokenize, there is no doubt that real estate will be at the forefront of the digital financial evolution.
Intuitively beneficial and alluring to new marketplace providers and investors alike, this sector will continue to grow in spite of the many incumbents who are still stuck in their old ways and attempting to resist the inevitable: Tokenizing real estate and embracing digital transformation.
- Gamma: Excellence in Action
Gamma is the largest NFT/Ordinal marketplace on Stacks, and for good reason. Gamma sets the bar high for the Stacks ecosystem, read on to learn how they manage to drive adoption in this quickly moving space.
After being immersed in the crypto space for a while, you begin to learn a bit. One of the first things that you notice is how fast things move around here. Even the market cycles in crypto take place at blinding speed relative to the traditional markets. To be successful in crypto means rapidly adjusting to new technological breakthroughs, while delivering the best product to your customers. In order to do this, you need a well rounded team, a team replete with visionaries, highly skilled front end and back end coders, and solid community managers. This is the winning formula.
There are many teams in the Stacks ecosystem that operate at this high level, and today I am going to tell you about one particular team that personifies excellence in this space.
Today, I am going to tell you about Gamma.
In the Beginning
Jamil, the founder of Gamma, was an early adopter of the STX, this is because he understood Bitcoin, and understood Ethereum (which is to say smart contracts). Upon learning about STX, and the ability to add smart contract functionality to Bitcoin, his entrance to this space was inevitable. Not long after he started learning about NFTs, Jamil ran into a frustration born out of not being able to easily view the NFTs in his burgeoning collection. His solution to this frustration evolved into what is now the largest, most successful NFT marketplace on Stacks.
Solutions for Early Adopters
One of the pains of being early to anything in crypto is that if you aren’t technically proficient, you can find yourself missing out on the best opportunities. The faster that a team can solve this problem for retail, the faster that sector grows, and more opportunities are born. Few teams are able to keep up with Gamma in this regard, and it is obvious to the observer that Gamma is still driven by the desire to solve such problems.
The first time that I noticed this was the speed at which Gamma was able to launch a BNS marketplace. This occurred late last year after an influx of new people into the Stacks ecosystem discovered BNS (the .btc handle), and started trading them OTC. Within days Gamma had added a trustless way for people to trade BNS names via their marketplace. Not only did this become a massive win for Gamma, but a massive win for the entire Stacks ecosystem.
History Repeats Itself
Just this last week Gamma became the first exchange to launch a Bitcoin ordinals marketplace capable of making trustless swaps in a retail friendly way. Just before that, Gamma was able to provide the community and creators with a user-friendly way to inscribe their own ordinals. This is fast, even for crypto.
According to Nick Sainato, Gamma’s co-founder, the Gamma team started running test before the first 1,000 inscriptions (at the time of this writing there are over 500k inscriptions, and growing fast). One week later Gamma launched its inscription service, all the while working on their user friendly, trustless marketplace.
What started as a convoluted process to make or even buy an inscription, has been simplified to the point that anyone who has used a Metamask or Hiro wallet can create and trade inscriptions.
A Common Goal
This is the answer that I received from both Nick and Brett aka Eliherf, the head of Community Growth at Gamma. The Gamma team is lean, scrappy, highly skilled, passionate, and united in their common goal of building the best marketplace. In addition to this, Gamma is known for its massive support for NFT artists. While other marketplaces are figuring out how to cut out artist royalties, and otherwise maximize profits. Gamma supports royalties for artist, and even went so far as to eliminate any service fees for those who wish to create their own inscriptions. At Gamma the user only pays for the Bitcoin network fee. This will become massively important later, as Bitcoin fees become more pricey due to demand for block space.
The Ethos Lives On
It is clear to the observer that Gamma’s commitment to problem solving, and user adoption is the key to their massive successs. The lesson is clear: Success is defined by execution and passion. Thankfully Gamma is not the only project in the ecosystem that embraces this ethos, but they definitely set a high bar for everyone else. This, dear reader, is one of the primary reasons why you should stay informed about the projects, teams, and visions that are to be found in the Stacks ecosystem.
Closing Thoughts
It is easy to feel like the majority of the opportunities in crypto have passed you buy if you are new here. The reality is that this could not be further from the truth. The fact of the matter is that if you are here now, you are still quite early. The vast majority of humanity has no idea what an inscription is, much less what being able to place information on the immutable Bitcoin blockchain means for humanity. You are in the right place.
Thank you so much for reading, be on the lookout for the next article. Until then, this is your Captain signing off.
- mad Max
- The Japanese Bond Market
Market forces have pushed Japanese government bond yields above policy targets. The moves are the biggest test in seven years of yield control in Japan
Japan's government bond market is one of the largest in the world, with a total debt value of over $7.9 trillion. However, in recent years, the market has become increasingly illiquid due to a policy known as yield-curve control (YCC) implemented by the Bank of Japan. This policy, which has been in place for the past seven years, aims to stimulate lending, growth, and inflation by keeping short-term interest rates at -0.1% and 10-year yields around zero.
To maintain this interest rate environment, the Bank of Japan has adjusted its tolerance for movement in the 10-year yield several times, most recently in December. As a result, the bank expanded its target band from plus or minus 0.25 to plus or minus 0.5 points. This means that the bank now allows for more significant fluctuation in the 10-year yield, which measures the government's borrowing cost.
As a result of this policy, the Bank of Japan has been forced to buy large quantities of bonds to defend the band's upper limit. This has resulted in the bank owning over half of the government bond market. This significant bond market presence has led to illiquidity and volatility concerns. Additionally, this can harm the market as a whole, as it limits the participation of private investors.
The Bank of Japan's enormous ownership and buying volume has resulted in the government bond market needing more influence in determining benchmark debt prices or the cost of public financing.
According to reports by Keisuke Tsuruta, a fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, the BOJ's ownership of the 368th series of 10-year Japanese government bonds is nearly total, at 97.0% on January 10th, up from 86.4% on December 22nd. Furthermore, the BOJ held 86.8% of the 367th 10-year bonds on January 10th, an increase from 81.9% on December 20th.
Foreign short-selling has further exacerbated the situation in recent weeks, adding more volatility to an already distorted market. Interest rate swaps, which closely track sovereign bonds in most markets, rose above 1% at the 10-year tenor on Monday. This swap yield may indicate where the 10-year bond would be if the BOJ were to leave the market alone.
- The Japanese Bond Market
Market forces have pushed Japanese government bond yields above policy targets. The moves are the biggest test in seven years of yield control in Japan
Japan's government bond market is one of the largest in the world, with a total debt value of over $7.9 trillion. However, in recent years, the market has become increasingly illiquid due to a policy known as yield-curve control (YCC) implemented by the Bank of Japan. This policy, which has been in place for the past seven years, aims to stimulate lending, growth, and inflation by keeping short-term interest rates at -0.1% and 10-year yields around zero.
To maintain this interest rate environment, the Bank of Japan has adjusted its tolerance for movement in the 10-year yield several times, most recently in December. As a result, the bank expanded its target band from plus or minus 0.25 to plus or minus 0.5 points. This means that the bank now allows for more significant fluctuation in the 10-year yield, which measures the government's borrowing cost.
As a result of this policy, the Bank of Japan has been forced to buy large quantities of bonds to defend the band's upper limit. This has resulted in the bank owning over half of the government bond market. This significant bond market presence has led to illiquidity and volatility concerns. Additionally, this can harm the market as a whole, as it limits the participation of private investors.
The Bank of Japan's enormous ownership and buying volume has resulted in the government bond market needing more influence in determining benchmark debt prices or the cost of public financing.
According to reports by Keisuke Tsuruta, a fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, the BOJ's ownership of the 368th series of 10-year Japanese government bonds is nearly total, at 97.0% on January 10th, up from 86.4% on December 22nd. Furthermore, the BOJ held 86.8% of the 367th 10-year bonds on January 10th, an increase from 81.9% on December 20th.
Foreign short-selling has further exacerbated the situation in recent weeks, adding more volatility to an already distorted market. Interest rate swaps, which closely track sovereign bonds in most markets, rose above 1% at the 10-year tenor on Monday. This swap yield may indicate where the 10-year bond would be if the BOJ were to leave the market alone.
- Hi Lenster!