Dear Knights š°,
Hereās a question for you: how well do you understand on-chain vs off-chain transactions? Itās one thing to have a vague idea about it, but our headline article this week underlies the importance of assets being on-chain. Rest assured, the future is crypto!
Contributors: The Psych Guy, Cheetah, FINE, Ethan, Mak, Sujith_god
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Embrace On-Chain: The New Asset Harbour
Author: Sujith_God
Recent technological growth has seen trade and commerce shift online. We all pay through credit/debit cards on Amazon and mostly just use our phones and tap on screens at our grocery stores. But that wasnāt the case in the 1990s or the ancient Web1 phase as you may choose to call it. Online or non-physical systems of payment were seen with extreme skepticism.
There is a similar sentiment seen in the media as well. Every form of media has gone online, which you may know as the Web2 phase(probably medieval Iād say). Not many understood and frankly approved the concept of sharing a photo of your morning oatmeal prep on a photosharing app (Instagram). But we have come to know of that as the new age of marketing.
From bite-sized content (Twitter) to long-form content (blog posts) and visual content (Youtube videos), everything is online and just at our fingertips. You better get used to that because itās all gone a step further with the reckoning of blockchain and crypto.
Similarly, blockchain which is a decentralized ledger will transform the way we handle assets. Every asset will go on-chain in the future(we certainly hope!).
If that just went over your head, donāt worry; weāll break it down for you. Now, what does that mean? Why does it make sense to do that?
First of all, letās understand what an off-chain transaction is.
If I PayPal you $100, only you, PayPal, and I will know that. The transaction happened inside a walled garden, and PayPal might choose to stop the transaction from ever happening or block my account if they want to.
On the other hand, if I send you 0.00001 BTC to your non-custodial wallet, there is no third-party actor between us that is handling the transaction. Nobody can stop the transaction from ever happening. Anyone can see the transaction - open and permissionless. Thatās an On-chain transaction. In other words, the transaction that reflects on the decentralized and distributed ledger called Blockchain. The transaction cannot be altered or reverted by anyone.
Thatās great! But does taking real-life assets (Real Estate, College Certificates, Your Own Data, etc) on-chain will make sense? Letās get into it.
Decentralization:
Obviously, the first advantage is decentralization. Currently, some intermediary who is either a financial institution or some company or government almost always holds out assets. You donāt own your Facebook account. You donāt own your data and google is using it for free for their ad targeting. Some government organizations or real estate companies act as the third party in the property purchase transaction between the buyer and seller.
Blockchain will change all of this. The ability to transact without relying on a third party is truly fascinating.
All are equal before the code:
The total value locked on Defi is $80B+. The risk is managed by code. The code doesn't care who you are, what you do, or what color your skin is when giving a loan to you. It lends you money based on the assets you have.
Thatās not the case with traditional financial institutions. We all know the hectic paperwork that one needs to submit, minimum credit score requirement, and the narration of your entire life history to the bank officials and whatnotā¦.just to secure a loan.
Defi is changing all of this by taking finance on-chain and removing the intermediary.
Creating new markets for previously illiquid assets:
Similarly, a commercial property can be tokenized and fractionalized, and those tokens can be sold on a secondary market without the need for a third party.
Let me explain this in the context of CitaDAO and how weāre taking it to the next level.
After due diligence, a commercial property can be fractionalized and tokenized, with a crowdfunding concept called IRO (Introducing Real Estate On-chain). If the total funding the IRO gets from people meets the soft cap set for that particular property, an NFT will be minted. And the property will be tokenized (Check this for reference).
So if I have committed 100 USDC during the IRO, Iāll get back $100 worth of Real Estate tokens. I can buy more on a secondary market if I am bullish on that property. Or I can even sell those later if I donāt want to hold those anymore.
I can own a piece of real estate just by owning those tokens in a non-custodial wallet (no one except me can transfer or sell those tokens) and at the same time can leverage Defi to earn some yield on top of that. All of this in a permissionless manner.
Currently, for the proof of ownership, the property rights need to be enforced via contracts, regulation, arbitration, and court proceedings.
In the case of On-Chain, you can see how many RETs (Real Estate Tokens) I have in my Metamask, and being the holder of my own private keys; I can prove the ownership.
Transparency, automation, and efficiency!!! Letās go on-chain!
šĀ Ecosystem Updates
š§ Great Reads
Problem with Tokenizing Real Estate, Joel Lin
š°Ā Knight of the week
Tradesmanš ļø - 35/Product Manager - Real Estate & AEC Software Professional/USA-AZ
Prev. Licensed General Contractorš· , Prev. RE Midrise Portfolio Manager šØ - Focus in Declarant Transition.š¤
CitaDAO as a product aligns with my personal development goals in CRE & RWAs "under smart contract" or "on-chain". I see Market Depth as the biggest challenge to this Community, and would like to contribute to the protocol's execution in this area.
#1 - Ledger Integration (or other hardwallet). You have to put crypto into people's HANDS š before they really understand what it is or how it works.
#2 - Frequent & Re-occurring Poll & Consensus mechanisms for Community Members as whole. Ultimately, this is our greatest value as a DAO. What does our Membership Participation Policy look like? What Engages more people?
#3 - RE Professional Network Integrations. In theory, our TradFi and REFi brothers & sisters WANT to see new tech/development in the space, not just Apes (no offense š ). We just have to keep sharing the message. š Even when media šŗ is fear-mongering our industry. The hard part is answering the same WHY questions over and over again... š ļø š¤