July Meltdowns and the rise of on-chain real estate
Catch Up With What Happened This Week in CitaDAO
Dear Knights 🏰,
Welcome to another amazing issue of RealFi. We’ve got some interesting ecosystem updates for you along with some deep insights into CitaDAO’s Real Estate Tokens (RETs) and how it differs from a traditional investment vehicle like REITs. Amidst the July Meltdowns (hint: Celsius!), the Knights continue to hold the fort. This is an emotionally jarring moment for all of us and our hearts go out to our community members who may have gotten liquidated or had their crypto frozen by newly-bankrupt platforms.
Contributors: The Psych Guy, Cheetah, Sujith_God
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All hail RETs: A contrast with REITs
Author: sujith_god
Real Estate is one of the fastest-growing investment sectors. In fact, the commercial real estate market is expected to register a CAGR of more than 10% (CAGR is the short form for Compound Annual Growth Rate: It measures your investments' average annual growth over a given period) during the forecast period (2022-2027). In the past, real estate investment was something that was accessible only to wealthy individuals. But that has changed with REITs: Real Estate Investment Trusts. REITs were introduced by the USA in 1960 making it accessible for everyone to invest in income-producing Real Estate. There is a data report that proved that REITs had outpaced the S&P 500's total return. Sounds great, right? But REITs come with issues too:
REITs are fixed by a centralized exchange. And that means holder doesn’t have much choice left when it comes to choosing their investment options.
REIT investors face the same liquidity problem where they can only trade during centralized exchanges operating hours
Property selection is not in investors' hands. It will be decided by a centralized party (REIT managers). And to add the cherry on top of that, these managers charge basic fees, performance fees, etc.
This changes with DeFi. CitaDAO is a decentralized platform that allows real estate assets to be tokenized.
For every single real estate, a separate set of real estate tokens (RETs) will be created. How are these tokens created? Through IRO - Introducing Real Estate On-chain.
Property owners can list their platform on CitaDAO to get it tokenized. Once the due diligence process is done, it will go through the IRO process where the community member decides if the real estate gets tokenized.
If the IRO succeeds, participants will get receive RET tokens based on the USDC they committed during the IRO. And if the IRO fails, particants will get be able to withdraw their committed USDC.
As all the transactions on the blockchain are open, you can see the amounts that are being committed during IRO, which makes this process fully transparent.
Ok, but how are these RETs better than REITs?
Since each property will have different RETs, you can decide on which property’s IRO to participate in. Moreover, the RETs of a particular property can be bought from a decentralized exchange like Uniswap as these RETs will be ERC20 Tokens.
Decentralized exchanges makes buying and selling RETs easy, something that is not possible with REITs.
Instead of having those RETs sit idle in a wallet, they can leverage DeFi pools and earn an extra reward by providing liquidity.
That’s what CitaDAO is aiming for. And RETs can help unlock the capital in the real estate ecosystem.
🗓 Ecosystem Updates
@MakerDAO published their latest financials
Celsius filed chapter 11 bankruptcy.
And most importantly, The Merge is coming!
What’s New
🧠 Great Reads
DeFi Will Never Die - Centralized crypto banks are dying. DeFi is thriving.
14 Mental Models for Crypto Investors, TheDeFiEdge
Get Involved
💪 CitaDAO is looking for writers
Would you like to write for the CitaDAO’s RealFi newsletter? We’re focusing on producing high quality deep dives into the real estate and DeFi space. Come say hi in the #newsletterteam channel in our discord server and get in touch!
🏰 Knight of the week: FINE #8385
I am a student and self-taught in web3. I’ve been in the crypto space for about a year and 4 months contributing to DAOs. I’m a writer for PeopleDAO, a Governer and Mod for LanguageDAO, and also contributor at Bankless South Asia DAO.
I discovered CitaDAO while looking for a way to tokenize my own real estate. When I saw CitaDAO’s approach, I got excited about CitaDAOs future. I envision CitaDAO making the real estate market much much better by bringing them to DeFi!