Dear Knights đ°,
A conversation about investing requires a sound understanding of the risks involved. It requires a proper determination of the asset and confidence in it to put your hard-earned money on it. Thatâs exactly the reason why CitaDAO creates assets backed by real estate, one of the most reliable investment vehicles in history. In this issue, one of the very own, @Sujith Godavarthi, explains the two types of tokens that CitaDAO uses. He explains their utilities, pros and cons and the brilliance in their making. Have a great read!
Contributors: Cheetah, Sujith_god, AB_colours
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KNIGHT vs RETs: Behind CitaDAOâs multiple tokens system
Author: Sujith_god
A token can be created out of thin air. But to make it sustainable, there has to be sound economics behind it that help support and grow the project while at the same time providing value to the users. Web3 people call it âSustainable Tokenomicsâ.
This is why at CitaDAO, we have multiple tokens that serve different purposes. And that is what we are gonna cover in this issue.
First of all, CitaDAO is a marketplace where a commercial property can be tokenized on the Ethereum Blockchain via a mechanism that we call IRO - Introducing Real Estate On-chain).
Letâs get into the tokens part. We have two token types: Real Estate Tokens aka RETs (different RETs for different properties) and KNIGHT tokens.
Real Estate Tokens (RETs):
After a successful IRO (meaning the process to tokenize the property meets the threshold), an NFT (ERC721), a digital right to redeem the title deed will be minted and deposited into a smart contract which will distribute RETs (ERC20) to all IRO participants.
Confused? Let me explain this clearly with a successful IRO we had in the past.
During the IRO (for a property in Singapore) back in May 2022, users participated in the IRO by committing USDC to the smart contract and the IRO was successful (you can see in the above image that the hard cap of 617,647 USDC was reached).
And so, an NFT was minted and the smart contract automatically distributed the tokens to the users based on the amount they have committed during the IRO process.
So if I committed 100 USDC, I will have 100 RETs. Remember that I mentioned at the beginning the RETs are specific to the real estate?
For this Singapore property, the token was â20SML0253â. Not all properties have the same value. This is why the total tokens minted and issued for each property are unique.
Simply put, 1 RET1 (of property 1) â 1 RET2 (of property 2).
KNIGHT Tokens:
Thatâs not the case with the KNIGHT tokens. KNIGHT is universal across the CitaDAO ecosystem with a 10B supply. You can read more about the KNIGHT tokenomics here.
So, 1 KNIGHT (that you have) = 1 KNIGHT (that I have).
But what is the KNIGHT token in the first place?
KNIGHT (ERC-20) is the governance token of CitaDAO. This token distributes the governance power to contributors of CitaDAO. 79% of the tokens are allocated for community rewards to support the development and marketing of the platform.
To make it more simple, what UNI is to Uniswap is what KNIGHT is to CitaDAO.
RETs & KNIGHT Tokens. Whatâs so unique?
Unlike stable coins, RETs are a better hedge against inflation. They generate better yields than fiat currencies held in bank accounts as rents are typically rebased due to inflation, which adds to the RET's value over time.
And imagine swapping those RETs on a DEX in a permissionless manner. All you need is a wallet (like Metamask) and some funds in it (and ETH for gas) for you to get into Real Estate. Isnât that just liberating?
Talking about KNIGHT tokens, the CitaDAO treasury receives 2% of all Real Estate listed through the platform. Hence, owning KNIGHT gives the token HODLers a broad and diversified exposure to Real Estate on-chain.
As a finishing thought, RETs represent the share of a Real Estate property while KNIGHT tokens represent the governance of the CitaDAO platform. Thatâs the key takeaway. If you take anything from this piece, itâs as simple as that.
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