Why the world needs RealFi
CitaDAO’s next commercial property is launching this week. Read on for details!
Contributors: The Psych Guy, Cheetah, EverythingBlockchain
Dear Knights 🏰,
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The problem statement
Author: Everythingblockchain
As a non-correlated asset, real estate ranks as one of the best investments and frankly, reflects in a major portion of most portfolios across the globe. Valued at $280 trillion, the global real estate market is thriving and has proven its resilience in the face of the pandemic by recording $1.3 trillion of total transactions in 2021. Real estate grants investors access to passive income, tax breaks, and the ability to enhance wealth-it’s pretty clear by now - real estate is a sound investment. Acting as a hedge against inflation and short-term tremors within equity and other markets, it has an ability to deliver long-term returns. Having said that, the sad reality is that while the market boasts an impressive size and attractive returns, it is dominated by wealthy individuals and large corporations. A multi-trillion dollar industry, it is plagued by the issue of illiquidity and inefficiency. Let’s unpack the problem and understand how CitaDAO can make your real estate investment journey smooth.
No doubt, real estate is a great bet for the exponential growth of your monies but there are several obstacles preventing entry into the market. According to some estimates, 80% of the global population perceives real estate as a solid investment however, only 3% has actually invested in it. The perils of housing during this period of high inflation (40-year high) and the burn in your pocket is public knowledge. In some countries, it has reached an all-time high. The purchase of real estate is associated with high upfront costs and time-consuming complex procedures and paperwork. The problem is further deepened by the lack of sufficient capital and inefficient processes. These include expensive intermediaries and legal documentation for loan approvals. Most of the time, individuals go through the burdensome task of securing loans to meet the requirement but even then the amount for the downpayment is too large and serves as a major barrier for individuals seeking to gain exposure to this market. To add to that, getting your foot through the door to acquire or invest in commercial real estate is even more difficult. While profitability is much higher, entering the commercial real estate market for individual investors is next to impossible owing to the complex legalities, limited market opportunities, and exorbitant costs. This section of real estate is almost exclusively reserved for institutional investors and high-net-worth individuals-I know, it is very SAD.
Apart from the financial barriers, another significant issue associated with investing in real estate is illiquidity. This illiquidity stems from a number of factors not restricted to but including the expensive nature of the transaction coupled with the difficulties conducting the transaction and the inability to find buyers and sellers at the right price or time. Unlike stocks/bond transactions, most real estate transactions involve face-to-face discussions between various parties and the involvement of middlemen like brokers simply translates to added cost.
Enter Tokenization
Now, enough talk about the problems that plague the industry. A popular solution that has arisen in recent times (thanks to our beloved cryptosphere) is the tokenization of real estate assets. Tokenization can be defined as the process of digitalizing property into tradeable tokens that are stored on a blockchain. These tokens represent ownership of a type of real estate asset sans the hassle of actually buying/managing the property. The value of the tokens is tied to the underlying tangible asset and as such fluctuates based on its performance.
Tokenization is a promising application of blockchain technology that seeks to broaden market participation, eliminate expensive intermediaries, simplify the investment process, increase liquidity and democratize the entire industry. However, despite the myriad benefits, tokenization by projects/protocols on the blockchain failed to offer the masses a unique deliverable. Traditional finance offers individuals plenty of opportunities to invest in real estate without acquiring, owning, and managing properties. These opportunities come in the form of REITs (Real Estate Investment Trusts), real estate crowdfunding/partnerships, fractional ownership, and real estate stocks. REITs are popular investment vehicles modeled after mutual funds that pool money to invest in profitable real estate. Previous projects failed to address a key aspect - secondary liquidity. In the absence of a secondary market for tokenized assets in the blockchain space, these projects offered individuals no way to close their position without a significant price movement.
However, existing attempts did not solve anything that is already been done in TradFi. Real estate tokenization space has a lot of unrealized potential and DeFi holds the key to the innovation needed to make it a reality. With proven usability in redefining user interaction with traditional financial products, DeFi can unlock endless possibilities. Just for perspective, global commercial property is estimated at $32.6 trillion and market capitalization for the entire cryptocurrency industry stands at $2 trillion. DeFi has the potential to change it. It can break these barriers and provide investors of all categories exposure to the commercial real estate market irrespective of their geographical location.
Not a Millionaire but Interested in Real Estate?
Don't worry Knights of CitaDAO will pave the way. We are taking a different approach that will truly unlock the potential of real estate tokenization.
A decentralized finance (DeFi) platform for Real Estate built on top of the Ethereum network. CitaDAO addresses the drawbacks of traditional real estate to deliver on its belief of Real Estate on-chain will transform DeFi and grow existing DeFi markets, such as collateralized loans, into a trillion-dollar TVL ecosystem.
CitaDAO with its permissionless platform eliminates all the hassles users face in the traditional market. You will no longer have to go through arduous procedures to meet the legal requirements or prove your net worth. It democratizes access to commercial real estate and enhances liquidity in a market that has been suffering from the issue since the very start.
Stay tuned for the next edition. We will cover in-depth how CitaDAO is creating a DeFi ecosystem for tokenized real estate.
🗓 Ecosystem Updates
🚀 IRO 2 is being released
We've returned, and we're better than ever. The support of the community has given us the confidence to move forward and find a better property for IRO2. The property is a strata industrial space in the vibrant Midview City in Singapore and the IRO starts on 19 May 2022, 00:00 UTC. To get involved, visit citadao.io
What’s New
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Core Spotlight: Joel
I’m Joel, a contributor at CitaDAO. Like myself initially, most tradfi professionals are unable to value bitcoin and ethereum without the financial statements, and that is limiting their participation in DeFi.
By creating tokens backed by Real Estate, I believe that it will increase the rate of adoption of DeFi by the TradFi community as they will be able to value tokens based on the value of Real Estate, giving them the confidence needed to bridge the gap into the DeFi universe.
🏰 Knight of the week
Jonas77.eth My professional experience includes five years as a tradfi banker and four years VC investor in cross-border e-commerce. I entered crypto in 2020 and now I am trying to find out and participate in the more innovative project in web3 which can change and promote the world in the next ten years.
I contribute by managing the Chinese community channels, hosting twitter spaces, Q&A, promotion, and other community events at CitaDAO.
I learned about CitaDAO through the website(coinversation.org), and it aroused my great curiosity because I have never seen such a project which can combine web2 and web3 by real estate, and I never thought before that the real estate tokenized could be used as a stablecoin. It also solves the illiquidity which is the biggest pain point in the real estate industry. I believe Citadao can change the real estate world in the next decades.
I hope Citadao can be the largest commercial real estate tokenized trading platform in web3.0
🤣 Meme of the Week
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Our second IRO is happening this week, dear knights! 🚀
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