RealT is one year old! We take a look at the progress and milestones we have made, as well as give a roadmap of what to expect from the future!
The quick summary of RealT so far:
- 1 Year Old
- 7 different properties tokenized in ERC20 tokens
- $1.6M in total value of tokenized real estate on Ethereum
- $50,225 in total rental payments paid to RealToken holders
- $550 in rental payments are paid per day!
Year 1 of RealT has been all about getting real estate on Ethereum. Now that there is a decently large amount of real estate on Ethereum, year 2 of RealT is about improving the experience of owning real estate on Ethereum!
Getting Caught Up
The timeline below illustrates the history of RealT, in two different dimensions
- The properties that have been sold on the RealT platform
- The various technological innovations of the RealT management system
The rectangles on the upper side of the timeline represents properties; the vertical height of the rectangles correlates to the total value of the property sold; the horizontal length correlates to the time that the properties were available for purchase on RealT
The bottom side of the timeline represents DeFi applications that RealT leverages in order to improve the experience and value of owning real estate on Ethereum. Uniswap and Compound represent early and easy DeFi apps that we’ve been able to leverage.
All RealT properties are available for buying/selling in Uniswap. The cool thing about Uniswap is that it retains all legal compliance logic (basically, the whitelist) that is built into the RealT tokens. This way, all RealT Uniswap markets maintain legal compliance. If you’re not on the RealT whitelist, you can’t buy/sell on Uniswap!
At RealT, we use Compound to increase both the rental income sent to RealT Token holders, as well as for the maintenance reserve for each property. Since RealT sends out rental income on a 24-hour cycle, the funds that are yet-to-be-distributed are stored in Compound. Additionally, each property has an emergency maintenance fund that is also collecting interest in Compound.
Asset Delivery System
How does one come to own tokenized real estate with RealT?
In the background, there is a stack of technologies that we’ve stacked together to generate an efficient asset delivery system. In the very beginning, this delivery system took us multiple days to get a token delivered to a customer.
Now, we are down to under 24 hours for all orders, and under 4–8 hours for 90% of orders.
Here’s how the process looks:
- A user comes to RealT.co, adds a token to their cart, and checkouts/pays
- Documents from HelloSign are sent to their email inbox; customer signs
- RealT also signs the documents
- Then, RealT goes to our token-management system, and adds the user to the whitelist for the property they’ve purchased
- Then, RealT sends the token to the users Ethereum address!
The largest friction in this current system comes from the two different worlds that RealT is operating in. The legacy world, and Ethereum. There is a division between these two worlds that most crypto-companies struggle to gap. As a result of the division, token delivers are not immediate, but rather take a few hours for the manual processing.
But! A solution is underway!
In order to speed up this process, we want to reduce as much human involvement as possible. The ethos of the cryptocurrency world is that computers are better at managing value and exchange better than humans.
In the next update of the RealT asset delivery system, RealT will be removed from the signing process, by pre-signing the documents.
HelloSign will be able to directly integrate with our token delivery system, and be able to execute a delivery of tokenized real estate upon signature from the customer.
With this update, a RealT customer will be able to arrive on the RealT website, purchase a token, sign the documents, and receive the token all in the same session.
The truly magical thing about this comes from comparing it to the traditional system, when real estate purchases takes weeks or months, but because of some clever innovation and Ethereum, RealT is able to get that down to 15 minutes or less!
Rental Payment System
The current, V1 of rental payments is very simple.
- The amount of tokens owned per user
- Multiplied by the rental income per token, per day
- Sends it outbound
While this system is simple, its is far from perfect. Ethereum gas volatility, dropped transactions, and inflexible logic make this an imperfect system.
While this seems like a trivial detail, the fixed rental income per token, per day means that rental payments accounting logic is behind done elsewhere. The computation for how much each token-holder should be receiving is being done by RealT in the background.
With the next iteration of our rental payment system, we will be hosting the rental payment logic on-chain. Three variables are taken in:
- The amount of rental funds that has been deposited into the contract
- The number of days left in the month
- The total supply of tokens
- The amount of tokens owned per Ethereum address
Now, the role and responsibility of RealT has gone from manually calculating how much rent needs to be paid to each property holder, to simply depositing all collected rental income into a specific contract address on Ethereum, and then Ethereum takes care of the rest. Done!
By hosting the accounting logic on-chain, token holders are able to have increased transparency with the rental income for each property, and RealT is able to relegate management and accounting overheard to Ethereum. Win-win!
Real Estate —> DeFi
The asset characteristics of Ether and real estate are polar-opposites.
Ether has a low total market cap, high volatility, and high liquidity. Real estate has a high total market cap, low volatility, and low liquidity.
However, Real Estate on Ethereum is an entirely different category.
Although you can buy/sell real estate on Ethereum with Uniswap, Real Estate on Ethereum isn’t exactly liquid. Tackling this problem is described later on.
However, from the early data that we do have, real estate assets on Ethereum are highly-stable.
You can see the price-charts of RealT’s first 3 properties in Uniswap below:
While there are fluctuations in asset prices, this is largely because RealT properties in Uniswap are denominated in ETH. When ETH price goes up by 10%, RealT properties in Uniswap are priced 10% higher. This is obviously not normal for general real estate assets; they are not priced in ETH. This is simply a limitation of Uniswap V1.
What is important to note is that the price does indeed return to baseline, and quickly! Arbitragers and traders are stepping in, and returning the price of the asset back to fair-market value. This makes us extremely optimistic for the role of tokenized real estate as collateral inside other DeFi protocols. All good collateral is also liquid collateral, and the existence of traders/arbitragers taking advantage of opportunities bodes well for the viability of real estate as collateral in DeFi.
Getting real estate on Ethereum and into DeFi is the main focus of RealT!
Putting Ethereum’s real estate assets inside Uniswap was an easy integration, but further DeFi protocols are unfortunately not as easy of a process.
MakerDAO represents the ‘finish line’, when it comes to getting real estate into DeFi. If RealT properties can be collateral inside Maker, then they can be collateral inside anywhere else.
The path between here and there was laid out in a blog-post on Bankless.
In addition to the above three, Monolith, Aave, and Compound are also of particular interest to RealT.
- Monolith offers a ‘DeFi card’, which is a normal Visa card, except you are spending DAI from your Monolith wallet, rather than money from your bank.
Soon, RealT customers will be able to have their rental income sent straight to their DeFi card! Meaning they can spend their rental income directly, with no other transfers required.
- Aave is a borrowing/lending platform, similar to Compound, but with some extra financial features that make it compelling. Specifically, Aave offers fixed-interest loans. Most DeFi protocols like Maker/Compound offers variable interest loans, and the variance of this interest has ranged from 0.5%-20.5%!
RealT rental income rates are much more steady and dependable than interest rates like this, making loans from Aave, and RealT property income, an interest intersection when it comes to the financialization of these assets!
- RealT uses Compound already (described above), but RealT assets inside of Compound is an entirely different endeavour. Fortunately, the path for RealT assets inside Compound is similar to the path for RealT assets in MakerDAO.
The RealT Affiliate System
RealT has an affiliate system! For those that own at least 1 real estate token, the affiliate system is a way to earn 2% on all purchases that you refer to the website.
At RealT, we see real estate moving to digital means. Why not for real estate sales too? With the RealT affiliate system, you too can be an ‘Internet Real Estate Professional’!
Our affiliate system has strong analytics and tools available for those who are interested. Read more here.
The RealT Affiliate System is only available to non-U.S. customers.
Join the RealT Community Calls
Every other Thursday, RealT hosts a community call! This is a chance for the RealT community and the RealT team to come together in the same room!
Join Our Discord!
The RealT Community lives in the RealT Discord Channel. Join the conversation and your mutual property owners there!
Thanks for reading!