RealEx DAO

Organization and Functions

RealEx DAO is building a global decentralized economy to create the world’s first real estate-backed cryptocurrency, with its ultimate goal being to democratize real estate and sustainably bring liquidity to a previously illiquid asset class to create financial inclusion.
A decentralized autonomous organization (DAO) is a governance mechanism that allows the collective community to make decisions in a more trustless and collaborative way. Under the organization’s decentralized structure, the RealEx DAO community is responsible for forming ideas, evaluating projects, delegating responsibilities, creating accountability, and ensuring successful execution of complex growth and development strategies that bring value to RealEx DAO’s economy.

Current Structure

RealEx DAO is becoming increasingly decentralized as it continues to grow its distributed pseudo-anonymous team. As of February 2022, Discord serves as the primary informal medium for community discussion and community voting. There are a wide variety of channels, covering everything from detailed technical discussion in #dev, to information and questions regarding the real estate assets and acquisition process in #real-estate, to open dialogue about various topics in #general. The DAO is currently using the #polling channel as an interim voting system, which provides DAO community members with the opportunity to vote on decisions related to ongoing operations and continued growth of RealEx DAO. RealEx DAO’s Discord server is regularly trafficked by core team members and DAO contributors, who relay messages from the community to the relevant team members as necessary.

Use of the RealEx Steadycooin in Governance & Voting

As part of RealEx’s efforts to implement decentralized governance strategies, all major functionalities, including the voting mechanism, will be built into the RealEx protocol, which will help to ensure that governance decisions are reached by consensus of true RealEx steadycoin holders. These governance rights will be represented through mechanisms based on holding the RealEx steadycoins.

Future Governance & Full Decentralization

As the DAO works to decentralize additional aspects of the protocol and as its activities continue to evolve, it will need to add new collective skills and governance processes.
The RealEx DAO will continuously research best practices and seek community input on the optimal governance system for each function. Over time, the RealEx DAO community will use emerging DAO tools and technologies for making decisions and implementing complex strategies that will allow the DAO to keep up with development cycles in the industry.

Structure & Governance

The DAO community, with its legal counsel, has settled on a structure that will enable RealExDAO to carry out its decisions and achieve its ultimate goals. While RealExDAO itself is an organization that operates absent a centralized authority through its smart contract-based protocol, the proposed structure will also strategically incorporate various legal entities that have the regulatory framework, legal powers, and administrative capabilities to carry out the wishes of the DAO community. These entities include the RealEx Foundation and various development companies and operating companies.
The RealEx Foundation is a neutral authority that will operate in accordance with the DAO’s decisions and guidance. When the DAO makes a decision through community vote, the RealEx Foundation will execute on that decision. For example, the DAO would be able to direct the Foundation to open a bank account, sign contracts, pay or grant tokens to RealEx DAO contributors, and in general, meet the requirements of existence to interact as an entity. Initially, the Foundation will support off-chain functions bound to executing valid proposals passed through the DAO’s interim voting system. Eventually, this setup will transition to full on-chain voting and governance.
As the Foundation is a legal entity, it will be supervised by an independent council. However, it will not have any individual owners or shareholders. The DAO will vote to appoint the councilmembers, who will collectively have the authority for final approval of all DAO motions and decisions. The council is instructed to vote affirmatively on an item if it is in line with the community’s decision, while it also retains the right to overrule a DAO vote in the case of malicious intent from bad actors. This structure allows the council to cede decision-making power to the community without putting the protocol at risk and is essentially an additional layer of protection against negative external influence.
Separate operating and development companies will provide contractor services to the RealEx Foundation, including operations, protocol development, real estate advisory services, legal and tax advisory services, token development, financial services, and any other services or consulting necessary to optimize RealExDAO.
The overall structure RealEx DAO is putting in place allows not only for the decentralization of a protocol, but for the decentralization of an entire ecosystem of real world interactions required to transact, acquire, operate, manage, and dispose of real tangible assets.

General Improvement Process

Property Acquisition

How the RealEx DAO Acquires Real Estate

The RealEx Real Estate Desk is comprised of DAO members who are responsible for the acquisition, management, and disposition of the DAO’s real estate assets within the RealEx Asset Vaults under the consensus of the community. Initially, there will be a single asset vault representing all the assets under the DAO’s management, but the system is being designed to support multiple asset vaults at the discretion of community consensus.
The RealEx DAO community has established a checklist that designates the values and goals that are to be associated with desired real estate assets. The DAO will use this checklist as part of its process of identifying, underwriting, and scoring a potential asset before submitting it to the DAO for a vote to approve acquisition of the asset.

Governing Values and Goals

RealEx reimagines real estate ownership by making real estate assets available to everyone while upholding its commitment to ethical, sustainable, and responsible impact on the RealEx DAO community as well as local and global communities, the environment, and the planet at large.
The DAO’s goals and values are as follows:
  • Profit. RealEx DAO aims to maximize profit without compromising the interest of stakeholders, the community, and the environment.
  • Transparency. RealEx DAO is designed to empower our community’s involvement in the decision-making process. Asset-level metrics about real estate financials, effects on the environment, and community impact are made accessible on the RealEx platform. The overall goal encompasses RealEx guiding investment decisions by leveraging the best practices in decentralized governance.
  • Protect the Environment. RealEx DAO strives to operate with minimal impact on the environment, seeking opportunities in which we can leverage technology to improve the environmental impact of projects.
  • Help Communities. As an impact-driven business, all stakeholders are taken into account. When selecting real estate projects, we consider tenants, local community members, employees, local businesses, and municipalities.
  • Innovation. The RealEx solution leverages technology to solve problems. Additionally, the platform strives to conduct real estate operations more inclusively and sustainably.

Key Attributes of Properties

RealEx DAO aims to pursue strategies that optimize the usage of energy and resources to make buildings more efficient and optimize operating revenue. RealEx will also add ESG technologies that can act as "oracles" for real estate assets’ tokenization, working with local communities to create tax credits/operating revenues running as easements along with the buildings. Hence, it will create endless revenue streams for RealEx’s assets rather than being in the ownership rotation. RealEx will seek yield along with public benefit through:
  • Optimizing the energy efficiency of existing buildings and integrating smart technologies to reduce operating costs
  • Converting underutilized commercial space into affordable housing
  • Re-imagining the usage of excess hospitality inventory by turning it into workforce housing
  • Accelerating redevelopment in economic opportunity zones Designing innovative work-life balance for assets
  • Facilitating the commodification and trade of carbon emission credits, riparian rights, and conversion of mineral rights. This is to mitigate global warming and preserve sensitive environmental areas

ESG and Profit - The New Bottom Line

The 21st Century saw a rapid growth in ESG values and implementation throughout capital markets and the corporate landscape.More companies are reporting ESG publicly as financial priorities are aligning with ESG values. Even though more companies are reporting ESG, lack of data and transparency make their actual impact assessment difficult. In 2019, only 29% of S&P reporting companies obtained external assurance on their sustainability information. RealEx has the opportunity to ensure that social, environmental, and governance impact metrics are built into its model from the onset. The RealEx DAO’s proprietary ESG scoring system will drive decision-making at both the asset and portfolio level. These metrics are shared publicly so that the community may better understand the motivation behind the RealEx DAO’s choices. Every potential project goes through a multi-step consensus-building process that is comprised of first going through rigorous due-diligence, and then layering on an ESG-focused decision-making guide. The guide has criteria weighted appropriately to help the DAO evaluate projects. Eventually, the entire community has an opportunity to vote on the acquisition or disposition of assets in the RealEx Vaults.
While reporting for large REITs is the ESG metrics’ focus, the RealEx platform offers granular transparency of asset-level ESG metrics.

Asset Scoring

RealEx DAO’s real estate portfolio is being established at the onset of functionality with specific benchmarks which will be evaluated using a scoring system. Over time, the DAO community may determine that, based on market reaction to the RealEx business model, which will ultimately be reflected in the value of the steadycoin, portfolio composition and the DAO’s benchmarks need to evolve.
The DAO’s initial scoring system is based on the target asset baseline metrics listed in the table below, which are defined by the DAO and subject to change depending on the needs and preferences of the DAO community.

Scoring Range

Assets are scored on a scale of 0 to 5 stars, with 5.0 being the highest score possible with the asset far exceeding the DAO’s goals, and 2.5 being the minimum score to pass underwriting and be sent to the DAO for a vote, meaning the asset is barely meeting the DAO’s goals. Examples of how the DAO determines an asset’s score are set forth below:
5 Stars: A rare asset that returns double the target financial expectations and scores very strongly in ESG. Example (using the baseline metrics above): An asset with a projected IRR of 15%, Equity Multiple of 3.2x, Cash Yield of 6%, low risk, and a “High" ESG Score of 90 (see below) would score 5 Stars.
4 Stars: An asset that performs very strongly in both financials and ESG. Example: An asset with a projected IRR of 12%, Equity Multiple of 2x, Cash Yield of 3%, and a “High" ESG Score of 90 with low risk would score 4 Stars.
3 Stars: An asset that performs strongly in either ESG or financials, and performs average to above average in the other category would score 3 Stars. Example: An asset that meets the DAO’s exact baseline metrics and scores “Good” in the ESG Category with low risk would score 3 stars.
2.5 Stars: This is the minimum score for an asset to be sent to the DAO and considered for a vote. An asset that scores 2.5 stars may be above baseline metrics in either one of the ESG or financial categories, but below the baseline metrics in the other. An example of a 2.5 star asset that may be considered by the DAO is a social impact project, which may score extremely high in ESG, but not meet the DAO’s baseline financial metrics: IRR: 3%, Equity Multiple: 1.2x, Cash Yield 2%, with an ESG Score of near perfect (95 out of 100) would likely score 2.5 stars.
Below 2.5 Stars: Assets scoring below 2.5 stars are not to be considered by the DAO.

Property Acquisition Process

Once a real estate asset has been underwritten and passes the minimum score of 2.5 stars, the real estate team will present the asset to the RealEx DAO community for a vote. The next steps are outlined below:
  • RealEx DAO: property coordination proposal ready for vote;
  • RealEx tokenholders review the recommendations of the underwriting team;
  • RealEx tokenholders vote on property coordination proposal (Deny/Approve).
When a proposal is approved, the DAO will then coordinate the following actions:
  • The property’s owner sells the ownership and/or leasing rights to a RealEx DAO-owned holding company.
  • The DAO issues RA-NFTs that represent property rights, working with appropriate trust providers as necessary for asset verification. To coordinate property yield, the DAO will include information about the RealEx-NFT and the DAO’s responsibilities.
  • The RA-NFT is deposited in the Treasury and bonded in order to record the asset, identify the terms of relationship with the DAO, and set forth the income recognition and payment terms.

Ongoing Management and Reporting

Each asset will have its own development and operating team, with which RealEx DAO will contract to oversee the management and operations of that particular asset. This team will be required to provide monthly financial and operating reports to RealEx DAO. If the monthly reports meet key metrics, operations will continue. If they fall below key metrics, the DAO’s asset management team will conduct a review of the asset to determine next steps.
The monies from the property’s initial revenue will be used to pay the property management team. Any additional revenue will be considered a yield that arrives via the RealEx Protocol to the DAO Asset Vault. Once there, the DAO will distribute the yield to the RealEx tokenholder only if the tokenholder has completed their obligations as per the RealEx Governance token.