The core flow of the solution provides holders of a RealEx steadycoin with access to the underlying value of a set of real estate assets held in the RealEx Treasury. RealEx executes a simple 3 step core flow to generate value for token holders.
- 1.Grow Treasury: RealEx steadycoins are auctioned off on a regular basis through a bonding mechanism that enables continuous fundraising. RealEx coins are sold and minted for stablecoin assets and other assets as decided on by governance. These assets sit in the RealEx Treasury and the RealEx coin represents the value of all assets in the treasury.
- 2.Buy Real Estate: Through governance, the treasury is used by the DAO to buy incoming real estate assets. Real estate is traded for the treasury assets, and a digital representation of the real estate is subsequently deposited into the treasury. The RealEx coin continues to represent the value of all assets in the Treasury.
- 3.Buyback and Burn: When the real estate produces income, this revenue is used to buy tokens from the open market and burn them, reducing total supply. Governance sets the parameters for when buybacks occur.
This mechanism can easily be scaled by increasing the size of the treasury, thereby creating opportunities to acquire more assets and increasing the revenue produced.
The entire mechanism is controlled through a governance process designed to effectively support the wishes of RealEx steadycoin holders. While the solution will initially be deployed on Ethereum, the RealEx protocol will be deployed across all other EVM compatible blockchains that have demonstrated adoption, liquidity and steadycoin infrastructure, such as Avalanche, Fantom, Terra, Polygon, Harmony, Moonriver, Moonbeam, and Binance Smart Chain.
The front-end application will be provided through a web-based application across both desktop and mobile.
The RealEx solution is designed to deliver a comprehensive set of capabilities for real estate investment, acquisition, and trading, all powered by an underlying blockchain-based protocol.
The features enabled by this protocol are shown in the diagram and described in the subsequent sections below.
The RealEx steadycoin represents ownership of, and participation in, the RealEx DAO and the value of its assets. Ownership of a RealEx steadycoin provides its holders with ownership of both the intrinsic and extrinsic value of the underlying crypto and real estate assets held in the RealEx Treasury. Representing a pool of assets through a single token, implemented as an ERC20, provides the opportunity for those assets to be traded and leveraged in decentralized financial markets.
RealEx steadycoin holders benefit in four ways:
- 1.Underlying Asset Appreciation: The coins are backed up by real estate and other cryptocurrency reserve assets. Historically, these types of assets have appreciated over time.
- 2.Yield Returns: The Coins generate returns when the underlying assets generate profits from real estate rentals, in addition to yield provided through community coin bonus rewards from locking up your tokens, also known as staking.
- 3.Inflation Resistant: Steadycoins are not pegged to a currency. Because inflation increases property and rental prices (and decreases the purchasing power of the currency), this keeps value and yield consistent relative to inflation.
- 4.Coin Price Increase: While there is no guarantee, historically, many popular cryptocurrencies backed by nothing real have seen dramatic increases in value due to demand. Coin holders benefit from the premium placed by the market on the coin.
RealOHM is a token dedicated to supporting the liquidity bootstrapping mechanism of the DAO.
RealD is a receipt of burned RealEx tokens, unlocking the value of the idle assets in the DAO without affecting the treasury’s TVL. RealD enables RealEx that would otherwise just hold value, to achieve utility and growth through diverse investments and other financial strategies. The benefits are:
- Unlock the value of the illiquid supply of RealEx in the DAO without affecting market price.
- Utilize stablecoins in the treasury, that would otherwise just hold value, to achieve utility and/or growth through real asset purchases.
The Treasury is the heart of the RealEx system, with the assets held in the treasury providing support for the floor value of steadycoin.
Bonding is the primary mechanism by which RealEx aggregates value into the Treasury. The bonding system provides regular priced auctions, offering buyers the option to sell liquid crypto assets in return for newly minted RealEx steadycoins. The price (which may be discounted) of the swap is algorithmically controlled and dynamically changing relative to the current market price. The crypto assets used by the purchaser to buy the RealEx steadycoins are stored in the treasury.
The selection of crypto assets offered for bonding is controlled through governance and can change on a regular basis. The strategy incentivizes users to buy from RealEx directly rather than the open market. The strategy is selected based on two goals:
- 1.Sourcing and accumulating liquidity from other ecosystems: Sourcing assets that are heavily used within significant ecosystems to support the exchange and leveraging of assets. These are primarily in the form of stablecoins, and examples on Ethereum include DAI, MIM, FRAX, USDC, and USDT.
- 2.Sourcing liquidity to provide confidence: Sourcing DEX Liquidity Provider (LP) positions of any of the above assets paired with the RealEx token; or example, DAI-RealEx Uniswap LP. This enables the protocol to own its liquidity, providing a confidence signal to the market and to lower slippage for larger trades, attracting increasing size of positions.
By continuously modifying the strategy, RealEx DAO is able to collaborate with various partners that see the benefit of extending their liquid assets into real estate. This dynamic not only increases revenue and bolsters the Treasury, but it also allows RealEx to create infinite connections to its ecosystem, which will be increasingly important as RealEx continues to scale and pursue its mission.
In order to put crypto reserve assets in the DAO’s vaults to work, a proof-of-burn mechanism unlocks the full value and potential of RealEx. Under the governance control of the RealEx DAO, we peg RealEx to REALD, a non-transferrable stablecoin. A chosen amount of RealEx in the DAO’s vaults is burned and REALD is minted. The amount of REALD minted is the burnt market value of RealEx at that time. REALD is a claim on the treasury, and the reserve assets representing the burnt value such as MIM or USDT are then released to the DAO operating account to be used, in the case of RealEx, to buy real estate. REALD is a proprietary stablecoin that is untradeable after minting and cannot be bought or sold. We recognize and thank FantOHM for the innovation of this mechanism on their own protocol.
It is important to scale the Treasury asset pool to provide the market with credibility, stability, and longevity. In order to scale the assets in the Treasury, the RealEx protocol will be designed to allow bonding of real estate assets directly to the protocol. This would allow any asset owner with a verifiable RA-NFT to realize the value of their assets by bonding them to the Treasury in exchange for RealEx steadycoins. This enables the DAO to grow the asset base in a single step, rather than two steps, where RealEx would be sold for a stablecoin and then those stablecoin proceeds would be used to buy real estate. Removing this friction will accelerate the growth of the Treasury. In addition, property owners could choose to receive either the full value, partial value, or cash flow value of the asset.
The RealEx Treasury is a secured vault that coordinates the deposit, use, and withdrawal of assets under management. After RealEx assets are deposited into the Treasury through the bonding process, they are considered to be under management of the DAO. The Treasury smart contracts manage all related money flow, such as the distribution of yield or fees, the parameters around which shall be continuously decided through governance. The protocol will start with a single vault, and over time could expand to multiple vaults that are focussed on a particular geography (e.g., San Salvador Vault) or mission (e.g, Student Housing Vault). This enables RealEx to target many markets and become more resilient, since it could transcend geographic or market-specific conditions that might influence the underlying value of its assets. In addition, it enables RealEx to target specific market needs and pursue positive social impact missions, such as homelessness.
One of the most significant differences between RealEx and other protocols in the market is the need to digitally store a record of owned real assets. The RealEx protocol uses the RealEx Real Asset Non-Fungible Token (RA-NFT) to represent a single real asset to be stored in the Treasury, along with the asset’s metadata. The RealEx DAO coordinates with external real asset verification providers to mint RA-NFTs for specific assets that it acquires through purchase, lease, or option. These NFTs are then bonded into the Treasury and provide a canonical on-chain reference to that real asset. The RealEx NFT metadata will outline several key elements of the asset, including but not limited to:
- Property rights (e.g., property ownership versus lease)
- Management duties (e.g., the creation of an operating agreement, managers, accounting and performance reviews)
- Yield rights (e.g., payment of staking fees less expenses)
- All disposition rights (e.g., payment of proceeds from property or NFT’ sales)
- An off-chain reference to the real estate asset, such as a link to a county register record
- An off-chain reference to an ESG data feed of the asset
- An off-chain reference to the legal agreement purchasing the asset
- Asset information such as the address, geographic coordinates, one or more photos or other media assets
It is expected that RA-NFTS comply with a generally recognized standard to maximize interoperability between different protocols. These standards are early in their stages of development and RealEx plans to contribute actively to help define and validate implementations together as a community.
RealEx provides a staking solution to further incentivize and reward RealEx steadycoin holders to lock their tokens for a period of time. When RealEx steadycoin holders stake their steadycoins with RealEx, they are rewarded with additional RealEx tokens. The staking reward rate is controlled through the DAO’s governance, and supported through the bonding and rebasing mechanism of the Treasury.
Once a real estate asset is bonded in the Treasury, it is possible to provide additional capabilities to frictionlessly create products and services based on these assets, in order to enhance the capabilities in service to the DAO members and their communities.
RealEx Utility NFTs are derivative NFTs linked to a specific Real Asset NFT. These Utility NFTs provide additional benefits for DAO members because of the underlying utility represented by the asset. For example, they could be minted in limited batches and awarded like loyalty awards (like frequent flier miles) for stays in properties owned by the DAO. In some cases, these utility NFTs could be locked, or unlocked and traded peer-to-peer.
Other financial uses include minting carbon credits with a verified attestor, for example as a result of owning raw forest land. In this case, these credits, or fractions of credits, could be awarded directly to token holders for their use, or deposited in the RealEx Treasury for management and yield optimization.
The RealEx Protocol could further be expanded to fractionalize ownership of real estate. For example, bonding a single property to the Treasury in its own vault, and distributing vault specific tokens to your friends for them to own a share of the property.
The RealEx Decentralized Autonomous Organization (DAO) is responsible for making decisions, delegating responsibilities, and implementing complex growth and development strategies, including governing the protocol parameters and making decisions regarding the ongoing use of the Treasury. Governance rights are represented through mechanisms based on holding the RealEx steadycoins. More information on how the DAO operates can be found in RealEx DAO.
The RealEx Governance token (gRealEx) offers its tokenholders a right to contribute to the RealEx DAO. You receive gRealEx when you stake RealEx at a 1:1 ratio. gRealEx are redeemable 1:1 for RealEx. In addition the gRealEx token can provide holders with RealEx community bonus token rewards, provided through a rebasing mechanism to create yield for holders.
All assets in the Treasury are under the management of the DAO and the DAO makes decisions regarding the use of assets. Any revenue earned through use of the assets is owned by the DAO. Such revenue could be used to buy additional assets or to support buying back RealEx tokens in the open market.
The DAO Operating Account receives fees for value-based services provided through the Protocol. The primary fee mechanism at launch is through bonding, where the DAO receives a fee in RealEx tokens for every bond sold by the Protocol. It is expected that the DAO will receive fees for all major protocol features. The fee schedule is controlled by the DAO and the fees will be used to support the ongoing development and operations of the DAO to ensure longevity.
A bond marketplace providing a complete borrowing solution to finance a purchase of real estate, to finance a re-mortgage, or to finance a future revenue stream. Loans don’t need to have an expiry date, and can be structured as short as a single block, with configurable payment and buyback structures.
Crowdfunding real estate asset purchase with flexible configuration of all forms of property rights for supporters. Treasuries and control of protocol parameters can be delegated to sub-DAOs of the RealEx DAO, enabling communities with their own mission and values to have control over the parameters of a subset of the system. This enables funding of new real estate developments and the revitalization or renovation of existing real estate, in line with community needs.
A decentralized exchange connecting buyers and sellers and providing contracts for the trade of Real Estate NFTs, with limitless flexibility for integrated financing structures through the Borrow capabilities. Full swaps are also possible providing for non-financial transactions, such as no-fee social vacation trades
The solution is enabled by a blockchain protocol, a system of smart contracts coordinating the movement of steadycoins and assets. The diagram below shows the high level flow of the key parts of the protocol.
High level system flow
This protocol enables all of the community participants to capture any value creation from real estate asset operations. The Protocol can be used for real estate assets that RealEx DAO owns, but it will also serve as a building block for others, ultimately empowering anyone to plug into the protocol to coordinate the benefits of tokenizing, staking, and using real assets that the DAO or its sub-DAOs doesn’t own.
As part of the ongoing community development, the RealEx DAO fosters an environment that generates innovation. The goal is to allow the community to advance the protocol and related technologies in order to accelerate and succeed in the mission. Further, the RealEx DAO contemplates the development and use of open-source technologies to secure ongoing bonding of assets, to protect assets, and expand the promise of decentralized finance as it relates to real assets. The immediate roadmap over the next 18 months is shown below:
RealEx’s goal is to develop a community of curious and interested developers and entrepreneurs to build on top of RealEx, by building apps and the plumbing required for generalized use within the ecosystem, providing APIs to integrate with existing applications and systems operated by traditional finance. The RealEx protocol will function similar to an “app store”, while RealEx steadycoins function like the payment system for the apps. The RealEx DAO will support development of some applications, and create opportunities for the community to build other technologies that believe in the shared vision and values of the DAO. A non-comprehensive list of API products that are conceived to be useful include: