Tokenization represents a new alternative to For Sale By Owner by listing your home on a publicly traded marketplace.
As described earlier, tokenization is the process of representing the ownership of an asset. In the use case of this platform we are outlining how that tokenization will be structured to meet the legal framework provided by the SEC for "Digital Assets". There are some cases where part of an existing deal can be tokenized to offer more liquidity to the capitol stack. Below is an example of an investment type deal where tokenization is used as a portion of the stack. Similarly people would be able to tokenize a portion of the equity in their home (i.e. instead of taking out a home equity line of credit, that amount can be sold).
Determine the specific property type or properties that will be added to the blockchain. Each property added to the platform is unique and therefore the the offering depends on factors such as jurisdiction, asset type, capitol needed, and what types of investors can participate in the deal.
- Commercial: Property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute residential real estate.
- Multi-family: A residential dwelling where multiple housing units are contained within one building or several buildings within a complex.
- Single family home: A structure maintained and used as a single dwelling unit.
Determine what types of users will be able to participate in the deal. This also includes doing the proper user verifications to KYC or Know Your Customer. This ensures that the platform verifies user identity, suitability, and asks associated with participating in the platform.
- Retail Investors: A retail investor, also known as an individual investor, is a non-professional investor who buys and sells securities or funds. Retail investors execute their trades through traditional or online brokerage firms or other types of investment accounts.
- Accredited Investors: An individual with a net worth of at least $1,000,000, excluding the value of one's primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount.
- Qualified Institutional Buyers: The qualified institutional buyer designation is often conferred upon entities comprised of sophisticated investors. Essentially these individuals or entities, due to their experience, assets under management (AUM), and/or net worth, are considered not to require the type of regulatory oversight when purchasing securities that unsophisticated, regular investors often need.
Determine the legal factors associated with pooling capitol for the asset. These fineprint elements vary from deal to deal
- Property location: Include any prospectus requirements related to regional regulations.
- Asset price: Set the price of the asset and the number of tokens that will be issued.
- Voting rights: Determine if owners will have voting rights for the property's management. Similar to how ownership of a stock also comes with voting rights.
- Cap Table Management: Once investors make the purchase, they will receive the digitized securities, and in real time you can manage the raise and view the cap table.