Landshare Team
It’s no secret that the cryptocurrency market is highly volatile. While its potential upside is unmatched, it also frequently experiences sharp price corrections and enters prolonged bear markets. When this happens, investors need a place to protect their funds from losses — often referred to as safe havens.
A safe haven is a type of investment that is expected to retain or increase in value during times of market turbulence. Investors move funds into safe havens to mitigate their risk of losses during market downturns. In the crypto space, these types of investments can be difficult to find — especially if the investor is also expecting a consistent return.
Real estate-backed tokens offer the ability to invest in real estate directly on-chain. They are not affected by cryptocurrency bear markets because their value is derived from real world assets. By moving trading profits and idle funds into real estate-backed tokens, investors can protect their funds from volatility while also earning regular cash flows.
Real estate-backed tokens, or Asset Tokens, are cryptocurrencies that represent the ownership of real-world assets. To put it simply, the value of an Asset Token is based directly on the value of the asset it represents. All of this is made possible by a process called Tokenization.
Tokenization splits the ownership of a real estate asset into smaller parts represented by tokens. Each individual holder of the tokens is a co-owner of the asset and receives a share of the profits it generates. Asset Tokens tokens can be bought, sold, or traded just like any other token on the blockchain.
For a more detailed description of Asset Tokens and the process of Tokenization, check out Landshare’s Tokenized Asset Overview video.
Traditionally, crypto traders move their funds to stablecoins such as USDT, BUSD, and USDC to take profits or protect themselves from market downturns. Because the value of a stablecoin is always at or near $1 USD, they allow traders to keep their funds on-chain while protecting themselves from volatility and price fluctuations. While stablecoins offer great utility in this regard, real estate-backed tokens offer several unique advantages as a safe haven for crypto traders.
Tether’s USDT is the most popular stablecoin in the market today. There is a widespread assumption that Tether holds enough USD to back up the whopping 69,000,000,000+ circulating supply of USDT. However, at this point it is not clear how many USDT tokens are backed by actual USD. According to a recent Bloomberg article:
“Exactly how Tether is backed, or if it’s truly backed at all, has always been a mystery. For years a persistent group of critics has argued that, despite the company’s assurances, Tether Holdings doesn’t have enough assets to maintain the 1-to-1 exchange rate, meaning its coin is essentially a fraud.”
On October 15, 2021, the CFTC ordered Tether to pay a $41 million dollar fine for issuing unbacked USDT tokens. According to the release:
“The Tether order finds that since its launch in 2014, Tether has represented that the tether token is a stablecoin with its value pegged to fiat currency and 100% backed by corresponding fiat assets, including U.S. dollars and euros. However, the Tether order finds that from at least June 1, 2016 to February 25, 2019, Tether misrepresented to customers and the market that Tether maintained sufficient U.S. dollar reserves to back every USDT in circulation with the “equivalent amount of corresponding fiat currency” held by Tether and “safely deposited” in Tether’s bank accounts. In fact Tether reserves were not “fully-backed” the majority of the time.”
The concerns over Tether’s operations should be taken seriously if cryptocurrency is to be adopted by the mainstream public. Without being collateralized 1:1 USD, a “run-on-the-bank” situation, or even regulatory actions, could leave hundreds of millions of users with valueless USDT that can no longer be redeemed for $1 USD.
By contrast, Asset Tokens are fixed supply tokens transparently backed by real world assets. Because token holders are shareholders of the asset itself, they have a direct legal claim to their share of the asset’s value.
While stablecoins offer protections against market downturns, they do not intrinsically offer any yields or returns to investors, nor can they appreciate in value. In fact, due to inflation rates reaching 30-year highs, holding stablecoins can mean a loss of buying power over time.
Asset Tokens offer similar protections from the volatility of cryptocurrency while also offering annual cash yields and value appreciation averaging between 6–8% and 5–10% respectively, for total annual returns up to 18%. While the value of the US dollar shrinks, US home prices are projected to increase by 13.6% over the next year.
Traders may choose to stake stablecoins on loan or yield farming platforms such as Venus or Beefy Finance. These platforms offer a great way to earn some extra income while holding USD and greatly outperform the rates offered by banks.
Unfortunately, these platforms come with their own risks that can still result in traders losing their investment. Due to the open nature of DeFi, many protocols have vulnerabilities that can be exploited by hackers, and these attacks are not uncommon. $119 million was recently stolen from BadgerDAO by hackers, Cream Finance was exploited for over $100 million, and Poly Network was exploited for $600 million. According to Cipher Trace, over $10 Billion was stolen in DeFi related theft this year.
In addition to DeFi risks, investors are vulnerable to the loss or theft of wallet private keys and exchange hacks, meaning funds can be lost even by holding. If these events occur, there is typically no way to retrieve lost funds.
Tokenized Real Estate offers additional security measures that traditional protocols cannot. While traditional tokens can be lost due to DeFi exploits or wallet hacks, Asset Tokens are immune to this because they are owned by the investor, not a wallet. If an investor’s wallet suffers an attack or is compromised, the stolen tokens can be administratively reissued to a secured wallet.
Tokenized Assets offer a great way to hold your profits in a secure and traditionally stable manner without the risks of being run on, being hacked, or sitting on depreciating assets. While your first thought for a safe haven may be holding stablecoins, it may be time to consider real estate-backed tokens as an alternative.
Landshare offers fractional real estate investment on the blockchain, enabling hassle-free investment for as little as $50. You can find out more about the Landshare platform at https://landshare.io and view our current offering at https://app.landshare.io/property-details.
New to Landshare? Learn more about the platform at docs.landshare.io.
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Landshare Team
Tokenization has brought unprecedented changes across industries but it is more effective within the real estate sector. Although there is widespread discussion about how it opened varied opportunities for investors, the offerings and benefits extend further. The discussion is largely focused on how tokenized real estate helps investors but it is equally, or perhaps more important for property owners.
As a property owner, you must be looking for ways to maximize the profitability of your real estate assets. With the real estate tokenization, which is possible due to blockchain technology, the goal is certainly achievable. Converting your property into digital tokens to make them easily tradable and manageable on the blockchain opens up new avenues for you to increase profits.
Let’s take a look at the strategies how you can apply and effectively boost your profits.
Real estate tokenization involves creating digital tokens that represent ownership stakes in your property. These tokens are created and stored on blockchains that make their transactions easier, secure and transparent. Tokenization allows fractional ownership of property that further makes the property investment and trade more accessible.
There are multiple benefits of real estate tokenization including enhanced liquidity, increased transparency, access to a broader investor base, and international access among others. In addition, property management and raising capital against real estate property becomes hassle-free.
All these benefits make it easier for investors to enter the real estate market who found it difficult earlier. Where investors take advantage of benefits, property owners can also utilize these features and capitalize on them.
One of the most talked about features of real estate tokenization is fractional ownership. You can sell smaller shares of your property to a larger number of investors. It attracts investors with a small budget to take part in real estate investment.
Tokenization started the retailing of real estate properties making it in reach of low-income group investors. It significantly increases the pool of potential buyers, making your property more attractive.
Since buying and selling of real estate assets becomes easy and frequent, the liquidity goes up. The property owners can focus on selling the shares of a property at the best possible price to maintain the cash flow. It requires less hassle since you can find a large pool of investors interested in investing in real estate properties.
With tokenization of assets comes globalization of assets. Bringing your assets on chain means bringing it within reach of capital markets worldwide. Pool of investors from all over the world can invest in your property and it can increase the odds of raising capital by a huge margin.
Blockchain technology is synonymous with transparency and trust. It is immutable and secure that keeps all the transactions safe. These cutting-edge features better attract investors and keep them for long.
Real estate tokenization offers you numerous opportunities to boost your profits as a property owner. You can maximize the value and profitability and value of your assets by attracting more investors through fractional ownership, enhancing liquidity and cash flow, accessing global capital markets, improving transparency and trust.
The global real estate market is about to hit $700 Trillion in the coming years and tokenization of real estate has potential to share a significant share from this enormous valuation. As the sector continues to evolve by embracing emerging technologies such as tokenization, real estate property owners could see exciting transformations and extensive growth opportunities in the long run.
Landshare Team
What comes to your mind when considering whether there will be an increasingly high demand for real estate properties with time? The answer should be affirmative since we know that land is a finite resource, and so are properties. This more was needed to drive the demand for real estate properties, at least not for another century. However, property owners do not need to worry since real estate tokenization solves this issue.
One of the most effective use cases of blockchain technology—tokenization—has shown impressive results and assured a bright future. Real estate tokenization was among the first implementations of the technology, and it was indeed successful. McKinsey, a global management consulting firm, estimates that the volume of tokenized digital securities will hit $5 trillion by 2030, while other reports suggest that real estate tokenization will have a significant share in it.
A Boston Consulting Group (BCG) report showed that the market size of the tokenized real estate sector in 2022 was $2.7 Billion. However, it is expected to reach $16 trillion by 2030. Such huge numbers are only possible with supply meeting demand. Tokenization brings enormous possibilities, and property owners can now be assured of potential increased demand for tokenized real estate properties.
We must investigate the reasons that are expected to increase the demand for tokenized real estate. Let’s do this by first understanding what tokenization means.
Tokenization is the digital representation of assets on blockchain networks. Real estate tokenization does the same by representing property value through blockchain-based tokens. After tokenization, the real estate sector experienced remarkable changes, as it eliminated inherent flaws and brought some unique features.
The benefits, including rational ownership, increased liquidity, transparency, and security, place tokenized real estate ahead of the traditional market. Investors and property buyers are drawn towards tokenized real estate due to these offerings and likely to increase the demand in the contingency.
The demand for real estate investment has continued to grow. According to KPMG, the global commercial real estate investment hit $830 billion in 2019, demonstrating growing interest. On the other hand, average investors have been massively included in the real estate market because of some practical ways to invest, such as Real Estate Investment Trusts (REITs). The S&P Global REIT Index has seen notable growth in the past few years, indicating the rising demand for real estate investment.
Tokenization offers a more democratized way of investing in real estate, ensuring a huge future demand. Let’s delve into the offerings of tokenized real estate to understand why it could drive more demand:
Fragmentation or fractional ownership of real estate properties through tokenization not only makes it possible for small investors to participate but also empowers them. By making tokenization accessible to small investors, tokenization opens up a vast pool of untapped interested buyers. Once this crowd enters the space, the real estate market could see unprecedented demand, giving small investors a significant role to play.
Tokenization is often hailed as the 'democratization of the real estate sector '. This term refers to the idea that tokenization can make real estate investments more accessible to a wider range of investors, not just the ultra-wealthy. Many reports show that ultra-high-net-worth individuals (UHNWI), a term used to describe individuals with a net worth of over $ 30 million, prefer real estate investments for stability, cash flow, appreciation, and diversification. According to Tiger 21, a network of UHNWI entrepreneurs and investors, about 27% of these HNIs' investment portfolios consist of real estate investments.
If given opportunities, small investors are likely to follow the HNI investment strategy to benefit from the stability, cash flow, and appreciation of the real estate sector. Tokenized real estate provides many investors with an opportunity to enter the market.
Traditional real estate markets have always had a barrier to entry, given the requirement of high capital to invest. This has restricted small investors from entering the market, but tokenization solves this. Tokenized real estate properties are divided into small units and become affordable even for retail investors.
The low threshold for entering the real estate investment market has allowed many investors to enter, which was never possible earlier. There are numerous active projects in the tokenized real estate market that facilitate real estate investment with as low as $50. In comparison to traditional real estate, which might require from $100K to $1 Million, depending on the property, there are enormous possibilities in the tokenized real estate market.
Tokenization doesn't just allow investors to invest in real estate in any corner of the world, it opens up a world of possibilities. This global reach liberates investors from the limitation of investing in regional properties, offering them the excitement of exploring international properties with the possibility of a better return on investment and rental income yield.
Several studies show that nearly 90% of all US-registered real estate properties are accessible only to accredited investors. This shows that many investment options are only available to a small number of investors.
For instance, if you are an aspiring real estate investor from Indonesia, you can invest in tokenized real estate based in the United States. This access to international real estate properties was unimaginable until tokenization.
In tokenization, real estate properties are turned into tokens that investors or property buyers can hold. These tokens can then be easily traded to other investors. This easy and quick selling and buying of tokens not only makes the tokenized real estate sector highly liquid but also provides property owners with a sense of security, knowing that they can receive cash in exchange for their property or part of it quicker than they could traditionally.
Property owners can receive cash in exchange for their property or part of it quicker than they could traditionally. Investors or buyers are also not burdened with carrying the investment for long periods.
Blockchain technology plays a significant role in the easy management of real estate properties with the help of smart contracts. Tokenized real estate properties do not need intermediaries to carry out the transactions. Self-executable smart contracts take care of the property transactions once the conditions are met.
With blockchain technology comes the assurance of security and transparency. As smart contracts take care of the process, participants can see the whole transaction by themselves and see if everything is going according to plan. Due to the immutable nature of blockchain networks, it becomes nearly impossible to alter the transactions.
Since buying and selling tokenized real estate property is digital, it does not require paperwork, bureaucracy, or other requirements that increase transaction costs. The automated process keeps the cost minimal, making the transaction affordable.
KPMG study finds that a significant amount of time and money goes into a real estate transaction. Such transactions could sometimes take six months to 2 years and 1% to 3% of the assets’ value in fees, depending on the property. Tokenized asset transfers get done quickly and at a much cheaper rate.
Traditionally, real estate markets are illiquid, and it might take months to sell or resell your property. In tokenized real estate, however, since investors purchase the tokens, they can easily sell these tokens further to other investors or in the secondary market.
The real estate market has this limitation, but asset-backed tokens are easily tradable, further enhancing liquidity.
Landshare offers the ultimate real estate tokenization services that ensures investors as well as property owners get most benefits. We ensure all the features and offerings mentioned above available on the platform. Providing access to retail investors, accessibility to international real estate, high liquidity, transparent process, low transaction cost and secondary market trading, Landshare is committed to cater both ends in the real estate market: investors and property owners.
We have explored that tokenization of real estate is more than just a fleeting trend; it is a transformative innovation reshaping the market. With enhanced accessibility for retail investors to global reach and high liquidity, tokenization is smashing long-standing barriers.
The integration of blockchain technology makes the process transparent, secure, and efficient by reducing transaction costs and simplifying property management using smart contracts. Indeed, the future is digital, and the real estate sector is still catching up with the trend. Property owners can leverage tokenization and look forward to an emerging market that is more inclusive, efficient, and dynamic.
Landshare is a U.S.-based platform dedicated to the tokenization of real estate properties. It enables investors to acquire fractional shares in residential properties using blockchain technology, streamlining the investment process and broadening the scope of who can invest in real estate. By integrating blockchain technology into the real estate market, Landshare offers tokenized property assets on its platform, making it possible for investments to start at just $50, thus democratizing the entry into property investment.
The platform employs Real World Asset (LSRWA) tokens, granting investors partial ownership in tangible property assets and marking a notable innovation in real estate investment. Landshare's utility token, LAND, has demonstrated its transactional effectiveness by successfully selling four tokenized properties on the Binance Smart Chain (BSC), affirming its readiness for the market. Addressing the traditional inefficiencies and liquidity issues in real estate, Landshare positions itself as a critical player, offering promising prospects for growth and passive income generation.
Landshare Team
The real estate market is witnessing a transformative shift with the introduction of blockchain technology, particularly through the concept of tokenization. This innovative approach is redefining property ownership, offering new opportunities for investment and liquidity.
If you are an investor in real estate, you might have reaped the benefits of tokenized real estate investments. However, real estate tokenization not only opens a new avenue for real estate investors but also brings forth advantages to property owners.
Tokenization allows property owners to convert real estate assets into digital tokens, thereby simplifying transactions and broadening investor access. Liquidity and fractionalization are key benefits in tokenized real estate but for property owners within the ecosystem could see more than this.
In the following blog, let's explore more compelling use cases of tokenization for property owners including house flipping, partial sales, and tokenizing cash flows, backed by real statistics and figures to illustrate its growing impact.
Tokenization is a process of creating a digital identity of a tangible financial asset on blockchain which is unique and anonymous. This method takes the value of an asset on a chain. It brings benefits such as fractional ownership, liquidity, enhanced security and transparency. Currencies, commodities, real estate properties and art pieces are the common tokenized assets.
As an investor, you can enjoy investing in multiple assets through fractional ownership reaping the benefits of varied returns on respective assets. Real estate sector is traditionally one of the most illiquid ones since it takes time to sell off a property which requires time and effort but tokenization solves such pain points.
We have already discussed the pros and cons of tokenized real estate investments in earlier pieces. Along with the investors, tokenization resolves issues for property owners. The tokenized real estate properties can be sold off in units that increase higher chances of sale. Following are more crucial advantages of tokenized real estate for property owners.
Traditionally the practice of purchasing properties, renovating them and then selling them in profit is house flipping. It needs a hefty amount upfront and since the market turns or unexpected costs are also crucial factors, there are risks included in the process. But inclusion of tokenization could mitigate these risks to some extent also resolving issues related to liquidity.
The house flippers could sell fractional shares of the property as tokens in exchange for the required amount. Let’s say a flipper buys a property for $300,000 and needs $50,000 for renovations. Now they could issue 350,000 tokens valued at $1 each to raise the renovation funds. This way they can not only speed up the process but also manage to diversify the risk.
Tokenization also allows partial sales that enable property owners selling a fraction of their property to different investors. Though the method could be useful for any real estate property, the markets with high-value properties such as the United States can benefit the most. This way the property owners bear no debt and it becomes a great alternative to home equity line of credit (HELOC).
Property owners can sell out their shares of property to a pool of investors after tokenizing it. For instance, a property owner takes 60% ownership and sells the rest 40% of the property. Along with the democratization of real estate investment, this approach also provides liquidity to owners to invest in more ventures or even make improvements in the real estate property.
One of the innovative ways to secure the funding along with providing regular income to investors is through tokenization of rental properties’ cash flows. You as an owner of a real estate property that generates $10,000 per month through rent could use the method and tokenize this case flow while offering tokens that represent a share in the rental income. This method attracts investors seeking stable returns without the need for large capital investments.
A Deloitte report states that by offering such fractional ownership and investment opportunities, tokenization could grow the liquidity of global real estate assets by over $1.4 trillion.
At Landshare, we've dedicated ourselves to democratizing real estate investment, and our efforts have culminated in the Landshare RWA Token. This innovative product empowers anyone to generate passive income from real-world assets with an investment as low as $1.
The benefits of our tokenization process extend beyond just investors. Property owners—whether individuals, corporate entities, investment clubs, or funds—now have a powerful tool at their disposal. Through tokenization, both investors and property owners can cultivate a relationship that is mutually advantageous.
As we build on our strong base of RWA investors, our next objective is to enable property owners to tokenize their assets through the Landshare platform. This capability will allow them to raise funds and secure loans against their properties, enhancing the value provided to our existing LSRWA investors.
Tokenization offers property owners a range of strategic advantages. It isn't merely about listing properties for sale. Its true value lies in its ability to provide liquidity and allow for the fractional ownership of properties. Alternatively, they can borrow against the future cash flow from their properties, maintaining their stake while obtaining upfront cash.
Landshare has always been taking bold and unique steps for the sake of community and is now looking to include property owners, who remain at the other end of spectrum, along with the investors.
This initiative is set to broaden the array of properties available on our platform, diversify our offerings with new property types including vacation homes and commercial spaces, and expand our reach beyond the U.S. It also introduces new mintable NFTs, enriching our investors' options.
The broader impact of real estate tokenization is significant, offering increased liquidity, reduced transaction costs, and enhanced market efficiency. A study by the World Economic Forum predicts that by 2027, 10% of the global GDP will be stored on blockchain technology, with real estate being a major component of this shift.
This adoption indicates a robust future where tokenization not only makes real estate investment more accessible but also more integrated with global financial markets, allowing for seamless international transactions and diversified portfolios.
Tokenization stands out as a revolutionary tool in real estate, providing property owners and investors with novel ways to manage and profit from their assets. As the technology matures and regulatory frameworks develop, the possibilities for tokenization in real estate will likely expand, further unlocking the potential of properties as both investment vehicles and sources of revenue.
Landshare is a platform for tokenizing property in the United States. It allows investors to buy shares in residential properties through blockchain tokens. This method has simplified the investment process and made real estate investment accessible to a broader audience. Landshare merges blockchain technology with the real estate sector by offering tokenized real estate assets on its platform, enabling investments as low as $1 and democratizing access to property investment.
The platform utilizes Real World Asset (LSRWA) tokens to offer investors shared ownership in actual property assets, which is a significant innovation in real estate investment. Landshare's utility token, LAND, has proven its transactional efficiency with the successful sale of four tokenized properties on the Binance Smart Chain (BSC), showcasing its market readiness. By addressing inefficiencies and liquidity challenges in traditional real estate, Landshare is emerging as a pivotal player, providing attractive opportunities for growth and passive income.