AMA Highlights — LABS Group
By Daniel Dal Bello, Director.
February 8, 2021–6 min read.
On Thursday 4 February, we welcomed Patrick Tang and Yuen Wong from LABS Group — short for “Liquifying Asset Backed Securities” — into the Hillrise Group Telegram Chat for an AMA. Patrick is Managing Partner, and Yuen is the sitting CEO.
LABS Group are building an end-to-end real estate investment ecosystem, intending to remove barriers to entry and enable fractional investments.
We know that regulation in this area can be complex and many real estate focused blockchain ventures have failed.
In this post, we have compiled key questions and answers from the event.
Daniel Dal Bello
Welcome to you both and thank you for joining us tonight. I’m looking forward to understanding more about what you are working on here with LABS, making tokenized real estate exposure easy.
Could we start with introductions and background on how you both came to be in your positions with LABS Group?
Hi everyone. Thanks for having us here today.
LABS Group is one of the first end-to-end real estate investment ecosystems allowing for retail securities trading on a securities exchange that is only focused on real estate. We want to democratize real estate investing by allowing everyone access.
We formed LABS in 2018, Starting as an STO advisory company for real estate projects. We both had contacts in real estate and had an opportunity to work with a large land developer.
My name is Yuen, and I’m the founder and CEO of LABS Group, which is a digitized real estate investment ecosystem powered by blockchain.
My background has always been in blockchain and real estate, and that’s why I’m doing this great project with a great team!
Prior to launching LABS, I was Managing Partner for a UK property company and I’m still involved at times in BitMart exchange as a partner.
The higher-level concept that you are working on outside of the blockchain context is not new. In straightforward terms, how do you fundamentally differentiate yourself from a traditional REIT [Real Estate Investment Trust]?
REITs are usually required to be publicly listed — when they are not, they are hard to exit. Higher entrance and transactional costs are normal, as they are expensive to set up.
Current REITs require accredited investment status. For us, we are able to sell SPV [Special Purpose Vehicle] structures that hold multiple properties in a crowdfunding structure and sell in the secondary market for as low as 100 USD a share as Yuen has mentioned.
Daniel Dal Bello
In terms of the process, when a person or entity wants to raise funds through the sale of a property — do you as a company offer the legal services needed to go through the process? Or do you have any partnered legal firms that take care of this for the client?
Well, LABS will have a project advisory and management layer, as typically property developers are new to digitization and they will need alot of hand-holding.
And LABS is a digitized real estate investment ecosystem, so we also have primary and secondary trading platforms, and DeFi components to allow leveraging solutions.
Our lawyers specialize in structuring for real estate as well as a good knowledge of security tokens. The #1 aspect of property investment is structure, structure, structure.
My question is based on the maintenance of the property.
For instance, if I’ve got a real estate property in the USA and I’m a resident of Germany, who maintains the property for me?
Just like REITs, the properties will be managed by appointed professional property management companies.
When we digitize a real estate asset, it means we transfer the asset title to an SPV, and digitize the shares of it.
And then the digitized shares, or the tokens, are sold and traded. The asset title will be held in custody since the tokens already represent its interest.
How would you say that LABS differentiates itself from some of the other real estate-focused security token platforms, companies out there?
For example, SolidBlock, Realio and RealT.
I’m also curious to know why you’ve chosen real estate specifically and if you’re planning to expand your service offering in the future.
Since 2018, LABS has evolved from a conceptual idea to a ‘Digital Real Estate Investment Ecosystem’. Our business model is revolutionary and holistic, it includes three layers.
- An issuance and a crowdfunding platform (built on Polkadot with their support),
- An exchange for which we have obtained a digital security exchange license, and
- Advisory and management services.
To strengthen the ecosystem and make it attractive and complete, we incorporate DeFi solutions with staking pools, DEX and lending platforms powered by a strong token economy and the ‘GAINS’ model.
I think the number one difference is that we have are going to allow the securities to be traded to retail [investors] on a real estate focused securities exchange.
With regards to your tokenomics, what are the core utility characteristics of the LABS token?
What is the relationship between the LABS token and your other ecosystem tokens — LABS Stable Token and LABS Security Token?
To strengthen the ecosystem and to make it complete, we incorporated DeFi solutions powered by a strong token economy and the ‘GAINS.’ model.
Let me explain what we mean by the GAINS model:
Our token holders can vote on important matters of interests.
LABS token holders can get early access to real estate projects that the ecosystem introduces.
LABS token holders can get incentives should they decide to get involved in our projects in our ecosystem.
LABS token holders can nominate projects they wish to be launched on our platforms and be rewarded.
- Staking (for rewards)
LABs token holders can stake the tokens to get rewards. LABS will use its governed 80 per cent profit generated by the LABS ecosystem to buy back LABS tokens from the open market in a quarterly manner and distribute to the staking pool in accordance to the size and days staked in the pool.
By buying back from open markets with the ecosystem profits, the token price would be boosted and holders will be rewarded when the ecosystem gets even bigger traction.
We’re slowly seeing some growing interest in security tokens on AMMs, this as liquidity still is the biggest issue for security tokens on centralized exchanges. We’ve seen the RealT platform do this for some time and as expected it does encourage more trading.
On the flip side, these AMM markets are often still relatively illiquid due to the low value of the listed properties ($100–200k) and due to the small investor base, which has to be whitelisted in order to be able to trade.
How do you see the future of secondary markets evolving for security tokens?Is it AMMs or centralized exchanges?
To what extent do you see your properties as attractive enough to drive retail and institutional interest, and liquidity?
As of right now, we are focused on centralized exchanges because of KYC and AML restrictions — we need to be ultra-careful.
We are trying to disrupt a very old industry that needs disruption but we need to do it the right way
We’ve noted your seemingly close collaboration with RioDeFi. You have several executives from that startup as advisors to LABS. What is the nature of the collaboration now and in the future?
We have a few business partnerships with them. Our platform token will always be ERC-20. But inside our platform it will be on RioChain which is potentially a future Polkadot parachain.
We need the speed, efficiency and cost savings of the chain. After an investor performs KYC, they will be able to buy real estate in minutes.
For those of you that have purchased a home. Most of you know at a minimum it takes 30 days to close, with LABS its fast as you electronically sign a contract and pay in USDT.
Outside of the chain, we have a few business relationships with RioDeFi. These will be announced over the coming month or two.