Decentralized finance, or DeFi, means using blockchain technology to create financial services that work between people instead of traditional financial institutions and services. With the potential to generate larger returns than traditional savings accounts, DeFi enables investors to act as their banks, lending and borrowing according to their own rules.
In the real estate market, DeFi introduces transformative advancements such as peer-to-peer transactions and asset tokenization. These innovations not only contribute to a more liquid and approachable real estate market but also streamline mortgage and loan administration through DeFi protocols. By eliminating intermediaries like banks, DeFi real estate solutions enable direct interactions between individuals, facilitated by blockchain-based smart contracts that ensure fairness and transparency.
With the purpose of decentralization, and technology advancements, smart contracts were created to generate automated actions, and execute them, with the transparency allocated by blockchain. In smart contracts, once predefined conditions are satisfied and validated, a computer network puts the actions into effect.
Benefits of DeFi in Real Estate
- The tokenization of real estate assets on the blockchain enhances liquidity by enabling their easy trading on global markets. Real estate tokens can be traded on peer to peer exchange, like the YAM, collateralized assets on platforms like RMM, among others.
- Transparency: Through smart contracts, DeFi makes real estate transactions faster, visible and more trusting.
- Self-Custody: The method that DeFi market players engage with permissionless financial applications and protocols is through Web3 wallets like Metamask or Rabby, which allow them to always maintain custody of their money and data.
Exploring Real Estate Investment Platforms in DeFi
Exploring tokenized real estate is just the first step in your DeFi real estate journey. There are a multitude of ways you can capitalize on the opportunities provided by the DeFi real estate market. Let’s dive into a few:
Decentralized Lending Platform: Put your tokens in lending platforms like the RMM to collateralize them to borrow stable coins. This increases involvement of the public and lends legitimacy to decentralized economic systems. Everyone benefits from this.
Peer-to-peer Platform: The peer-to-peer platform YAM can be used to increase the real estate tokens’ liquidity and utility. Owners of real estate tokens can easily buy or sell their holdings on the Yam platform, giving them more freedom to manage their real estate investments. Yam integration guarantees a decentralized and transparent platform, in addition to facilitating fast trading.
Liquidity Real Estate Pools: Liquidity pools decentralize assets to make them exchangeable and bring more liquidity to such assets. A notable example occurred in 2019 with RealT, when it initiated a fair exchange on Uniswap. This event witnessed 9943 Marlowe RealToken holders swiftly converting tokens on the Uniswap Exchange, facilitating transactions with ETH. The Uniswap Exchange pool for 9943 Marlowe was seeded with 15% liquidity on the Uniswap exchange.
Let’s break it down. Once a property is tokenized, it essentially becomes a tradable asset on the blockchain, each property is divided into multiple tokens. As an investor, you’re then able to buy a fraction of a property by purchasing these tokens.
In addition, because smart contracts manage and execute this process automatically, it reduces the chance of mistakes or fraud caused by humans. Let’s say you purchase 10 tokens of a particular property. The smart contract records this transaction on the blockchain ledger, thereby enforcing ownership without any intermediaries or potential for illicit activity.
Additionally, RealT distributes rental income to token holders every Monday. So, not only can you leverage your assets by using the RMM but also, exchange assets on the YAM with other token holders, bringing deep liquidity into real estate investments. Therefore, making real estate more accessible to everyone and giving investors in decentralized finance the same chance.
So, why does this matter? Well, it essentially democratizes the real estate market by dramatically reducing the minimum investment requirement. This makes real estate investments viable even for individuals who aren’t particularly wealthy or don’t have access to bank loans. In summary, through tokenization and DeFi, RealT offers you a simplified and accessible path into real estate investment, augmented with the flexibility, transparency, and security powered by blockchain and smart contracts.
In essence, DeFi in the Real Estate Market combines flexibility, transparency, and security, supported by blockchain and smart contracts, ushering in a new era of inclusive and innovative real estate investment.
RealT provides investors with the ability to hold fractional shares of properties and tap into the huge potential of real estate investment by utilizing blockchain technology, smart contracts, and yield creation methods.
Take a look at the properties available on RealT on our website: https://realt.co/ and our social media below.
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The information in this communication is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to sell or solicitation of an offer to buy securities. No offer of securities shall be made except by lawful means of an Offering Memorandum meeting the requirements of the relevant jurisdiction(s) and securities regulations. This communication shall also not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed business initiative.
