Token Economy

The intention for REG (Realtoken Ecosystem Governance) is to make it attractive with numerous use cases forcing holders to make strategic choices as to their allocation of REG in the various programs and uses of the ecosystem. Our aim is to make the most of the loyalty of our “early adopters”, who have supported us throughout these first five years, and to offer multiple opportunities to all those who will join us in the years to come.

REG’s motto is to place all participants on an equal footing, enabling any player investing an effort comparable to that of other individuals, including those at RealT, to benefit from the same advantages and rights. The aim of this approach is to encourage long-term commitment and to adapt to different profiles and strategies in DAO participation.

With our roadmap, our technological advances, our creativity, a very active community and our unique position as one of the few projects, and probably the oldest, to connect the real world to decentralized finance, we are confident in our role as a catalyst in the mass adoption of the next few years. Consequently, we aspire for our economic structure and DAO to recognize and reward both early adopters and future community members.

As we saw earlier, the market for real assets (RWAs) represents an immense economic potential that remains largely untapped. The giants of traditional finance agree: tokenization of real assets represents the future of finance. This sector promises gigantic trading volumes and revenues, a significant proportion of which could be captured by the RealToken DAO.

The initial supply is expected to be 500,000,000 REG Tokens**.

**This supply does not include mint linked to SOON (SOON was the temporary token pending the release of REG), and may rise or fall according to various criteria and DAO decisions.

The initial supply of 500,000,000 REG is to be distributed in regular airdrops over 5 years (see breakdown below), using a system based on “epochs”. By default, each “epoch” will have a duration of one month (which can be modified as required). Rather than making one or two airdrops based on arbitrary, ad hoc criteria defined by a handful of people, we’ve designed an innovative, dynamic solution offering multiple advantages, providing leverage to balance everyone’s interests.

To determine the allocation criteria between participants, we have set up an equitable system that addresses 3 individual profiles, through 3 types of NFT:

• The “RealToken Citizen” NFT, aimed at “early adopters”, and focusing rewards on the citizenship aspect of the ecosystem;
• The NFT “RealToken Activity”, aimed at active people who carry out On Chain and Off Chain actions that benefit the ecosystem;
• The NFT “RealToken Collector”, aimed at more passive profiles with capital to invest.

Holding an NFT is not a requirement for participating in governance and the ecosystem, since it will be possible to do so with REGs held in the wallet. Applications remain freely accessible, as has been the case to date. However, owning a RealToken NFT offers advantages such as a boost in voting power (materialized by an amplification of the weight of your vote), access to airdrops and other exclusive benefits. NFTs aim to channel, direct and align the community’s efforts and interests over the long term. Another of these advantages is to make a “locked-in” asset liquid, without the need to create a new liquidity pool, as is the case for CRV with cvxCRV, and thus avoid downward pressure on the value of REG.

To find out approximately how many REG tokens an NFT holder will be able to obtain over the next “epoch” and over the next five years, the user will have access to a simulator. Thanks to this simulation, the market can assess the value of these NFTs and their potential profitability. The allocation calculated by the simulator may vary from the actual allocation you collect, due to the assumptions you select.

Any creation of an NFT during the course of an “epoch” makes the NFT eligible only for future epochs. This new NFT is therefore not eligible for an airdrop from a past or current epoch.

The partial or total withdrawal of tokens received via Airdrop (REG and other assets) can be made at the end of each epoch. If the user does not withdraw his share, they will remain in the NFT and will be blocked until the end of the next epoch. As long as the REGs have not been withdrawn from the NFT, they will slightly boost the weight of the NFT in the next epoch.

Removing assets from an NFT is a 2-step process:

1. A first transaction must be carried out before the end of the epoch to register the NFT’s asset withdrawal request and thus prevent the assets from being locked in automatically for the new epoch;
2. A second transaction must be executed during the following epoch to withdraw the funds. If you haven’t withdrawn the assets by the end of the epoch, your assets are automatically locked again. You will have to go back to step 1 and make a new withdrawal request during the next epoch.

Each NFT can be resold on the secondary market. Thus, on each transaction, a fee will be charged (possibly composed of a share for the DAO and royalties for the creators of the NFT images). By developing different use cases for these 3 types of NFT, RealT believes there will be a demand to make them liquid, increasing their trading volume, the fees collected, and therefore the revenue collected by the DAO and its Token Holders.

After distributing the initial supply over the first five years via this system of airdrops and epochs, the DAO may decide to continue allocating part of its income generated by the protocol, or to buy back REGs on the secondary market. The aim of this action is to replenish the reserves earmarked for the budgets of the “RealToken Citizen”, “RealToken Activity” and “RealToken Collector” NFTs, thereby ensuring their value, interest and long-term viability within the ecosystem. By adapting distribution parameters to each epoch, the DAO can encourage a wide variety of actions to suit the needs of the moment. We can see that other, more mature DAOs, which generate a profit after paying the various providers, distribute part of their income to token holders. AAVE, with its new Merit program, is one of the examples that comes closest to our vision.

In the next section, we’ll go into more detail about the benefits of each type of NFT around the RealToken ecosystem. It’s important to distinguish between the RealToken protocol and the RealT company, which are two distinct entities. RealT is a service provider commissioned by the DAO to develop the RealToken protocol.

As a separate entity, RealT remains free to manage the products and services it owns as it sees fit (wild sales, affiliation, fees on the realt.co platform, etc.). Unilaterally, it can, if it wishes, give additional advantages to NFT holders; for example — fees on buybacks: instead of applying standard fees, RealT could decide that an NFT holder would benefit from reduced fees or even no fees at all. As a result, RealT has total discretion over the pricing of its products and services and may, if it wishes, establish different programs and fee levels for participants.

The DAO, for its part, may, if it so wishes, decide to give certain additional benefits to NFT holders concerning the products and services it owns.

As the RealToken protocol develops, it would not be surprising to see new use cases for these different NFTs.

Initial REG token allocation

500,000,000 REG (excluding SOON token conversion)

RealT’s intention to allocate 86.5% of its total offering to the ecosystem is a bold decision to accelerate our goal of decentralization. This strategy is particularly noteworthy in an environment where it is not uncommon for investors, advisors, the team and private sales, sometimes composed of “whales”, to hold between 40% and 60% of the offer. This concentration generally generates constant selling pressure in the early years, after each release of tokens acquired by these investors at an attractive price.

With this large percentage allocated to the ecosystem, RealT intends to balance the economic levers through a distribution whose objective is twofold: on the one hand, to fairly reward the first contributors according to their actions, and on the other hand, to ensure equal opportunities for newcomers wishing to actively participate in the ecosystem.

Airdrop GENESIS

This first airdrop will be financed by the treasury budget. Each wallet that has held RealTokens over the last 5 years will be eligible for 100 REG per eligible wallet.

The aim of this airdrop is to initiate trading, generate interest and explore the value that the market will place on REG. RealT does not participate or influence the setting of this initial price discovery (RealT will not create a liquidity pool). Only the market will decide on the value or otherwise of REG. To find out more, read the section below, “Liquidity at launch”.

Eligible wallets will be able to claim their 100 REG airdrop on Gnosis Chain. Thereafter, REG will be cross-chain and deployed on other blockchains depending on decisions taken by the DAO. Wallets whose owners no longer have access to the REG or fail to “Claim” it within 1 month of it being made available will lose their right to this airdrop.

Any REGs not distributed will revert to the DAO treasury budget, which feeds this airdrop.

Ecosystem allowance

86.5% of REG is distributed to the ecosystem, representing 432,500,000 REG. This allocation is divided into six main categories:

1. 0.58% for an adjustment provision (budget at RealT’s discretion)
2. 0.99% for community contributions (budget at community discretion)
3. 11.93% for DAO treasury
4. 18.89% for early adopters (NFT “RealToken Citizen”)
5. 23.86% for activities (NFT “RealToken Activity”)
6. 43.75% for community collectors (NFT “RealToken Collector”)

Adjustment provision

0.58% — 2,500,000 REG

This restricted portion of the supply will be distributed at RealT’s discretion. This budget could be used to act quickly without the need for a DAO vote, in order to remain agile and flexible in the face of an unexpected event, or to support activities within the ecosystem.

Community contribution

0.99% — 4,300,000 REG

This allocation will be determined by the community through one or more governance votes. At RealT, we believe that community contributions to the ecosystem should be rewarded by the community, which is best placed to judge the relevance and contribution of contributors. That’s why we support the idea of “Rewarding the community by the community”, including community leads and moderators, member support, beta testers, creators of tools, applications, content and so on.

RealT may give its opinion, but will not decide on the final allocation. The community thus has full power over the allocation of this distribution.

It may decide to distribute all the rewards immediately, or to reserve a portion for future contributions. It can also opt for a blocking period, or for progressive payment.

It is envisaged that the budget will be made available to the community from January 1, 2025. This period will allow the community to debate the distribution of this allocation, and to have had enough epochs / airdrops of REG to have a representative vote.

The community will need to provide a list of addresses who will be the owners of a Gnosis Safe holding this budget before the release date.

Treasury DAO

11.93% — 51,600,000 REG

This allocation offers total freedom of use. The intention behind this budget is to encourage the use of REG tokens with the aim of creating beneficial synergies with the entire ecosystem.

There is no “lock” or vesting for this part of REG, it’s directly circulating tokens.

The GENESIS airdrop will come from this budget, and could reach around 3.8% of cash if all eligible wallets claim their 100 REG within the allotted time. In principle, this allocation should not be used for rewards unless there is a clear majority opinion from the DAO. Typical use cases would be the provision of liquidity on DEXs, OTC exchange with other projects to diversify and obtain voting power outside the RealToken ecosystem, to alleviate unforeseen needs to date, etc.

Early adopters, NFT Citizen

18.89% — (81,700,000 REG)

The purpose of this allocation is to reward and thank the players who have made RealT and the RealToken ecosystem a success over the first five years.

With the aim of making the distribution of REG attractive and fair, RealT has set up an innovative initiative where the first users of the ecosystem will have the opportunity to create (mint) a unique NFT per address holding or having held 1 or more RealToken(s) (the right to mint is not transferable, so if an address is no longer accessible the NFT linked to this address cannot be minted).

Depending on past actions, each NFT will have unique attributes to influence its allocation in REG and other advantages in the ecosystem, such as the ability to mint “RealToken Activity” NFTs (explained in the next section).

The probability of obtaining an NFT with a certain degree of rarity will be influenced by several factors, such as the age of the user’s address, his positive contributions within the ecosystem, such as adding liquidity to liquidity pools, participation on the RMM and YAM, the number of RealTokens held, etc.

This NFT, dubbed “RealToken Citizen”, is scheduled for release in Q3 2024, and will be minted free of charge (only Gnosis Chain transaction fees will be charged) by each eligible address for a period of one year on Gnosis Chain. If a user has used three different addresses, he will probably be eligible to create an NFT for each of his addresses. Given that this budget is intended to reward the existing community, it’s highly likely that the snapshot to determine address eligibility has already been taken by the time you read this.

At the end of the allotted period (1 year), if a portfolio does not proceed with the creation of the NFT, the address loses the right to mint its “RealToken Citizen” NFT and the associated benefits. By freezing this period at 1 year, the aim is to give our community time to mint it and to enable the supply of this NFT to be frozen at a given moment. By limiting the number of Citizen in circulation and indicating the level of the NFT, the market will be able to assess its value more accurately (a limited supply is often synonymous with a gain in interest).

The 81,700,000 REGs will be released progressively over the different epochs. From one epoch to the next, the REG budget will potentially differ according to the votes cast by the DAO. Let’s imagine that for epoch 1, the budget is 1,361,666 REG and that 5,000 addresses have minted an NFT before the start of the epoch. The weight of my NFT in the pool (NFT already created before the start of the epoch) is, for example, 0.06%. At the end of the epoch, I could therefore claim 817 REG. (0.06% * 1 361 666 = 817 REG)

Now, in epoch 2, the budget is still 1,361,666 REG, but the number of eligible NFTs has risen to 9,800. The weight of my NFT in the pool is, for example, 0.03%. At the end of the epoch, I could claim 408 REG (0.03% * 1,361,666 = 408 REG).

The allocation is determined by the following formula:

Where:

• Wnft is the Weight of your NFT.
• Wtotal is the Total Weight of the NFT pool.
• Bmax is the Maximum Budget remaining.
• Emax is the Max epoch (default Emax=60).
• Epassed is the number of epochs passed.

Users who do not have an address eligible for the creation of a “RealToken Citizen” NFT may be interested in buying one to collect airdrops in each epoch and benefit from the advantages offered by it.

We therefore expect a market to develop for the exchange of “RealToken Citizen” NFTs, enabling owners with a short-term strategy to sell it and buyers to recover future REG distributions and the benefits offered by its ownership.

ATTENTION: The sale of the NFT with REG or other future assets held and locked in the NFT are also transferred during the sale of the NFT, so the buyer becomes the owner as well as the NFT.

By way of example, here is a non-exhaustive list of possible benefits of the “RealToken Citizen” NFT:

• The creation of “RealToken Activity” NFTs, detailed below;
• A boost to the voting power of DAO decisions;
• Facilitator to become delegate for DAO votes;
• Reduced DAO fees.
• Priority access to certain DAO products.

Finally, thanks to its citizen activities in the DAO (voting, delegation, etc.), an NFT “RealToken Citizen” will accumulate points called “dark matter”. This “dark matter” can be exchanged for the creation of a “RealToken Activity” NFT, according to a dynamic algorithm that adapts to the protocol’s growth needs. We will go into more detail on this algorithm in a specific communication when it is launched.

Community activity, NFT Activity

23.86% — 103,200,000 REG

Within DAOs, distributing tokens through basic activities such as farming or staking is a classic move towards decentralization. RealT, however, has introduced an innovation in the form of NFT “RealToken Activity”.

These NFTs are specially designed to recognize and reward active members of the ecosystem, not only by engaging them in On Chain activities, but also by valuing their Off Chain contributions. Unlike the “RealToken Citizen”, which celebrates past contributions and civic engagement, the “RealToken Activity” NFT aims to honor current and future involvement in the ecosystem.

For example, a member helping newcomers, the creation of original content whose creator wishes to retain ownership (creator-owned content), or the provision of liquidity and other beneficial interactions will be taken into account to boost the weight of the NFT.

For the creation (mint) of NFT “RealToken Activity”, it is necessary to :

• Own an NFT “RealToken Citizen”;
• Consume dark matter: an NFT “RealToken Citizen” accumulates dark matter through its activities as a citizen in the RealToken ecosystem (the conditions will be explained when the NFT “RealToken Activity” is launched);
• Paying the DAO a certain number of REGs or burning them (governance decision for supply management strategy).

Over time, it is expected that the quantity of NFT “RealToken Activity” will increase, as their supply is unlimited (in theory). The increase in supply is necessary to keep pace with the growth of the community and enable newcomers to participate in the airdrop program at a reasonable starting cost. However, as with Bitcoin mining, the creation of new ‘RealToken Activity’ NFTs will be regulated and controlled by a Proof of Activity, symbolized by the ‘dark matter’ produced by each ‘RealToken Citizen’ NFT. As a result, the first NFTs will be simpler and less costly (in time, shares, and REG) than those created in 10 years’ time. With this control, the DAO can align everyone’s interests with the DAO’s growth and revenues, providing it with several leverage effects to direct efforts towards the growth relays useful to its evolution.

All these dynamics are designed to generate a variable and attractive return for these NFTs, encouraging their trading on the secondary market.

Community Collector, NFT Collector

43.75% — 189,200,000 REG

As seen above, a portion of REG tokens will be allocated via the alignment of interests with the ecosystem through the “RealToken Citizen” and “RealToken Activity” NFTs, requiring a certain investment of time to grow and improve the ecosystem.

However, some Token Holders would like to participate in airdrops across epochs by investing not time, but financial participation. The purchase of a “RealToken Collector” NFT, available in a limited edition and offering different levels of rarity, expresses this option. This more passive contribution enriches the offer and needs of the DAO, creating a complete balance in the ecosystem.

“RealToken Collector” NFTs can be boosted by locking REGs and/or stablecoins, thus increasing their weight in the pool (increasing the initial weight). To recover REGs after each epoch, the system is the same as that described above for “RealToken Citizen” NFTs. If no claim is made, the REG share allocated is locked in for the next epoch, slightly increasing the boost compared with another “RealToken Collector” NFT of the same rarity level.

The company “RWA Holdings SA”, the “early investors” including the founders and VCs who participated in the financing of RealT will have an NFT Collector in the same proportions and terms. This distribution puts everyone on an equal footing.

Members of the community who have invested through the company “RWA Holdings SA” will hold an NFT Collector through the SPV. The NFT and the airdrops distributed at each epoch via the community collector budget become assets of “RWA Holdings SA”. The shareholders of the SPV will therefore have voting rights over this NFT and the allocated REGs. For example, they may decide to sell the NFT or simply the REG. Likewise, they may decide to keep them to increase the company’s valuation, or simply sell part of them to invest this capital in other ecosystem projects. RWA Holdings SA shareholders will need to carefully consider the financial impact of their decision concerning the NFT and the distributed REGs.

Allocation to the RealT Inc team

10% of total supply — REG 50,000,000

We chose a one-year locked strategy, followed by a four-year vesting period. This approach differs markedly from other projects, where the standard lock period is usually between three and six months. This decision underlines our commitment to the long-term stability and growth of the project. The allocation of this budget remains at RealT Inc.’s discretion, allowing us to reward the current team while reserving a share to attract future talent essential to our development.

Marketing

3.5% of total supply — REG 17,500,000

We believe that the success of REG will also depend on targeted marketing initiatives. With this budget, we plan to list REG on centralized exchange platforms (CEX) or collaborate with content creators. This budget is allocated at RealT’s discretion, and any REG not used after the first five years could be allocated to the DAO’s treasury.

Summary of REG’s initial supply

REG inflation

After the 500,000,000 REGs issued, the number can only increase through the issuance of new tokenized assets.

How are new REGs created today?

We believe that RealT has created a competitive advantage over other investment vehicles offering to invest in real estate. When you want to invest in real estate, the average underwriting fee is between 8% and 12%.

Assuming fees are 10%, a person investing $1,000 will find that the net value of his or her investment drops to $900 within hours of investing. In this situation, it is generally advisable to hold your investment for several years to amortize these costs.

RealT incorporates its 10% in the token price to maintain liquidity on the secondary market. The company has decided to withdraw this 10% from the RealToken price after the first property revaluation. An expert performs an audit to determine the value of the underlying tokenized property/asset.

Depending on the revaluation, the asset may:

1. lose value
2. Increase between 0% and 10%
3. Increase in value by more than 10%

In the first two scenarios, the token price will fall in value, since the new token price cannot compensate for the 10% discount resulting from the subtraction of subscription fees. In the 3rd case, the revaluation of the property allows the token to appreciate in value despite the restatement of these fees.

Over the past 5 years, the token’s value has risen by an average of 7.03%.

The ecosystem goes one step further since, as mentioned in episode 3, Commutatio Holdings Limited distributes the 10% fee in REG tokens free of charge and at its own discretion, which is the only way to increase supply after initial issuance (minting). So, even if the property remains stable after one year, on the one hand the investor will see the value of his real estate token fall by 10%, and on the other hand Commutatio Holdings Limited will offer him the same value in REG.

This mechanism encourages long-term ownership and commitment to the ecosystem. It also reinforces the decentralization of the protocol and the participation of all investors, regardless of their capital, by investing in a stable asset and recovering a portion in REG.

Until now, the REG token was not available at each valuation. The 10% fees collected were converted by Commutatio Holdings Limited into SOON tokens with the exchange ratio: $1 = 1 SOON.

Good to know: This SOON and REG distribution method is likely to evolve in the future with the tokenization of new asset types. The principle remains the same, but it must adapt to RealT’s ambitions with the tokenization of other asset classes, real estate and non-real estate. These other assets provide new use cases and reinforce REG’s appeal to other players. Unlike real estate, some tokenized assets are not intended to appreciate in value. The process for converting the fees collected by the platform will have to evolve.

Converting SOON to REG

At the time of the REG launch, there are approximately 1,365,000 SOON tokens in circulation. SOON / REG exchanges will begin as soon as a value has been established for REG through Genesis airdrop exchanges.

The purpose of the Genesis airdrop explained above is to enable the market to determine an initial market value for REG. This price, determined solely by the market, will be used as the basis for converting SOON into REG at the oracle price or a median system (a thorough analysis must be carried out to ensure a reliable, non-manipulable system). At launch, we’re looking into the possibility of creating a transitional period in small epochs to fix the exchange rate and avoid manipulation, for example, by recovering all exchanges and creating a median.

For example, if the REG price is equal to $1, then the first token holders will exchange 1 SOON for 1 REG. If some choose to sell their REGs immediately, the price could fall to, say, $0.5.

At this price, other token holders could be encouraged to exchange their SOONs for REGs, receiving 2 REGs for each SOON exchanged. Some could then add these REGs to the liquidity pool to:

1. Support the start-up of the protocol;
2. Participate in the DAO vote;
3. Collect swap fees;
4. Improve their portfolio score, with the aim of obtaining a “RealToken Activity” NFT with better attributes.

Other Token Holders, not yet owning a SOON, might choose to buy REGs on the secondary market and add them to liquidity to enjoy the benefits cited just above.

A few days later, if the price of REG reaches $2, new token holders could convert their SOON into REG at a rate of 0.5 REG for 1 SOON.

SOON can be converted without a time limit.

At the time of publication, RealT has tokenized over $100 million in assets, meaning that around $10 million worth of REGs are expected to be created free of charge at Commutatio Holdings Limited’s own discretion over the coming months/years. As previously mentioned, the number of REGs issued will vary according to the amount, types of assets tokenized and REG price, gradually reinforcing the decentralization and dilution of the incumbent players.

The supply of REGs in circulation must remain dynamic (increase or decrease in supply) to meet the operating needs of the ecosystem and adapt to its growth, so as not to block new arrivals (holders, providers, etc.).

• If these $10 million are converted into REG at an average value of $1, 10,000,000 REG will be created, representing a 2% increase in supply (10,000,000 / 500,000,000).
• If the conversion is made at an average price of $0.5, 20,000,000 REGs will be created, representing a supply increase of 4% (20,000,000 / 500,000,000).
• If the REG is worth $2, 5,000,000 REGs will be created, representing a supply increase of 1%(5,000,000 / 500,000,000).

DAO can add mechanics to control supply, such as :

• burn REGs with protocol income
• lowering the rate of REG issuance on future tokenized assets
• encouraging the locking of more REG to reduce the supply in circulation.

Example of initial supply distribution and creation of new REGs

Liquidity at launch

By distributing REGs to thousands of users, the aim of the first airdrop (GENESIS) is to establish an autonomous, decentralized liquidity seed.

The community or an isolated individual could decide, for example, to launch an 80/20 liquidity pool on Balancer with 80% REG and 20% Wsteth. Balancer’s innovative approach enables this liquidity to be used not only to facilitate secondary market liquidity, but also as a voting and governance tool for DAOs. This mechanism eliminates the need to incentivize both stackers and liquidity providers, reducing expenses for the DAO. Many DAOs have understood this, with over 360 million TVLs deposited today.

Token Holders may choose to stake a single asset such as REG in the belief that the token’s value will increase in the future. In the event that the value of REG should increase, an 80/20 pool offers the advantage of significantly reducing the Impermanent Loss (aka IL) compared to a 50/50 pool.

By opting for wstETH rather than ETH, thanks to the staking reward, the impermanent loss would be even lower.

Balancer also proposes a launchpad with incentives in BAL tokens to be earned, based on the pool’s success. These incentives would quickly highlight the various synergies between the different DeFi protocols.

For example, other community members might be more interested in adding liquidity to a classic 50/50 pool on Sushiswap or other DEXs. Once cross-chain deployment is complete, other users might be interested in creating a liquidity pool on Kyber Network on a blockchain where REG is deployed.