Uniswap: Liquidity for Real Estate
The cool thing about Open Finance applications? They’re open!
Providing liquidity to real estate is part of the core vision of RealT. The world of asset tokenization promises to bring liquidity and exchange to previously illiquid assets.
This is that vision, realized.
RealT is excited to announce our first exchange pair on Uniswap!
Our flagship property, 9943 Marlowe, has been seeded with $5,000 of liquidity on the Uniswap exchange!
9943 Marlowe RealToken holders can now go to Uniswap.Exchange and instantly buy or sell Marlowe RealTokens with ETH.
The current 9943 Marlowe Uniswap pool is seeded with 15% of the total value of the property. As more and more 9943 Marlowe tokens are distributed across Ethereum, RealT will grow the liquidity inside of the Uniswap exchange as well.
This should come in stark contrast to traditional real estate, where the costs of illiquidity can reduce the price of an asset up to 20–30%. Not only that, but traditional real estate sales can take 30 days or more to settle, often much longer for higher valued assets.
Thanks to the power of Open Finance, the exchange of real estate is undergoing a paradigm shift.
The Right Liquidity Model
At RealT, we went through an extensive research phase, weighing the pros and cons of various liquidity mechanisms for our properties and users. There are a number of different options for exchanging tokens, and generating liquidity, but none of them providing the elegance and simplicity of Uniswap.
After months of deliberation about how to provide liquidity to RealTokens, it became clear that placing the responsibility of operating an exchange for real estate properties was best left to the algorithms. Market-makers and order-book exchanges would simply require too much maintenance and overhead for providing perpetual liquidity to RealTokens. As RealT expands its real estate offerings, and more sets of RealTokens are on Ethereum, the maintenance and management of all these various markets by market-makers would be undesirable.
Placeholder’s article DeFi Liquidity Models illustrates why an exchange like Uniswap has significant advantages over other liquidity mechanisms.
One quote from the article stood out from the rest:
“Users don’t need to find a counter-party, they can just trade with the asset pool.”
Users don’t need to find a counter-party.
Uniswap enables you to sell your property on a whim. Unexpected bill? Want a night out on the town? Just need some cash? If your property is a RealT property, you can instantly sell your property.
The biggest question we get at RealT is “What if I want to sell my property?”. At RealT, we’re overjoyed to be able to offer our customers product we’ve always wanted: Instant liquidity for real estate.
We would not be able to do this if it weren’t for Ethereum’s Open Finance primitive.
The best financial applications on Ethereum are the open ones. As individual users of Ethereum’s Open Finance ecosystem, we may forget that businesses and companies benefit from Open Finance just as much as the individual can.
This is the first known (to us) instance of a centralized crypto-company leveraging an Open Finance application to improve the product that they create for their customers. RealT is able to provide instant buy/sell to its users because of the permissionlessness and opennness of Uniswap.
This is the power of Ethereum. RealT can plug right into Uniswap, and leverage the liquidity mechanism Uniswap provides. Our legacy finance competitors have no mechanism for liquidity for their customers, and thus lock their customers into multiple-year long investment commitments.
With RealT, you access exposure to the U.S. real estate market, while enjoying the freedom of instant liquidity from Ethereum’s DeFi.
Uniswap’s First Security Token
All RealTokens operate with a whitelist. In order to remain compliant with U.S. regulations, only non-U.S. citizens are able to purchase RealTokens. The Ethereum address of approved users are appended to a whitelist, which is checked everytime a RealToken transfer is made. RealTokens transfers on Ethereum only execute if the address being sent to is approved.
This is because RealTokens are technically shares of a company. RealT tokenizes a property by wrapping it inside of a legal entity, an LLC. Ownership of the LLC then defined as a specific batch of ERC20.
By whitelisting the Uniswap Exchange address, we enable RealTokens access to the Uniswap application.
Why is this significant?
The 2017 world of massive amounts of illegitimate ICO’s was quickly replaced by the 2018 world of compliant and tokenized securities. The only problem: tokenized securities never came.
RealTokens listing inside of Uniswap is significant because it represents a security token operating inside of an Ethereum financial application, while still retaining compliance. All compliance logic that’s ‘baked-in’ to RealTokens is unchained by its integration with Uniswap.
A new Asset: 9943 Marlowe RealToken Pool Share Token
That’s a mouthful. What is it?
Uniswap Exchange operates by holding two assets inside a trading pair. The valuation of each asset is a function of the total value in each pool. For example, if Tokens A is worth $100, and Token B is worth $2, then there will be 50x the number of token in Pool A and Pool B, in order to keep two pools of assets that are equally valued.
Uniswap liquidity grows by liquidity providers submitting an equal-value amount of both assets to the pools. The larger the pools, the more the liquidity, and the less slippage for traders.
Liquidity providers put assets in Uniswap to collect fees.
The Uniswap application charges 0.3% for every exchange. If you submit a $100 purchase of 9943 Marlowe, $0.30 will be left inside the pool for the liquidity providers ($0.15c of Ether, $0.15 worth of 9943 Marlowe).
Just by holding their assets inside the exchange, liquidity providers recieve revenue from their assets. The fees that are collected from all exchanges that go through the RealToken← →ETH trading pair go to the holders of the assets.
So the 9943 Marlowe Uniswap Pool Share collects the fees from the exchange. AND the owners of 9943 Marlowe RealToken also collect rent revenue paid by the tenant of the property. Holders of RealTokens that submit their RealToken into Uniswap receive fees twice. Fees are paid from the exchange, to RealToken holders, and rent is paid from the tenant to RealToken holders.
The RealToken Uniswap Pool Share Token is a brand new asset type. This asset is backed by both real estate and cryptocurrency, and it collects fees via two different mechanisms.
Submitting RealTokens to Uniswap Exchange is available to any verified RealToken user! If you would like to be a liquidity provider to the Uniswap Exchange for RealT, sign up at www.realt.co and get verified!
Either purchase 9943 Marlowe RealTokens from our website, or from the exchange, and you can get your hands on this brand new asset type!
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