Introducing Tangible Baskets: Multiple Assets, One Token

This summer, Tangible will launch a new product in our suite of tokenized real world assets. We’re calling the new product Baskets.

Tangible Baskets are a simpler, safer way to own tokenized real world assets, giving owners access to a focused selection of high-yield items all through one, value-accruing token. Baskets remove the risks of single-property exposure while giving holders access to the full range of DeFi composability, bringing better functionality and ultimately liquidity to tokenized real world assets.

Baskets will launch with a pool of assets all sharing a key attribute i.e. UK real estate. However, this technology will ultimately allow users to invest in, farm and borrow against various RWA categories.

Baskets Market Fit:

We believe that Baskets solve a critical issue in how tokenized RWAs can be utilized on-chain. While NFTs (ERC-721) do a great job of representing ownership to a specific, non-fungible asset, they have limited composability with the most popular DeFi tools, resulting in asset illiquidity.

Our solution is to vault similarly categorized ERC-721s, creating ERC-20s representing that basket of NFTs. This gives new asset functionality to RWAs, as these ERC-20s can now be farmed, swapped on major DEXs or borrowed against. Further, the diversified backing of the Basket allows users to invest in a focused category while also hedging the risk of owning any single property.

How it works:

Basket tokens are minted with Tangible NFTs (TNFTs). Users will receive ERC-20s equivalent in value to the TNFTs they minted with. When minting, the entire value of your TNFT will be used, there’s no option to fractionalize and mint a portion of the TNFT.

The value of each ERC-20 is based on the true value of the real world assets in the basket. For example, real estate baskets would use the True Property Valuation (TPV,) provided by our oracles. The token price is equal to the total value of all TNFTs in the basket plus any accrued yield (only the case of real estate, held in USDC,) divided by the number of tokens in circulation. Token prices may fluctuate based on demand, but the true value used in mint/redemptions ensures token prices will find their correct asset-backed value as bots/arbitrageurs buy and sell within the system to maintain balance.

At any time, users can burn ERC-20 basket tokens and redeem them for an equivalent value of TNFTs and accrued yield from the vault. Users can select one or multiple assets from the UI which they’ll receive back as TNFTs. If there’s cash yield in that vault, it will be supplied in USDC, proportional to the share of the basket being redeemed.

Real Estate Baskets:

Real estate tokens will accrue yield from the rent of the tokenized property in the vault. The vault claims the rent on a daily basis, storing it and adjusting the price of the ERC-20 accordingly. When users redeem their ERC-20 for a TNFT they will receive their portion of the accumulated rent back in USDC. The amount of rent received is proportional to the amount of ERC-20 they burned.

Example: A basket has a total market cap of $1MM, including $100k worth of USDC yield in the vault. A user redeems $100k of ERC-20s, receiving $90k in TNFTs and $10k USDC in that redeem transaction.

Key Benefits:

Beyond derisking and simplifying the process of holding tokenized RWAs, Baskets offer various other benefits to Tangible and users alike.

TNGBL Value Accrual

Baskets accrue value to the TNGBL token in two primary ways.

As Basket tokens can only be minted using TNFTs, users will need to purchase these items in the marketplace. Secondary sales in the marketplace are charged a 2.5% fee, 66.6% is returned to locked TNGBL holders (3,3+ NFT) with 33.3% used to buy and burn TNGBL. More marketplace volume (driven by baskets) → more fees for TNGBL holders.

Real estate baskets feature a secondary value accrual mechanism that’s been built in. Each day, 10% of the rent from the property TNFTs in the vault is retained as a fee by Tangible and sent to the 3,3+ contract, accruing to 3,3+ holders just like marketplace fees.

Borrowing/Lending

Baskets will simplify the process of borrowing and lending tokenized RWAs. Abstracting away the risk associated with individual assets and distributing it over a vault builds safer, more reliable products to borrow against. Future lending markets on Tangible bring the upside of additional fees to the protocol. While integration with protocols like QiDAO and Aave provide access to much larger pools of liquidity. Integrating with the latter will only be possible with certain categories where we can integrate robust enough oracle infrastructure and on-chain proof of assets to pass governance votes.

Real USD Liquidity and Derisking

Baskets represent an alternative channel for Real USD property liquidations in the event of a bank run. In the event that all of the DAI has been redeemed from the treasury, Tangible would now have the ability to liquidate real estate by minting it into Basket tokens and then selling those assets into existing LPs. This speeds up the liquidation process as we can “sell” entirely on-chain and without the need to identify individual buyers. Baskets potentially eliminates the need for pDAI completely.

Conclusion:

Baskets is a major step forward in the development of Tangible and the on-chain integration of RWAs. New asset functionality opens new markets for RWAs, unlocking the creativity of DeFi users and aiding in the proliferation of these assets throughout the cryptoeconomy. For Tangible investors, Baskets are a new source of protocol volume, fee accrual to TNGBL and an important tool in the long term stability of Real USD.