Crypto Real Estate at ATX-DAO
ATX DAO works at uniting the crypto communities of Austin, Texas. As a decentralized group of crypto enthusiasts building a cohesive network of developers, artists, investors, and crypto professionals, ATX DAO organizes social events and provides web3 education to the local government and business owners. The crypto real estate group just started and dedicate itself to merging urban assets with blockchain technology.
Good investments for everyone
Web3 adoption is increasing in the real estate industry. It takes different turns, from the sale of virtual lands or houses in the metaverse to blockchain-based land registries in the global south. Recent use cases have also been to marketize and sell real estate property as NFTs payable in cryptocurrency, and the perspective of fractional tokenized ownership would allow smaller bids to access stable investments in the real estate market.
Taking the example of Austin city, it will probably double its real estate value by the next decade. But everyone can’t buy a full property right now. The solution proposed by fractional tokenized ownership consists in breaking a house or building into many shares of a much more affordable value. Indeed, lots of people could afford to buy a fraction of a house for $1000 and thus benefit from the added values to come out of the prosperous market. It will also generate much more activity as buying and selling shares of houses will be done much more easily than buying a full housing unit, and it won’t even change anything to the people leaving in paying their rents. As a personal investor, you will also have much more easiness in diversifying your wallet: buying shares of real estate in different cities or countries will offer you much more security than investing all your money in the same location.
Limiting real estate inflation
Proving land or home ownership is the foundation for a better life and no one doubt that land registries could take advantage of the many benefits of using blockchain technology. The DAO model for governance and participation in non-equity-based ownership is another interesting lead.
Different scenarios for collective ownership could be envisioned and would depend on the rules voted by the community of owners. When the regulation of real estate prices in a liberal market of a free economy might be a concern, collective ownership could prevent the inflation of real estate by assigning a fixed price to a share in a fractionalized real estate building, where a certain amount of shares would represent the right to live in a flat or house of a certain size. The organization could own different buildings in different cities, whose housing units would be reserved for the shareowners. If one wants to move to another city for work or just change, one could find in the other shareowners another one willing to move to the first city. It doesn’t even need to be a direct 1–1 exchange, since coordinated moves between different cities could be envisioned in the network. All it takes is 3, 4, 5, or more families who want to organize a property swap at the same time. Maybe due to a change of work or a change of status, and any other reason, the network of collectively owned buildings could synchronize the moving of someone to NYC, another to Austin, another to Miami, etc. The only thing to coordinate will be the date of moving in. No need for selling and buying properties, paying fees and intermediaries, and filling in the paperwork. Such a collective ownership network at scale could help its members to break free from the free market inconvenience such as added values. In such a network you will exchange your right of housing with another one through the transfer of an NFT attached to your housing unit.
As stable coins are a field of experimentation to stabilize cryptocurrency values, crypto real estate could also be a way to reduce the volatility of digital assets values. Same as most national banks are securing their value by buying gold, most prosperous economies invest in real estate building for its stability and useability. Attaching a part of any cryptocurrency volume to a stable market such as the existing properties of a stable economy could reduce the volatility of the currency. Such a system will as well anchor back real estate as a means to serve the right of housing, and protect the market from speculation from foreign investors and gentrification inconveniences. If we surely won’t forbid the people to be successful at making money, we still want our local populations to be able to own a place to live all their life, not being suddenly kicked out by an increase of real estate investments in the neighborhood which would lead to unoccupied properties bought as a financial asset by overseas investors.
A new source of revenue for the public sector
Somewhat recording real estate properties as NFTs doesn’t sound more complicated than putting GPS coordinates on a blockchain + the agreement that established the ownership + the signatures of the involved parties. But it still raises basic questions to build a business onto it: who buys the NFTs? who mints the NFTs? How does a buyer meet a seller and what’s the benefit for intermediaries?
Well, the same as crypto help the unbanked, it could help the unlanded. In most countries not having a cadastre system, investment in infrastructure is usually low too. Because the state hardly knows who’s the owner of what, it can’t collect taxes and thus often runs with a lack of public services. Land registries encrypted on a blockchain could be the entry door to a fair tax system in which all the population newly registered as property owners would benefit from public investment in the surrounding infrastructure. Interest in the city would come by stabilizing a revenue stream from the new market of crypto real estate. For that, we would need to imagine a burn mechanism that could generate tax revenues or some benefit for the local economy.
A few references on the topic:
- Okada listed one of their NYC buildings for sale on OpenSea on June 6th.
- Land-based DAO directory is a community directory for blockchain, crypto, and web3 real estate projects.
- Cardano Foundation is building land ownership and identity solutions for areas without cadastre systems.
- John O’Connor talks about the blockchain land registry system with an Ethiopian use case.
- Feb 2022 a house in Florida has been sold as an NFT of $635K.
- An art collection displaying iconic cities from real life/fiction is sold on OpenSea.