Why tokenize real estate?
Traditional real estate investment involves significant financial commitments, lengthy and siloed processes, and extensive paperwork.
Real Estate Investment Trusts (“REITs”) have provided a more liquid way to gain access to the real estate sector. However, the process of offering and listing a REIT is often costly and time consuming, and not easily available to issuers with a single real estate asset or a small portfolio.
Tokenizing real estate assets using blockchain technology addresses these problems by providing operational efficiencies, information transparency to real estate transactions, and bringing the additional benefits of fractionalized ownership and liquidity to real estate investment.
Tokenization lowers the barriers to entry for investment by enabling ownership in a real estate asset to be more readily divided across a wider pool of investors, democratizing access.
The Enhanced Distributed Ledger for eXchanges (“eDLX”) is a blockchain-powered platform for the issuance, management, depository, and secondary market trading (exchange and OTC) of regulated digital assets (including securities, real estate, bonds, and derivatives).
eDLX was built by ProximaX, a technology provider that seeks to partner with operators across the globe who have been granted a license by regulators to operate, or to work with unlicensed operators to enter and successfully exit regulatory sandboxes with a license to operate.
eDLX facilitates automated rule execution through its improved version of smart contracts, named Supercontracts. By storing self-executing code in the platform’s distributed file managed system, pre-programed logic can be more easily halted and updated upon reaching consensus.
Automation through Supercontracts can help reduce human error and create greater efficiencies for processes that include AML and sanctions checks, investor whitelisting, and post-issuance matters such as dividends distribution (e.g. real estate income). Post-issuance management can continue throughout the life of a real estate asset until maturity or redemption.
The eDLX platform is also integrated with a fully customizable e-KYC module to enable regulatory compliant user onboarding and ongoing due diligence. Customization is kept simple with its drag and drop feature. Third-party regtech of the operator’s choice can be integrated via its API, such as for AML screening, credit score checks, and facial recognition.
Issuers and investors are able to create their own digital identities using ProximaX’s self-sovereign identity technology, named SiriusID. These digital identities are tagged with “KYC-approved” credentials that grant access to the platform for approved users and enables the secure signing of transactions.
Using blockchain technology, digital identities and their respective credentials can be verified, which in turn creates trust and helps maintain the integrity of a digital real estate ecosystem.
Tokenization & Issuance
Assets can be fractionalized (up to six decimal places), which makes investment into real estate more accessible to a wider investor base with a larger pool of investment capital.
Investors that previously could not afford the high upfront capital requirements of real estate investment could now access this asset class for the first time. Fractionalization also enables larger investors to more easily diversify their real estate portfolios.
Distribution of tokenized real estate can be automated with the use of a Supercontract. Transfer of ownership is fast, as settlement is almost instantaneous. Ownership is securely recorded on the blockchain, which provides an immutable and transparent transaction record that is updated in real-time.
Traditional real estate intermediaries such as valuers, auditors, and brokers can benefit from increased accuracy and availability of data, with sensitive information protected by encryption against unauthorized access.
The eDLX platform provides secondary trading for approved investors via its over-the-counter (“OTC”) feature and integrated eDLX exchange; this promotes liquidity.
With the blockchain having in-built encryption and cryptography technology, transfer of real estate assets between investors is kept highly secure.
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ProximaX is a blockchain-based infrastructure and development platform project that combines blockchain technology with distributed service layers. It integrates blockchain with distributed and decentralized storage, streaming, database, and Supercontract (enhanced smart contract) service layers to create an all-in-one, easy-to-use platform.
ProximaX is built for scalability and can include more services in the future without compromising on performance. It is a unique enterprise-grade platform developed on proven technologies and is available in a private, public, and hybrid network configuration.
ProximaX’s extensive utility and flexibility can be used for a wide range of use cases that include, but are not limited to, digital identity, KYC, video streaming and chat, IoT and robotics, big data and AI, records and reporting, business continuity, legal and notary services, medical records, land registry, capital markets, e-payments and core banking, and supply chain management.