Blockchain Real Estate: CitaDAO on DeFi Powered by Chainlink

Primer: Blockchain real estate requires access to real-world data. How is this done? In this episode that is streamed live on Dec 20, 2021, the host Andy Boyan interviewed Joel Lin from CitaDAO. CitaDAO is using the Chainlink infrastructure to help bring real estate data on-chain to create a DeFi ecosystem powered by real-world assets. Find out what CitaDAO is doing and how Chainlink helps to support all of it.

CitaDAO

• A project that is building sustainable DeFi yield farms that are powered by real estate globally

• Real estate is a US $280 trillion market, but the majority of it is locked up and not earning any yield

• Will leverage DeFi to drive demand and unlock capital efficiency in real estate

• Believes that there will be two values for real estate in the future:

  • Value of on-chain real estate

  • Value of off-chain real estate

• Believes that on-chain real estate will have a higher value than off-chain real estate as there are more use cases for it

• For example, the iPhone App Store increases the value of an iPhone because of the increase in the number of use cases created by the apps on the App Store

“So real estate today is a very traditional asset class that is ripe for disruption. And we believe that the time for disruption is now. All assets will ultimately be tokenized in the new world, just like how everything is securitized today.”

- Joel Lin

• Real estate is like the iPhone, and CitaDAO is like the App Store which enables Real Estate in the real world to leverage the use cases generated by other DeFi projects to increase the value of Real Estate on Chain.

• Real estate tokens complement a typical crypto native portfolio:

  • Native tokens are highly volatile

  • Stablecoins which are inflationary in nature

  • Real estate tokens sit in the middle, offering low volatility and a hedge against inflation

Changing Perception Of Real Estate

• Seeing more people looking for real estate tokens to drive liquidity and capital efficiency to real estate

• Currently, stablecoins are backed by fiat currencies or different kinds of algorithms. Conjectured that future stablecoins can be backed by real estate

• CitaDAO has found a way to legitimize the real estate tokens. Holders can now redeem the underlying title deed from the real estate tokens

• This also introduces a floor price for the real estate tokens. If the valuation for the on-chain real estate ever falls below the off-chain value, holders can buy out the real estate tokens, redeem the title deed, and sell the property in the real world for profit

Their Recent Integration With Chainlink

• For real estate token lending pools to be set up, CitaDAO requires Chainlink to provide reliable real estate valuation data feeds to the DeFi ecosystem

“But to get that [real estate] data on-chain, that's where Chainlink comes in, it's an adapter, it pulls it in so that you can get this price feed. It's like a price feed but for real estate data. That's awesome.”

- Andy Boyan

• One of their community projects, PropMarketCap, has come up with an idea of taking valuation in the real world on-chain on a regular basis

• The team will engage valuation houses to do a monthly valuation on the property to ensure that prices are accurate and up-to-date

• The average price will be fed via Chainlink price feeds to on-chain lending protocols

How CitaDAO Works

• CitaDAO will be offering a permissionless two-way tokenization bridge for real estate

• The platform will allow landlords to independently list their real estate on-chain after KYC/AML checks and ownership verification

• Potential participants will be invited to commit their interest in fractions of the real estate through a process called Introducing Real Estate On-Chain (IRO)

• If the IRO is successful, an NFT representing the title deed will be minted and custody inside a smart contract

• Fractions of the ERC-20 token will be deposited into the buyers’ wallets. This is the real estate token and will be tradable on AMMs

• CitaDAO is looking at Uniswap V3 for the AMM

Token Models

• Every single IRO will be an independent project on the listing platform

• CitaDAO will be establishing a one-to-one ratio where the initial IRO price will be equal to $1 per 1 ERC-20 token

Q&A

What Type Of Real Estate Is CitaDAO Focusing On?

• Focusing on commercial real estate in Commonwealth countries

• Looking at Version 2 where they bridge into non-Commonwealth countries via Special Purpose Vehicle (SPV) setup in Commonwealth countries

How Do We Know That The Real Estate Is Real?

• Prior to the IRO, there will be an ownership verification check and the documents will be signed off by a law firm

• If there’s sufficient commitment to the IRO, a transaction will take place whereby the title deed gets transferred to a new SPV

• The new SPV will hold the title deed

• The real estate token holders get access to the SPV and the title deed within

Do Real Estate Token Holders Have A Claim To Yield/Rent?

• It gives holders claim to the underlying title deed

• Holders will not be receiving the rent. If holders receive the rent, the real estate token would be classified as a security token

• CitaDAO has structured its real estate token and has received a legal opinion that it is not a security token. Not being a security token unlocks more opportunities in terms of liquidity/listing on a lot more platforms

• Rent from the tenant will be paid into the SPV’s account. The SPV will be connected to a crypto exchange where it will buy and burn the real estate tokens

How Are They Approaching Regulations?

• Real estate is unique. Each country, state, city has its own regulations

• Will only be focusing on commercial real estate at the beginning to scale up CitaDAO

• Other types of real estate have a different set of land laws and development laws. Avoiding residential real estate as it is very complicated

What Is Their Roadmap Like?

• On 7 Jan 2022, CitaDAO will be bringing a 20 million real estate on-chain

• The real estate will be based in the UK in Cardiff. It is located on Queens Street

• It is currently leased to a global blue-chip bank

• Will be integrating with Abracadabra Money and Cream Finance

• Their second project is Hacker House, right in the center of London. Planning to make that into a space for the crypto community

• In Q2 2022, they will be scaling up and allowing the platform to be used by any landlord in the public space

• Hope to scale the platform up to a minimum of 4 billion in AUM by Q3 2023

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