NFTs and DeFi are revolutionizing real estate investing and homeownership — Here’s how
NFTs continue to make an impact on multiple sectors, and this mainstreaming is opening up new opportunities and revealing new trends for blockchain technology.
Recently, the real estate sector has shown interest in blockchain technology because it opens up the potential for fractionalized ownership, cryptocurrency-backed mortgages and other unique ownership, financing and payment models.
Here’s a look at a few real estate-oriented blockchain projects that are to integrate decentralized finance, cryptocurrency payments and nonfungible tokens (NFT) to the sector.
Propy
Propy is the largest real estate-focused protocol in the cryptocurrency market, and it’s focused on automating home buying and making the closing process faster and more secure.
After becoming the first company to launch a real estate NFT in 2021, Propy made waves for the recent real estate NFT auction in the United States after selling a home in Tampa, Florida for 210 Ether (ETH) worth roughly $650,000.
It's a wrap! The first real estate NFT auction in the US is history now. Thank you so much to everyone who participated and to those who cheered us on. Congratulations to the lucky winner, we can't wait to see what you do with the #PropyNFT next! What a blast! pic.twitter.com/LHfZrNSwTN
— Propy (@PropyInc) February 10, 2022In addition to providing proof of ownership to the holder, real estate NFTs created through Propy can also be used as proof of collateral for crypto-based borrowing and lending.
Milo offers crypto-based mortgages
When it comes to paying for a mortgage, crypto holders currently have to grapple with choosing which of their tokens they are willing to cash out and also incur a taxable event because there are few options for paying a mortgage with cryptocurrency.
Milo is a Miami-based fintech startup that claims to offer the world’s first “crypto mortgage” by allowing customers to use Bitcoin (BTC) as collateral to qualify for a 30-year loan.
Once launched, the service will be open to American and international customers looking to purchase real estate in the United States.
The company has already processed a few loans during the ongoing early-access stage, but interested parties are encouraged to sign up for a waitlist.
Related: Blockchain enables enterprise business models in the Metaverse
Home equity goes DeFi
Evidence of the growing popularity of real estate-focused projects in the blockchain ecosystem can be found by looking at several projects that have emerged onto the scene in 2022.
Vista Equity is a recently launched project with the goal of becoming the world’s first peer-to-peer marketplace for real estate-backed NFT assets.
WE HAVE LAUNCHED! A home can now be fully tokenized giving consumers new financial freedoms. Investors can now buy real estate backed NFTs as securities. Read our press release https://t.co/x7WKKyiCnH. Share, like & follow. @Algorand @wsford @silviomicali #realestate #blockchain pic.twitter.com/IiCDfv6034
— Vesta Equity (@vestaequityvpm) February 15, 2022The goal of Vesta Equity is to allow homeowners who own their homes outright to tap into the equity in their homes through tokenization. According to the company, token holders would then be able to sell off a portion of it as a fractionalized NFT.
Typically, property owners tap into their equity by refinancing or selling, and tokenization remedies this problem by providing investors with a simplified way to invest in real estate.
QuantumRE is a similar project that is just getting started. Like Vista Equity, the goal of QuantumRE is to link homeowners with investors to help provide homeowners with access to debt-free financing, while investors get access to residential real estate.
To do this, QuantumRE helps with the process of originating Home Equity Agreements (HEA), a type of financial tool that allows homeowners to get a cash lump sum for the equity held within their home with no monthly payments, interest or added debt.
The agreement can be settled by selling the home, refinancing or renewing the agreement. By creating liquidity and a trading platform for HEAs, QuantumRE is supporting a secondary trading marketplace for HEAs, which can be tokenized and split into fractional units.
QuantumRE indicated that the first fractionalized HEAs will be offered on the platform during Q1 of 2022.
On an interesting side note, both Vista Equity and QuantumRE are launching their products on the Algorand blockchain, citing the network’s fast processing speeds and low gas fees when compared to the Ethereum network.
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