Collateralized Real Estate
With investors continually seeking means of financial return, a trend has emerged surrounding U.S based real estate. This is the concept of ‘flipping’ a home/property.
The concept is simple – buy a home in disarray at a discount, strategically renovate, and sell the home for more than the cost of purchase and renovations. This model has proven quite lucrative, and shows no signs of going out of fashion.
OpenLTV has recognized this and developed a platform aimed towards giving investors access to such opportunities. This is made possible through the issuance of digital securities, which represent fractionalized ownership of real estate backed debt. These tokens are ERC-20 based, which means they are issued on the popular Ethereum network. With this being the most commonly used protocol, it is expected that support for secondary trading in future months should be supported.
OpenLTV indicates that through the use of its platform, investors can expect to generate returns in the 8-12% range per year.
Stablecoin of Choice
While investors have the ability to invest through the OpenLTV platform with cryptocurrency, a stablecoin of choice is needed to facilitate interest payments etc. OpenLTV has chosen PAXOS to be this stablecoin.
PAX tokens are ERC-20 based tokens, allowing for widespread support throughout the industry. Paxos issues monthly ‘attestation reports’, along with undergoing regular audits. These steps are taken to ensure transparency, allowing investors to verify that funds are indeed backed 1:1.
Upon announcing the launch of their platform, OpenLTV CEO, Kirill Bensonoff, took the time to issue the following statement.
“The OpenLTV platform will simultaneously allow us to tap into a global pool of investors and unused crypto-asset liquidity…We are thrilled to be partnering with the Paxos team to bring a long-standing and secure investment option in the real estate industry to the financial future.”
In addition to their issued statement, we reached out to OpenLTV for further comment on this development. The following is what CEO, Kirill Bensonoff, had to say.
Q: With the various stablecoin options available, why was PAXOS chosen to partner with?
A: “We have used PAX previously, and were impressed with what they have built. We were looking for a trusted company with regular audits that had verifiable 1:1 USD backing, and a great platform, and they were it.”
Q: How will clients benefit through use of the OpenLTV platform versus more traditional means of investing, such as REITs?
A: “There are a number of differences OpenLTV is issuing on the blockchain, where all transactions and interest payments are open and immutable, bringing a new level of trust and global access. Investors can choose what loans they want to back, unlike with a REIT, which makes all of the divisions and charges more costly. The loans offered on the OpenLTV platform will be short term and at a high-yield. This enables investors to avoid risk, shortens the time before they get their investments back to 12-24 months, and subjects them to less market volatility.”
OpenLTV is a Boston based company, which was founded in 2019. This young company has developed a platform allowing for qualified investors to gain exposure to U.S based real estate through fractionalized ownership.
Company operations are overseen by CEO, Kirill Bensonoff.
Paxos is a New York based company which was launched in 2012. The company states that their mission is ‘creating a global, frictionless economy’. This led to the development of Paxos Standard (PAX). These are digital tokens, which act as stablecoins pegged to the U.S dollar.
Company operations are overseen by CEO, Charles Cascarilla.
In Other News
While OpenLTV appears to be a promising platform through which investors can invest in debt-backed real estate, they are not the only ones to tackle this industry. Real estate has proven to be one of the most possible industries to be tackled by digital securities – and with good cause. The illiquidity, yet potential high-return of real estate makes it a perfect candidate for beneficial blockchain implementation. Here are a few examples of companies tackling real estate through digital securities.
Libra to Utilize KoreConX in Upcoming Digital Security Offering
KoreConX has recently announced that they have been chosen by Libra Project to host an upcoming digital security offering.
This event will see Libra Project raise capital for their green initiative. Primarily, Libra Project is working to develop renewable energy sources, with the goal of bringing 1st world amenities, such as reliable power, to 100 million humans.
This endeavour represents the first fully compliant DSO to target, and be hosted, within Africa and the Middle East – also the primary regions in which the project can affect the most change.
In making the announcement of their partnership, the CEO of each, KoreConX and Libra, took the time to comment. The following is what each had to say on the matter.
Hans Fraikin, CEO and Cofounder of Libra Project, stated,
“Libra Project is thrilled to enter into this new partnership with KoreConX…Their world-class digital securities asset management protocol will accelerate our plan to become the first fully compliant DSO (digital security offering) in the Middle East and Africa. Ultimately, this partnership supports Libra Project’s mission of democratizing access to impact investments all the while bringing clean energy to hundreds of millions of people in Asia and Africa.”
Oscar Jofre, CEO and Cofounder of KoreConX, stated,
“The Middle East is a very important region for us. We want the regulators and companies in the Middle East to know that there is a provider that does things the right way and will meet their regulatory obligations. We are truly glad that more and more companies are starting to realize the transformation that comes with blockchain, and the ways it can simplify doing business.”
Libra Project is a U.K based company, operating out of London. The company maintains satellite offices in a variety of locations, including Abu Dhabi. Libra Project is actively developing their own service, known as Blockchange. This will act as a bridging platform, connecting green initiatives start-ups with interested investors.
Company operations are overseen by CEO, Hans Fraikin.
KoreConX is a New York based company, which was founded in 2016. Through their KorePartners Ecosystem, and in-house services, this young company is able to offer clients a comprehensive digital securities issuance platform.
Company operations are overseen by CEO, Oscar Jofre.
In Other News
Libra represents a growing trend surrounding ‘green’ projects. Another company which is utilizing blockchain to tackle global issues is Almond. Not only did we recently detail their company, but we had the pleasure of interviewing their CEO. Check out the following articles to learn more about Almond, and what they are doing to better the world.
Securitize DS Token Protocol goes Open Source
The security token issuance platform, Securitize raised eyebrows amongst the cryptocommunity this week after releasing its DS Token code to the public. The move goes along with the crypto sectors long-held stance of open-source projects. Now, programmers from across the globe have a chance to test and advance the platform’s core coding.
News of Securitize’s decision spread quickly after the announcement was made at Coindesk’s latest Consensus 2019 conference. Consensus is one of the largest blockchain conferences in the world. Securitize used the hugely popular seminar to ensure their announcement received the proper attention and publicity the company desired.
A Proven Standard
Discussing the decision, Securitize co-founder and CEO,Carlos Domingo first explained how Securitizes’ Digital Securities Protocol proved itself over the last year. He then took a moment to explain why the decision opens many doors for the company.
Domingo sees a future where developers are now able to create and test Dapps based on the Digital Securities Protocol (DS). Dapps are a crucial component of any token standards in the marketplace. As a result, analysts continually point out that the Dapps propel a project forward.
Dapps are Important
For example, Ethereum is by far the most widely used platform to launch security tokens. In most instances, security tokens launch as a variant to the ERC-20 protocol. The main difference being that these tokens also include the necessary regulatory compliance mechanisms found in security tokens. Likewise, ERC-based Dapps are among the most prevalent in the market.
Now Securitize wants to capture some of the excitement and added functionality that Dapp developers bring to the table. Domingo commented on the need to provide these developers with a viable venue to actually make a difference with the code.
In a company blog post, Securitize elaborates on this theory. Here, Securitize states the importance of their strategy. Basically, the firm spent the last year perfecting their coding and proving that it is reliable enough for real-world use. Now, the DS protocol is ready to go to the next level.
DS Token Protocol
According to the blog post, the goal of the DS protocol is to provide the “proper Digital ownership Architecture to address all aspects of the digital securities lifecycle.” Company officials now hope that the cryptocommunity will step up and really put the DS protocol to the test.
DS Token Code
The newly released coding includes five main interfaces in which developers can interact, test, and build on the coding. The first component is the DSServiceConsumerInterface. This portion of the coding is what enables the other component to interact in a seamless fashion.
Next, the DSTokenInterface is the actual token protocol. As expected, the coding shares many aspects of the ERC-20 protocol but with some key differences. These upgrades include investor-centric balances.
The DSTrustServiceInterface is where developers can assign trust roles in the context of the DS token. This is how developers are able to authorize high-level users and developers within the platform.
A DSRegistryServicesInterface is used to define the Registry Service of the tokens. This is where the token holds all relevant ownership information. Consequently, this section is a critical component when discussing token compliance.
Finally, the DSComplianceServiceInterface is how tokens are able to continually check to ensure compliance throughout its lifecycle. Secondary compliance concerns are a major issue in the security token sector. This protocol is what enables DS tokens to remain within the legal guidelines of digital securities. Importantly, this protocol plays a major role in secondary market compliance as well.
Securitize Steps up its Game
The decision to go open-source is a smart one on the part of Securitize. The crypto sector was built on open-source projects such as Bitcoin and Ethereum. Securitize is now in line to continue this legacy and push its DS token protocol to new heights.
DigiMax Designated ‘Exempt Market Dealer’ by OSC
DigiMax has recently announced that they have successfully been granted a designation as an ‘exempt market dealer’.
This designation, doled out by the Ontario Securities Commission, will allow for DigiMax to issue digital securities on behalf of their client, without the need for a prospectus. As a result, DigiMax will see their advisory, and issuance platform, become more flexible, providing client easier access to capital.
Exempt Market Dealer
For the majority of companies issuing securities within Canada, a prospectus is needed to remain regulatory compliant. There, however, exists a subset within capital markets, which allows for companies to forgo this step. This subset is known as an exempt market, and typically indicates that less protective measures are put in place for companies granted exempt status.
For more information on exempt markets, and those taking part, click HERE.
A prospectus is a form of documentation which is typically required by regulatory bodies, such as the Ontario Securities Commission. The documentation consists of a thorough outlining and description of a companies planned actions, pertaining to a capital generation event.
In making their announcement, DigiMax CEO, Chris Carl, took the time to comment. The following is what he had to say on the matter.
“We are very excited to have been granted registration as an EMD in the jurisdiction of Ontario in Canada…This registration allows us to serve Ontario based corporations and investors as an exempt market dealer in various forms of funding, and to market such offerings to institutional or accredited investors. Working with our growing network of similarly registered dealers in other countries, DigiMax Global Solutions is well on its way to becoming the leader of a global syndicate of dealers able to assist companies to raise capital around the world.”
DigiMax is a Canadian company operating out of Toronto, Ontario. Since operations were launched in 2017, DigiMax has developed a platform which facilitates capital generation events in the form of digital security offerings.
Company operations are overseen by CEO, Chris Carl.
Ontario Securities Commission
The Ontario Securities Commission (OSC), is a government run, regulatory body, which oversees the enforcement of various acts. Each of which has been designed to protect investors through the creation of fair and honest markets.
In Other News
The digital securities sector has seen various large developments as of late. We have seen huge conglomerates make their entrance, while existing industry participants hone their platforms and services. Here are a few noteworthy events from recent weeks.
- Libra to Utilize KoreConX in Upcoming Digital Security Offering June 25, 2019
- Securitize DS Token Protocol goes Open Source June 25, 2019
- DigiMax Designated ‘Exempt Market Dealer’ by OSC June 24, 2019
- Velocity Ledger to Utilize Security Suite through HCL Cyber Group June 23, 2019
- Mt. Pelerin Release STO Launching Service Amidst Path to Full Banking June 22, 2019