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.
VeVue Signs Partnerswith CBX for Token Launch
The blockchain-based social media platform, VeVue announced plans to host an STO in the coming weeks. The company intends to expand the platform’s capabilities with the funds raised. Now content creators have a more lucrative alternative to consider moving forward.
News of the company’s intentions first broke via an October 14 press release. In the post, the company announces its new strategy and partnership. As part of the firm’s new crowdfunding approach, VeVue partnered with the hugely popular CBX exchange.
For its part, CBX will be responsible for the sales, token issuance, and distribution of the VUE token. CBX is one of the largest crypto exchanges based in the Middle East. The firm operates a fully compliant EU exchange. Developers integrated both AML and KYC protocols directly into its trading platform.
CBX recently launched a campaign with Alibaba competitor GoJoyin in which the platform secured over $10 million in funding. The experience gained in this campaign will be critical for VeVue STO’s success.
The VeVue STO will commence on October 28, 2019, at 4 pm PST. Interestingly, the event is scheduled to only last 48 hours. CBX intends to issue 5 million VUE tokens to qualified non-US investors. Vevue also announced that there will only be 100 million VUE tokens in total available to investors. Of these tokens, 35 million are reserved for investor purchases.
Vevue and CBX Unique Strategy
CBX and Vevue have a unique strategy for their crowdfunding efforts. The company intends to host an STO monthly moving forward. Additionally, these auctions will be Dutch-style. Basically, the official token price is set after taking in all bids.
Highest-Price VeVue STO
This strategy enables the firm to receive the highest price for the total offering. For example, investors place their bids which include the price and quantity they desire. The firm will then accept the top 5 million bids for the tokens.
VUE Token Benefits
VUE token holders receive a portion of gross revenue collected via the VeVue social media app. Consequently, investors actively earn from VeVue’s ecosystem. The App provides content creators with a revenue-generating outlet. Here, users can create and monetize content such as videos easily.
VeVue Transaction Fees
Vevue charges a 5% transaction fee on the monetized content. This fee then enters into the dividend pool from which STO investors receive payments daily. Importantly, dividends are paid in VUE tokens. This unique strategy encourages users to create high-quality content to earn more tokens.
Next Level Social Media
Traditional social media doesn’t allow users the opportunity to earn from their content contributions. In fact, the current social media giants provide content creators with zero payment for their efforts.
Social Media Heat
VeVue’s timing is impeccable as social media giants such as Facebook continue to confront lawmakers over a myriad of concerns. Facebook, in particular, appears to be in the target of regulators after announcing plans to issue its own native cryptocurrency called the Libra.
A Better Social Media Alternative
VeVue appears to have unlocked a better way to social media for everyone. Providing users with an opportunity to earn tokens for their content is a smart concept that has proved to be a great alternative in the past. You can expect to hear more from VeVue in the coming weeks as its STOs hit the market.
CFTC Labels Ether a Commodity
The crypto community got some exciting news this week after the Commodity Futures Trading Commission (CFTC) Chairman stated that Ether (ETH) is a commodity. The news follows similarly worded statements from SEC officials in the past.
The news came via an Oct 10 statement from acting CFTC Chairman Heath Tarbert. In the post, the Chairman announced that he believes Ether is not a security at this time. The news comes at a critical point in Ethereum’s development.
The news is a huge win for the Ethereum community. Currently, Ethereum is the second-largest cryptocurrency in the world by market cap ($20 billion). The ruling is important because it means Ether falls under CFTC regulations and not SEC securities regulations. Consequently, the decision allows financial institutions to offer a wide array of new products and open up entirely new markets moving forward.
Ether Futures and Derivatives
In the past analysts pointed out that the Ether derivatives market suffered due to the lack of transparency. Tarbert now says that you can expect to see both Ether futures and derivatives markets in the very near future. Surprisingly, he stated that these financial tools would hit the market in less than a year.
According to the Chairman, Ether is a case of a transformative token. Basically, the token started as a security during the ICO event. At that time the enterprise was playing a controlling role over the digital asset. As time progressed, the Ethereum enterprise faded to the background as the cryptocurrency decentralized. Now the token serves as a utility.
Additionally, Tarbert described the reverse scenario in which a utility token slowly develops into a security. In this situation, you start off with a fully decentralized organization. Over time, the enterprise steps back in to take more control. Consequently, this creates a scenario where investors seek profits from the efforts of others. Now the token is a security.
Notably, SEC officials stated that they do not consider Ether a security in its current state. However, both the SEC and CFTC did point out that during the company’s ICO, Ether acted as a security. Luckily the SEC declined to fine the Ethereum development team for its ICO.
Bitcoin is a Commodity
Falling along this line of thought, Tarbert explained that Bitcoin is also a commodity. This statement coincides with the SEC’s decision to decline to label Bitcoin as a security. Analysts consider these actions as a precursor to this week’s news.
PoW to PoS
Also, Ethereum developers announced a shift from the Proof-of-Work (PoW) consensus algorithm to a more energy-efficient alternative, a Proof-of-Stake (PoS) consensus mechanism. PoS systems don’t require your PC to do heavy computations. Instead, users earn rewards for “staking” tokens in their wallets. In this manner, PoS tokens use far fewer resources.
Ether Moving Forward
The Ethereum community has much to celebrate moving forward. The cryptocurrency continues to see development across the entire sector. You can expect to see the Ethereum community expand as more ETH-based products enter the market in the coming months.
SEC Seeks Input on ‘Boston Securities Token Exchange (BSTX)’ Proposal
Launching Markets – BSTX
The Boston Securities and Token Exchange (BSTX) has recently filed a proposal for various rule changes with the SEC. These changes would allow for BSTX to launch what would be the market’s first digital exchange supporting full-fledged digital securities.
The Boston Securities and Token Exchange is a by-product of a partnership between tZERO and BOX Digital. This pairing of companies launched the joint venture in mid-2018, with the intent to develop the first fully regulated digital exchange in the U.S.
BSTX is expected to utilize blockchain technology provided by tZERO, while BOX representatives work towards establishing regulatory clearance. With each providing different areas of expertise to BSTX, both tZERO and BOX have made it clear that this is a joint venture, with each having a 50% say.
The proposed rule change discussed here dates back to late June, 2019. At the time of the filing, it was viewed as having the potential to create a ‘rulebook’ for the operation of such exchanges in the United States. Only now, months later, is the SEC making the filing available for public commentary.
A few of the noteworthy attributes of their proposed exchange are as follows:
- Asset ownership recorded using a private blockchain
- Trading enabled through use of BSTX tokens
- Whitelisted clients
At the initial time of its filing, we took a brief look at BSTX and their plans, including the use of an in-house token developed by the exchange.
In their filing, made public by the SEC, the BSTX begins by outlining their plans and intentions for the proposed exchange.
“BSTX would operate a fully automated, price/time priority execution system for the trading of “security tokens,” which would be equity securities that meet BSTX listing standards and for which ancillary records of ownership would be able to be created and maintained using distributed ledger (or “blockchain”) technology.”
Boston Securities and Token Exchange (BSTX)
Operating within the United States, BSTX is a proposed digital securities exchange, which was founded in 2018. The company looks to become the first exchange of its kind, supporting full-fledged digital securities.
CEO, Lisa Fall, currently oversees company operations.
In Other News
Whether it be through the backing of others, or through their own endeavours, tZERO remains hard at work, establishing the digital securities sector.
We were recently fortunate enough to have interviewed tZERO CEO, Saum Noursaheli. In this exclusive interview we discuss past and future events pertaining to the company. Make sure to check out the following interview to learn more!