Real Estate investment has long been a preferred asset for many, but the lack of liquidity in the market creates unnecessary risk for the investors. Our mission at CitaDAO is to create a larger ecosystem for products that revolve around Real Estate in DeFi. The ERC20 real estate tokens (RETs) provide the ability to build primitives on top of the CitaDAO ecosystem. We believe this will support the utility of CTDAO and its ecosystem of RETs.

Real Estate investment has long been a preferred asset for many, but the lack of liquidity in the market creates unnecessary risk for the investors. Our mission at CitaDAO is to create a larger ecosystem for products that revolve around Real Estate in DeFi. The ERC20 real estate tokens (RETs) provide the ability to build primitives on top of the CitaDAO ecosystem. We believe this will support the utility of CTDAO and its ecosystem of RETs.

Here are some potential primitives that can be created in the CitaDAO ecosystem to make moving Real Estate exist on-chain even more compelling:

Collateralized Loans

One of the most attractive aspects of TradFi for real estate investors is the ability to gain leverage on their capital. We see this leverage as an essential way to unlock capital efficiency on DeFi. Since most crypto assets are relatively volatile, the amount borrowed and paid back could be wildly different over a short period. A MakerDAO for RETs that provides stablecoin loans based on RET collateral could potentially reduce the rate of over-collateralization due to the less volatile nature and real world backing of RETs.

Real Estate Index Funds

With RETs, different real estate properties can be bundled together to form a new ERC20 token that provides exposure to a diversified array of income producing real estate. For example, this new ERC20 token can be created based on geographical location, or types of buildings, or based on the median value of the underlying real estate assets. By bundling together these properties, people will be able to create a new price index for the asset class. The price of these ERC20 tokens could potentially replace archaic real estate valuation methods used in meat space and could additionally provide real-time valuation data for various real estate classes based on the on-chain price.

Options and Swap contracts

A primitive that allows the RET holder of one property to swap cash flows with the holder of the RETs for another property would allow both investors to diversify exposure and manage risk. In addition, options contracts would give investors the ability to short real estate or arbitrage on real estate price, thereby mitigating risk and opening the door to sophisticated hedging strategies. Primitives like options and swap contracts could potentially allow more sophisticated swap contracts to hedge against downward turns in the price of the real estate. The ability to provide credit default swaps or to create put options on certain real estate properties can also be created on-chain.

Usage rights

The primitive could allow users to stake the RETs of particular buildings to earn tokens that grant usage rights. Users could provide liquidity for these tokens in exchange for the usage rights of the facilities. These rights could include access to a workspace (for office properties) or access to a room to stay in (for lodging properties). These usage rights could have particular appeal to digital nomads who want the benefits of ownership while retaining the mobility to travel around the world.

We have seen various new projects in the DeFi space creating instruments that mimic the offerings of TradFi. These range from fixed income products (e.g., Tranchess, Saffron, Pendle) to derivatives trading (e.g., Injective, Perpetual Protocol), but none of them have applied these instruments to the real estate asset class. We believe that CitaDAO can democratize access to real estate investment by allowing anyone to create collateralized loans, index funds, and options — not just the big banks.

With a steady income stream backed by real world assets, we are confident our platform will create sustainable returns for yield farmers and early crypto folks to diversify their portfolio with a less volatile instrument that still produces excellent yields.

Do you have ideas for primitives for real estate, or would you like to contribute to creating one? Join our discord. We have allocated a significant amount of CitaDAO tokens for the community to create new primitives.