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Hedera HBAR: Pioneering Real Estate Tokenization!

By October 7, 2023October 16th, 2023No Comments7 min read
October 7 2023 Hedera HBAR Pioneering Real Estate Tokenization

Hedera Hashgraph is one of the most impressive crypto projects out there offering all the things that most layer 1s like Ethereum can do but faster, cheaper and with a higher guarantee! There are many areas where this crypto revolutionises and innovates already existing industries and in this article we would like to explore the tokenization of home ownership powered by Hedera! Owning a home is unaffordable for many, is Hedera solving this issue? We will be exploring the relationship between Quarter homes and Hedera!

What Is Quarter Homes:

October 7 2023 Hedera HBAR Pioneering Real Estate Tokenization

Numerous individuals of high character find themselves unable to purchase a home in the current housing market. The steep mortgage rates, which haven’t been this high in nearly two decades, make transitioning from rental properties to achieving the American Dream a challenging endeavor.

Quarter’s mission is to provide home ownership opportunities for those who cannot access conventional mortgage financing. This includes tens of millions of first-time Gen Z and Millennial buyers, many of whom lack the equity necessary for traditional transactions, as well as those who are financially underserved. They firmly believe that home ownership should be an attainable goal for a wide range of people.

How Quarter Homes Works:

Essentially what Quarter homes do is they take the home owners / people who want to buy homes and match them with people who want to invest in property. As a result of this that its 50% cheaper for the consumer than a traditional mortgage, between 20% to 30% cheaper across market rent across the 13 thousand VIP codes they have ran their model against and returns for the investor similar to that you see if you where to go out and buy a rental property and rent it out. The cool part about this is their use of DLT to make this possible! With the tokenization of property it enables fractionally investing in a property down to $1 if that is something you desired to do!

They aim to end up offering investors with $1000 to $1,000,000 the opportunity to use their platform and choose where they want to invest and deploy their capital, or distribute it wherever they see fit! The investor can choose their home and buy it through quarter!

As a buyer of the home, you can put down let’s say 5% and Quarter will match you with investors to find the other 95%. On a monthly basis you pay a ‘tenants in common fee’ to your investors, that provides sole occupancy right of the house, also gives you the ability to make capital improvements if you want, you still benefit from all the same rights a mortgage gives you!

They emphasise that there is no ‘lending’ involved instead investing as you are basically buying equity from the investor side of things not lending the money to the buyer of the home!

Tokenization:

The consumer doesn’t touch any of the tokenization aspect of it, it’s kept very simple and straight forward for them, and designed to feel like just going through a traditional mortgage. On the investor side that’s where tokenization comes in. Quarter exists as a multi token ecosystem, so multiple tokens are issued over the lifespan of a house and this introduces some unique and interesting value propositions.

When it comes to the tokenization of the property itself every token is representative of $1 in value of the property so 1 token = 1 dollar. An example of this is a house costs $200,000 and an investor comes in with $150,000 they will get 150,000 of what they call asset tokens and these are linked to a specific property and they entitle you to your tick fee that’s generated from the monthly home occupant fee, they also entitle you to your fair chare of appreciation, which comes in the form of another token they issue which is their HPI token. The investor is also entitled to the pro rata right of the sale proceeds when and if sold!

HPI tokens:

HPI tokens stand for Home price index, representing exactly that! The value increase or decrease of the property over time. Quarter distribute these on an annual basis. Traditionally you have to wait until a house is sold to realise the appreciation with Quarter due to the HPI tokens you do not, you benefit in real time annually! Those tokens are backed by all the appreciation of all the properties on the Quarter platform! It acts like an index to the entire market!

TOKO:

October 7 2023 Hedera HBAR Pioneering Real Estate Tokenization

Quarter use TOKO to tokenize the properties, TOKO enables the generation of value by encompassing the entire token lifecycle, granting asset owners the ability to tokenize traditionally illiquid assets, rendering them suitable for investment. TOKO provides asset owners with a novel avenue for capital raising and facilitates a digital asset marketplace for investors to acquire these assets. This partnership was introduced by DLA Piper a governing council member of Hedera!

Effective asset management relies on trust. TOKO – working with DLA Piper, and using cutting-edge distributed ledger technology to tokenize assets – delivers that trust” said Simon Levine, Global Co-CEO at DLA Piper.

October 7 2023 Hedera HBAR Pioneering Real Estate Tokenization

Hedera and Toko:

DLA Piper’s TOKO leverages the Hedera Hashgraph consensus algorithm, as well as the time-stamping and finality capabilities provided by the Hedera Consensus Service (HCS), to ensure the utmost level of trust in their tokenization service. DLA Piper has explored the robust security features of the Hedera platform since becoming part of the Hedera Governing Council in 2019. This Council strives to establish itself as the most decentralized governance model within the realm of distributed ledger technology, consisting of up to 39 member organizations from various industries and geographic regions. Council members are dedicated to overseeing software changes while contributing to the Hedera network’s stability and ongoing decentralization.

Scott Thiel Partner of DLA Piper: “DLA Piper has integrated the Hedera Token Service (HTS) into its TOKO tokenization platform to enhance the performance, security, and stability of enterprise-grade digital assets.”

How they actually use hedera:

TOKO employs Hedera for non-fungible asset tokenization in two distinct manners. The first approach involves utilizing the Hedera Token Service (HTS), where native non-fungible tokens are used to represent assets directly issued to accounts on the Hedera public network, eliminating the need for costly and potentially error-prone smart contracts.

The second approach is tailored for more sensitive transactions and incorporates a blend of blockchain technologies, specifically Hyperledger Fabric (HLF) and the Hedera Consensus Service (HCS). In this setup, TOKO issues and manages tokens within a private instance of HLF. However, for every transaction, a meticulously ordered, encrypted, and publicly verifiable message is recorded on the Hedera public network using HCS. This fusion combines the privacy features of HLF with the trust and transparency of transactions on the Hedera public network.

Video Explanation

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Conclusion:

Right now we see huge inefficiencies with most capital markets and real estate is ripe for transformation with DLT technology! Here we find another undeniable link between hedera and the real world of finance and how its evolving it! We continue to reiterate the head of the pack positioning of Hedera in the technological revolution that Satoshi started with bitcoin in transforming the world of finance through DLT! We will continue to keep covering these amazing partnerships with hedera and industry leaders here at allincrypto.com!

Allincrypto

With over 7 years of hands-on experience as a crypto investor and an additional 12 years observing the industry, I've witnessed the evolution of the crypto landscape firsthand. My journey has been marked by significant successes, but not without its fair share of learning experiences. I'm eager to impart my insights to you, helping you navigate this space without repeating the missteps I encountered.

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