Red Swan tokenises US$2.2 billion of real estate on Hedera Hashgraph via Polymath
Nothing highlights the tangible power of security tokens like billions of dollars of bricks and mortar.
- Red Swan: A commercial real estate (CME) marketplace and tokenisation platform. It registers properties for sale, prints the relevant tokens, does the compliance legwork and crowd-sells them as a registered security sale. These tokens can then be traded on a secondary market, while buyers can view and manage their CME holdings through the platform.
- Hedera Hashgraph: The network infrastructure for the real estate tokens. It's a public distributed ledger (blockchain) with an emphasis on speed, scalability and flexibility.
- Polymath: A security token technology provider with an emphasis on simplicity and ease of use. It provides the system that companies like Red Swan can use to compliantly tokenise and sell securities on distributed ledgers, and then enable trading in secondary markets.
US$2.2 billion of Class A commercial real estate in Austin, Houston, Brooklyn, Oakland and Ontario, of varying property types including mixed-use and multi-family buildings.
Class A refers to the most attractive type of real estate, in the sense of how much it likely costs. It considers factors such as aesthetics, location, age and overall quality.
Because commercial real estate, especially high quality offices in places like Austin, Houston, Brooklyn, Oakland and Ontario, are quite inaccessible investments, buried in layers of legal and tax obligations, and with a very high barrier for entry.
Tokenising commercial real estate helps solve those problems. By tokenising and fractionalising property, the minimum buy-in can lower much more easily. Meanwhile, the initial security sale can reach a wider global audience, and both that and the secondary market offer vastly increased liquidity.
In this case the minimum investments vary by property and appear to start at US$2,001.
Distributed ledger security tokens more generally can also reduce a lot of the legal and administrative overhead around securities.
Essentially, they can help automate restrictions and obligations. For example, you can program a token so that it can't be transferred to any unknown or otherwise ineligible recipients. This can allow seamless trading of security tokens without needing to conduct an endless parade of due diligence on every transaction.
Usefully, security tokens can also make it much easier to pay dividends to holders. Payouts can be made directly to token holders, with the assurance that they're the correct recipients. All token movements can be automatically tracked on a distributed ledger, so you don't have to rely on a stack of brokers and administrators to keep incurring costs, updating paperwork and occasionally making mistakes.
Red Swan's CME isn't the first example of tokenised real estate. But it weighs in at US$2.2 billion of Class A real estate in some of the most in-demand places in North America, which almost certainly makes it the "biggest" real estate tokenisation effort to date, and potentially one of the most valuable piles of security tokens ever minted.
Disclosure: The author holds BNB, BTC at the time of writing.
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