DeFi for Real Estate Assets
This is a general overview of blockquare and oceanpoint. The outline is a short historical overview of the development of the project (blocksquare) and the space in general, and a more technical overview of the protocol (oceanpoint) as it currently exists: including governance and tokenomics.
Ethereum
A blockchain is simply a record of transactions shared across computers in a peer-to-peer network. As each computer maintains its record, this network is by design distributed, decentralized, and immutable. A centralized system presents a single point of failure, so there are obvious benefits to a decentralized system.
A smart contract is a self-executing contract that is only executed when certain pre-coded conditions are met.
Ethereum was the first major programmable blockchain, or simply, a blockchain that had a smart contract functionality.
ICOs
The ERC-20 token (basically a standard used for creating and issuing smart contracts in Ethereum) made crowdfunding possible. That’s how the 2017 ICO craze happened: anyone with an idea for a project could raise funds. Most of these turned out to be scams. As a matter of fact, many legitimate projects created then did not survive the bear market. About 90% of ICOs died. Not blocksquare though.
Blocksquare is an award-winning company led by three co-founders with over 40 years of combined experience in tech, product, biz, legal and sales, developing the world’s leading blockchain-based real estate tokenization system, incorporated in Slovenia in 2018. At the time the idea was very simple and basic: tokenizing real estate assets. Investing in real estate is usually limited across jurisdictions. The project envisioned investing in any property across borders. Thus individuals from anywhere in the world could invest in properties in any jurisdiction. In fact, Businesses of all types — from startups to large enterprises — can use Blocksquare’s solutions and APIs to digitize value of real estate properties, launch their investment platforms and connect people to tokenized real estate deals online.
The ICO was held during the bear market, and as such didn’t reach its hard-cap. This is an important point, as it counterintuitively speaks to the project’s long term viability and sustainability. As other ICO founders abandoned their projects (others even absconding with funds), despite the shortcomings in the fundraising goals, the founders nevertheless invested their own funds and continued to build the prototype.
Users of the prototype purchased a prop token which represented their stake in the rent accrued by the property, which was distributed monthly in BST, the native token of the project. As the scope of the project has since expanded, it’s not necessary to explore the mechanics of the prop tokens. For those curious about the viability of the prototype, a parking space was tokenized, and the prototype is accessible at the dashboard.
DeFi
Initially as stated, people used Ethereum (in particular the ERC-20 standard) for fundraising needs for their projects and companies, but it became increasingly clear smart contracts could be far more powerful and break barriers in entry normally found in traditional finance.
For instance a bank will not grant you a loan without collateral. But a given property of smart contracts, namely atomicity, makes it possible for a particular type of loan that was simply not possible before, a flash loan, a reality. These were offered initially by Uniswap, DyDx, and Aave.
These are loans without collateral. Typically a smart contract you deploy borrows the funds from a vault (in say, a liquidity pool), executes pre-coded business logic (such as arbitrage), and repays the loan to the vault. By the atomicity property, either all or none of these transactions will be executed.
Thus the innovation of the smart contract made an entirely new class of transactions and financial products possible.
Back to blocksquare, with the DeFi summer it became clear the scope of the project could be expanded. Thus, oceanpoint was born. Currently, oceanpoint has tokenized over 47 properties from 11 jurisdictions all over the world, with a combined value of $42 m.
With that historical background, this next section digs deeper into oceanpoint and explores the tokenization process, and includes among other aspects the governance model.
Very simply, oceanpoint is a protocol connecting Decentralized Finance (DeFi) to real estate assets through tokenization.
Developed and powered by Blocksquare (a Tokenization infrastructure for real estate), Oceanpoint is a set of smart contracts on Ethereum that form an open-end DAO designed to potentially own an unlimited pool of real estate assets, where anyone can participate without legal restrictions to earn by contributing to a decentralized protocol backed by the real estate economy.
Tokens of the ecosystem:
BST token
The Blocksquare Token (BST) is the core economic engine that facilitates the building and expansion of Oceanpoint’s capabilities and its community. BST incentivizes participation, facilitates governance, and catalyzes user contribution. Users earn BST through pool participation and, later, participating in Oceanpoint’s continuous improvement.
sBST token
The Governance token is the key component of Oceanpoint’s first product — the BST staking pool. When users stake BST, Oceanpoint awards them with sBST, a token used by the community to vote on Oceanpoint related decisions. Governance polls are available via snapshot.
POINT token
The protocol also manages the issuance of POINT tokens — a new stablecoin backed by the USD value of tokenized real estate assets that Oceanpoint owns. One (1) single POINT can always be swapped for 1 USD worth of tokenized real estate held within Oceanpoint’s asset pool.
LP tokens
Liquidity provider tokens or LP tokens are tokens issued to liquidity providers on a decentralized exchange (DEX) that run on an automated market maker (AMM) protocol. Uniswap, Sushiswap and PancakeSwap are some examples of popular DEXs that distribute LP tokens to their liquidity providers. With the introduction of liquidity pools, Oceanpoint will enable users to directly interact with selected AMM protocols and stake their LP tokens to earn rewards.
BSPT tokens
Blocksquare Property Tokens (BSPTs) are a standard Ethereum ERC-20 smart contract with a defined maximum issuance of 100,000 tokens for each real estate property, where 1,000 tokens can be issued for each 1% of an asset’s capital stack. Each asset has its own BSPT, meaning the token symbol varies from property to property i.e. BSPT-XYZ-##. The token standard features on-chain property valuation, a legally binding tokens enforceable by a standardized corporate resolution stored on IPFS.
DeFi Primitives
These are features representing the mechanics of the DeFi products offered as part of Oceanpoint, and will be rolled out in 4 stages, 2 of which are currently live.
The Governance Pool
The Governance pool is designed for accessibility. Connect your wallet (e.g. MetaMask) with BST as the deposit asset, and make your deposit through the Oceanpoint web interface. When you deposit, you’ll receive a sBST token that represents your stake in the pool. As the pool accrues more BST (liquidity mining, rewards, asset revenues), that tokenized stake will grant more of the underlying asset.
To exit the pool, simply send your sBST back, and you will receive the underlying asset. While your funds are in the pool, you are free to move your tokenized stake to other wallets you control, perhaps to deposit it into an interest-generating strategy on other DeFi protocols.
The Asset Pool
Oceanpoint incentivizes real estate owners by enabling them to create a new passive income stream with their existing real estate properties. Just like miners use GPUs to mine and earn ETH, so will landlords be able to stake their real estate asset to earn BST.
After tokenizing their real estate asset via Blocksquare’s tokenization system, the owner will be able to mint BSPT to their wallet and stake it through Oceanpoint.
Essentially, by tokenizing, a real estate owner will be able to stake BSPT tokens of their property to earn BST from the rewards treasury. The valuation of the property is used to calculate the value of your staked BSPT in term defining the share in the pool for the property owner.
Liquidity pools
The third product to be launched shall be liquidity pools. These will be deployed on other DeFi protocols (e.g Uniswap, Balancer, Sushiswap, 1inch) based on community governance decisions, and connected with the Oceanpoint UI to provide an easy-to-use experience. Once introduced, anyone will be able to provide liquidity to the protocol and passively increase their holdings of BST.
Stable Pools
Once the Total Value Locked (TVL) in the Asset pool reaches a level the community deems appropriate, stablecoin liquidity pools on 3rd party DeFi protocols will be launched together with an incentive program for liquidity providers to start supporting POINT tokens, the protocol’s native stablecoin.
Pool mechanics
Just like with the other pool where staking to earn BST is possible, Stable pools will be designed for accessibility and ease-of-use, connecting the Oceanpoint UI with liquidity pools deployed on third party protocols.
Staking tokenized real estate
Oceanpoint enables anyone to start earning BST with their real estate assets. To start, you will first need to tokenize your real estate property using Blocksquare’s tokenization protocol. Don’t worry, you can send a request for tokenization using this form and the team will guide you through the whole process.
Once your property has been tokenized, 10,000 BSPT tokens will be minted to your wallet. Make sure to use an Ethereum wallet compatible with Oceanpoint. Currently, Metamask or WalletConnect compatible mobile wallets are supported, while use of hardware wallets is enabled through Metamask.
The blocksquare community is very friendly and helpful. If you have any questions or need any help feel free to ask in the discord or telegram channel. The team is also available on the socials, and they provide weekly updates aptly dubbed Block-Chat to the community.
Useful Links/Socials