Token economics (or tokenomics) is the study of the new type of economy that is defined as the design of a particular ecosystem in a blockchain environment. Every ecosystem is composed of several elements and the token functions as the central element of this new type of economy. A token is a digital asset that can belong to different categories: utility/security and fungible/non-fungible.
Utility or Security Token
The utility token is a cryptocurrency used to offer access to products and/or services on a platform. Security token derives its value from an external and tangible asset, and offers to the token holders a wide range of rights (entitlement to a share of profits, interest on a debt, ownership or equity in a legal entity, and so on). Given the different regulatory frameworks applicable, the line between these two categories of tokens is thin, so it can be problematic in tokenomics. The actual regulatory framework is not very clear about the criteria for qualifying a token as a security or a utility token, but there are guidelines that allow the blockchain entrepreneurs to create tokens legally.
Fungible or Non-fungible
Depending on the scope of the project, a token might be fungible or non-fungible. Fungible tokens are interchangeable and are divided into smaller token units. Non-fungible tokens are non-interchangeable and cannot be divided. In a tokenomics analysis, the choice between a fungible or non-fungible token will entirely depend on the used case study. Reitis [XREI] is a fungible token type.
Real Estate Tokenomics
The real estate tokenization allows us to issue tokens through distributed ledger (blockchain) technology. In real estate industry, tokens can represent:
– ownership in the underlying asset,
– a dividend paid to investors,
– equity in a legal structure that owns the asset,
– an interest in a lending contract,
– a debt secured by the real estate,
– a stream of income based on cash flows from the asset, and more.
Premium real estate development business models usually offer dividend and/or raises debt (interest) by lending, where original amount is being repaid plus interest. An Investors in real estate tokens gets revenue sharing (dividend or interest).
Dividend tokens represent the variable value paid annually by a company to its investors. As for Reits, 90% of the financial company’s profit in the holding (Reitis Capital OU) profit goes to the Reitis Community.
Loan (debt) tokens are related to the value of a fractional number of square meters of a property. The interest is given to Investors through an unchangeable smart contract. The initial value of a loan token is usually set to the value of one square meter of a property.
The power of compounding your investments for a higher APY (annual percentage yield, as Albert Einstein said: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”