Equisafe was the first STO platform to tokenize real estate on the Tezos blockchain.
In March 2020, the first STO on Tezos took place on the Equisafe platform. This was done during the “French Tech Night” at the Consulate General of France in New York.
For the launch of the Equisafe platform, they symbolized the “Music Pavilion of the Countess of Provence” in Versailles.
The property is officially listed as a historic monument, built in the style of neoclassical architecture by King Louis XVI of France in 1784.
The architect was Jean-François Chalgrin and he also built the Luxembourg Palace in Paris, which is now the seat of the French Senate.
Since then, the platform has seen tremendous growth. One billion euros in total asset value is currently managed by Equisafe, €210 million STOs have been funded through the platform, more than 7,000 registered investors have an account, and it has seen €22.7 million total transaction volume to date.
Not only do these numbers show healthy growth, but they also indicate that there is a lot of interest in managing assets such as real estate while using blockchain technology (in addition to raising capital and launching security token offerings.
STO is short for Security Token Offering. Thanks to STOs, assets can be tokenized. This means that the value of the asset is represented by tokens which are recorded on a blockchain.
These Tokens are classified as a “Security”, which are strictly regulated assets. This means that these regulations must be enforced. And this is where the blockchain comes in.
Thanks to sets of smart contracts specially designed to enforce regulations, all the limitations necessary to comply with these regulations can be applied.
Therefore, tokens can only be traded in a manner that fully complies with the regulations that apply to that specific STO.
In this case, the decentralized blockchain ensures compliance with trustless regulations because the rules are fixed in smart contracts that automatically enforce the regulations.
This means that many intermediaries like lawyers, brokers, notaries and the like are no longer needed.
Just an example: After your KYC/AML registration which is required to participate in STO trading, you will have a unique Hash ID associated with a wallet address.
This is a chain recording. If you want to participate in another STO, you can be verified in a fraction of a second.
In the old days, you would need a separate KYC/AML verification for each investment, and your legal contract would have to be checked by a lawyer at several hundred dollars per hour to verify the compliance of the sale.
The above is just one example of how decentralized smart contracts are applied in STO quotes and exchanges.
This saves a lot of money and time, which in turn brings more liquidity to traders because it is much cheaper and simpler to buy and sell assets that are traditionally illiquid.
Illiquid assets are assets that do not change ownership frequently, resulting in a low trading volume market. The most obvious example of an illiquid asset that most people are familiar with is real estate.
Open the real estate market
One of the interesting use cases for STOs is the tokenization of real estate. Why tokenize real estate? Apart from the benefits mentioned above, asset tokenization means that you can split an asset into an amount of tokens.
This means that assets that were once too expensive for many investors can now be partially purchased. Traditionally, you had to buy an entire property in order to invest in real estate.
Now you can buy a fraction and still enjoy real estate capital gains.
The fact that investors can buy fractions of an asset by buying tokens, dramatically lowers the investment threshold, opening up a whole new market for people who have never had the chance to invest in real estate.
It works both ways, as sellers of real estate (and real estate projects) will be able to tap into a whole new group of investors.
We can get creative here, apart from the possible increase in the value of the particular property, rent income can be earned and paid out to investors.
The tokenization of real estate (and other assets) not only simplifies investing, it also simplifies the management of these investments and all the processes that financial companies deal with for their clients.
An example is Koytcha Immo, a company specializing in the management of real estate assets in Reunion and France.
In 2020, they tokenized 30 assets on Equisafe with a total value of around €130 million.
An important focus for the Koytcha project was the technical-legal part of tokenization to improve backend processes.
So not just the tokenization of assets, but also other processes like governance of assets through on-chain voting and simplifying and reducing legal processes and costs, while complying with regulations.
Bilal el Alamy, co-founder and president of Equisafe said:
“The company manages about twenty properties and must, at general meetings, vote some 560 people. So we helped them digitize all these processes and automate what could be.
Keeping their records, knowing the customer and verifying the compliance of transactions is done automatically via our platform. Second, it facilitates governance.
Previously, Koytcha Immo asked investors to vote by email, had to try again until they received a response, and then centralized all the information in their own files.
Today, the investor accesses the space dedicated to asset management on our platform, participates in the vote, then the transaction is automatically transmitted to Koytcha.
The success of Equisafe represents and highlights more real blockchain use cases for Tezos, where the technology is actively used under the hood to transform applications and financial assets.