DigiShares has recently signed up a new white-label client in the real estate industry. Even though we are not allowed to publish the name of the client under our contractual relations, we are allowed to speak in general terms about the project and its implications.
The project is based in the US and will work under the jurisdiction of Wyoming. Wyoming is one of the most forward looking jurisdictions world-wide when it comes to tokenization. They have recently introduced and passed a bill that allows corporate stocks to be tokenized (i.e., issued as tokens on the blockchain). In addition, a Wyoming-based LLC can be created for as little as $150, making Wyoming a perfect spot for US-based tokenization platforms that want to run frequent STOs (Security Token Offerings). The project expects to conduct 10-20 real estate tokenization projects already in year 1. With the very low cost of a Wyoming-based LLC, this becomes realistic.
As opposed to this, Europe as yet doesn't have any inexpensive jurisdictions to set up tokenization projects. To begin with, there are only a few countries (Switzerland, Liechtenstein, etc.) where the legalities of tokenized securities have been reasonably clarified, but in these countries average fees per tokenization project easily exceeds EUR 100,000 including incorporation costs, legal fees, banking fees, etc. DigiShares is constantly monitoring jurisdictions and will always maintain an up-to-date overview of this with recommendations.
For this particular project, we are collaborating with Polymath and will use their standardized security token protocol framework, ERC1400. ERC1400 is a flexible and open source framework that is available for any tokenization project to use. It is a set of smart contracts for the issuance and management of security tokens, including modules for document handling, token transfers, whitelist management, and fungible tokens. The DigiShares platform is blockchain agnostic and can use most security token protocols. Currently around 95% of all STOs are carried out on Ethereum-based protocols but given the soaring Ethereum gas fees (up several 100% since January), other options such as Stellar, Tezos, EOS, etc. may suddenly become more attractive. Just these last couple of days there have been rumors of Ethereum gas fees upwards of $100.
We are also going to be integrating with Coinbase for their custody solutions. Investors' wallets will be set up with Coinbase and through their custodian framework assets stored in Coinbase wallets will be insured. On-boarding and payment will also be carried out through Coinbase's APIs.
The project is a co-development project where we deliver our standard multi-STO platform with investor management, corporate management, and trading, with some added functionality based on special requirements from the client. We expect to finalize the first deliverables in September such that the first real estate projects can be listed on the platform already in the second half of September.
On the business side, the client has the vision to become one of the leading platforms for real estate tokenization in the US, with already more than a hundred properties signed up to be listed on the platform.