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regulations, operating agreements, PPMs and lender
requirements. Lenders do not have to rely on a borrower’s
good faith to inform them of changes in the capital stack.
Programmable securities can automate the process of
dividend payments and create software interfaces for the
execution of equity rights.

Tokenization can be simply thought

of as a form of securitization,
selling fractional interests using

blockchain-based capital markets
for liquidity instead of traditional
markets such as the NYSE.

Current Reality: Lenders are concerned about the
commitment of small investors in highly fractionalized
cap tables, and don’t yet understand the compliance
benefits of smart contracts. Therefore, obtaining leverage
on tokenized capital structures can be difficult. Smart
contracts are new software and have suffered failures
in the past as pioneers have iterated best practices.
Securitize, Harbor and Polymath are leaders in the
creation of secure, compliant security token protocols.
They have taken up the mantle of educating institu-
tional investors and lenders on the benefits of tokenized
investment structures. CONCLUSION
Informed, rational investors should continue to be wary
TRANSACTIONAL EFFICIENCY of startups that promise massive disruption on short
Future Promise: The title to a property can be vested timeframes. This can be difficult in a highly volatile
in a single token, reducing transactions from complex market, where newly-announced ventures raise tens of
multi-party processes to a simple transfer between millions in a heartbeat from eager investors foaming (or
buyer and seller. The token’s history is publicly auditable, fomo-ing) at the mouth to get in on the next big winner.
simplifying the title research and insurance process. Nonetheless, the achievements and progress of the
Such a token can be placed into a smart contract wallet pioneering startups noted in this article are laying the
that acts as an autonomous escrow, holding the seller’s groundwork for new, efficient, automated, and global
property token and the buyer and lender’s cryptocurrency capital markets within the next decade. Each successful
proceeds in escrow until all parties assent to the exchange. implementation eases the path for further innovation
and adoption, accelerating the rate of change. Every
Current Reality: The real estate market is just starting real estate professional should keep abreast of this
to experiment with cryptocurrency transactions, with no developing technology, or risk being left behind when it
more than a couple dozen deals completed, mostly in the explodes into the mainstream.
residential space. Startups tackling transactional efficiency
include HouseHodl, Velox.Re and Propy. This vertical will Henry Elder (@Henry_Elder) is the Director of
probably continue to see sluggish adoption as it requires Origination & Investment for Slice, a real estate
the acceptance of institutions and the general public. tokenization platform. He has participated in
Institutions will likely continue to experiment with blockchain over $1 billion of debt and equity investments
for back-office use cases before getting comfortable across real estate and tech. He also speaks
enough to roll out public-facing blockchain software. Until internationally on topics such as asset tokenization, cryptoasset
institutional adoption and introduction, the general public is valuation, and tokenomic design.
unlikely to adopt the technology on a large scale.

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