A Total Asset Value Of 1 Billion Euros Is Managed Through Tezos-based STO Platform Equisafe
One billion Euros in total asset value is currently managed through Equisafe: €210 million in STOs have been financed through the platform, over 7,000 registered investors have an account, and it has seen €22.7 million in total trading volume to date.
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 at the “French Tech Night” at the Consulat général de France in New York.
For the launch of the Equisafe platform, they tokenized the “Pavillon de musique de la comtesse de Provence” in Versailles.
The property is officially classified as a historic monument, built in the style of Neoclassical architecture by the French King Louis XVI 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 enormous growth. One billion Euro total value in assets is currently managed through Equisafe, €210 million in STO’s has been financed through the platform, over 7,000 registered investors have an account, and it has seen €22.7 million total trading 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 utilizing blockchain technology (besides raising capital and launching Security Token Offerings.
STO is short for Security Token Offering. Through STOs assets can be tokenized. This means that the value of the asset is represented by tokens that are registered on a blockchain.
These Tokens are classified as a “Security”, which are assets that are strictly regulated. This means that these regulations need to be enforced. And that is where blockchain comes in.
Through sets of smart contracts that are specifically designed to enforce regulations, all limitations that are necessary to comply with these regulations can be applied.
As a result the tokens can only be traded in a way that is fully compliant to the regulations that apply to that specific STO.
In this case the decentralized blockchain guarantees the compliance to regulations in a trustless manner because the rules are fixed in smart contracts that automatically enforce the regulations.
That means a lot of middle men like lawyers, brokers, notaries and such are no longer necessary.
Just an example: After your KYC/AML registration which is necessary for participating in STO trading, you will have a unique Hash ID associated with a wallet address.
This is an on-chain registration. If you want to participate in another STO, you can be verified within a split second.
In the old-fashioned way, you would need a separate KYC/AML check for every investment, and your legal contract would need 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 listings and trading.
This saves a lot of money and time, which in turn brings more liquidity for traders since it is a lot cheaper and simple to buy and sell assets that traditionally are illiquid.
Illiquid assets are assets that don’t change owner frequently, results in a low trading volume market. The most obvious example of an illiquid asset that most people know is real estate.
Opening up the real estate market
One of the interesting use-cases of STOs is the tokenization of real estate. Why tokenize real estate? Besides the benefits mentioned above, tokenizing assets means you can divide an asset in a quantity of tokens.
This means that assets that used to be too expensive for many investors, now can be bought partially. Traditionally, you would have to buy a whole property to be able to invest in real estate.
Now you can buy a fraction and still enjoy the capital gains of real estate.
The fact that investors can buy fractions of an asset by buying tokens, lowers the investment threshold drastically, opening up an entire new market for people who never had the chance to invest in real estate.
This works both ways, since 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, besides the possible increase of value of the particular property, income from rent can be earned and paid to investors.
Tokenizing real estate (and other assets) doesn’t just simplify investing, it also simplifies managing these investments and all the processes that financial companies deal with for their clients.
One example is Koytcha Immo, a company that specializes in real estate wealth management in Reunion and France.
In 2020, they tokenized 30 assets on Equisafe with a total value of about 130 million Euro.
An important focus for the Koytcha project was the legal tech part of tokenization to improve backend processes.
So, not just tokenization of assets, but also other processes like governance of assets through on-chain voting and simplifying and reducing legal processes and costs, while still following regulations.
Bilal el Alamy, co-founder and chairman of Equisafe said:
“The company manages about 20 properties and must, at the general meetings, vote some 560 people. Therefore we helped them to digitize all these processes and to automate what could be automated.
Keeping of their registers, customer knowledge and the verification of transaction conformity are done automatically via our platform. Then, it facilitates governance.
Previously, Koytcha Immo asked investors to vote by email, had to retry them until they received an answer, and then centralize all the information in their own files.
Today, the investor accesses the space dedicated to asset management on our platform, takes part in the vote, then the transaction is automatically forwarded to Koytcha.”
The success of Equisafe represents and highlights more real blockchain use-cases for Tezos, where the technology is being actively used under the hood in order to transform financial applications and assets.
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