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Question: Is the coin-burning logic reasonable for Real Estate tokens?  (Voting closed: May 25, 2022, 06:30:19 PM)
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Author Topic: Is the coin-burning logic reasonable for Real Estate tokens?  (Read 15 times)
predictable_miracle (OP)
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May 18, 2022, 06:30:19 PM
 #1

Hello,

I've taken a look into the companies that made an ICO in Real Estate for the last couple of months. TBH, I am not seeing the ways for the profitability of the tokens except the marketing budget and speculation.

Considering that Real Estate is the most conservative business which provides guaranteed income, today's tokens can't ensure the guaranteed profit for the investors. You just buy tokens and hope that their price will go up for some reason. While on the stocks market, you can invest in Mutual Funds which operate with real estate, they will pay you dividends of 4-8% annually on average.

So I thought that we can make a token that will represent an income for the real estate business. Consider the following logic:
1. We provide 1,000,000 tokens for $1,000,000.
2. For $1,000,000 we buy 4 profitable real estate which gives us 15% each year, which is $12,500 each month.
3. The company guarantees that it will provide 90% of the income to buy the tokens, each month. And will do that all the time.
4. We got a deficit of the tokens and the price goes high.

Let's also imagine the worst-case scenario.
1. We provide 1,000,000 tokens for $1,000,000. We got 3 investors: A - $900,000; B - $99,000; C - $1,000.
2. After the ICO and launch on the first exchange, investors A and B decide to sell all the tokens and the price goes near $0.01 per token. Because of a lot of tokens on the market.
3. The first month of the company guaranteed to buy tokens for 90% of income. It is $11,250. As there are a lot of tokens in the market and the price is $0.01, we can buy all of them.
4. We have left with a single investor, who keeps 1000 tokens, which he bought for $1 each.
5. Next month, the company continues to buy tokens for cash, but there are no tokens on the market, so the company leaves an ask for the token with a price of $11,250. And investor C can sell a single token for this price.

So, in the worst-case scenario, an investor who keeps the tokens longer gets the whole month income of the real estate and he can sell the token for this price all the time, each month. It is actually 1,000 months (83 years) and $11,250,000. Not bad, if not forgetting that his investment was just $1,000.

That is what I got in my mind and it is interesting to know community opinion. Is it worth doing?

P.S. I am not really in Real Estate Business, more on the IT side. So if you are an expert in Real Estate Business your thoughts will be valuable.
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