Hi REALISTO,
First of all, I really like your idea for an ICO. It looks solid, and it is great that you see the use for blockchain technology in real estate market.
However, I still have some questions for which I could not find an answer neither on your web page nor whitepaper. I believe they are touching some crucial aspects of your buisness case. I hope you will be able to answer them (or even include within the next iteration of your whitepaper as presales and ICO are still ahead of us)
1. I am a little bit confused with a phrase "ROI payout". ROI is calculated as: (Gain from investment - Cost of Investment) / Cost of Investment. where Cost of Investment is initial funds from ICO/Crowdfunding and Gain from Investment is the Sales Price of a Estate. I believe you meant in your whitepaper that payouts will be made from Gain from Investment i.e. sales price. Your current paper suggests that if we had 100k $ for an investment, and the Gain is equal 150k $ payouts will be made only from 50k$ as it is 50% ROI value. In such scenario, there is no way for payouts to be beneficial for investors, as they will always lose their money. I am pretty sure that I just overinterpreted your paper. however I believe that your white paper is not specific enough in this matter. Payouts should be provided as a mathematical formula, so there is no place for misinterpretation. Could you elaborate on this issue?
2. You also say that REA token holders will receive 70% of the platform generated fees. In my opinion it also lacks of mathematical formula. However, my biggest problem is that you don't provide any details like: what services will be prone to fees and how big the fees will be like. What is more I would be very grateful for some predictions of potential fee revenues with appropriate assumptions. Right now the annual fees might be of any value. Consequently it is hard to assume any potential revenues from this stream. Could you provide more details?
3. My final question. Have you ever considered how your buisness case match with current crypto market volatility? I think it might be a significant problem for a investors. I will give a simple example:
- I invested 1 ETH into lucrative real estate investment with projected 50% ROI. Consequently you exchanged this ETH into FIAT - lets assume 300$ and use it to buy and renovate estate
- After 6 Months you sold estate with 50% ROI - consequently there is 450$ waiting for me
- However over this 6 Months ETH changed its value to 500$ (Actually It did over the last 6 months - checked on World Coin Index)
- As a result I receive 0.9 ETH, even tough I have invested 1 ETH. Of course, I have more money, however I would have even more if I hadn't done anything
This example clearly shows that your business model is prone to cryptomarket fluctuactions (which are significant). Ironically, business will be beneficial for potential investors only when ETH price will stay the same over the time of investment or drop down!
Can you gives us your comment to this scenario?
Thank you a lot in advance
Best Regards!
Hey BitSquirrel,
Thank you for your indeed very important questions.
We will try to add your questions to our documentation.
1. Indeed we aim to pay out the returns from the Investments in ETH, to be operational we will only pay out the returns, not the money invested, otherwise there would be no more funds to acquire new projects, that’s why we can only pay out the returns and not the equity raised in the ICO (if we would do that we could only do one round of projects and the REA tokens would be worthless afterwards.)
What you are not crediting in your consideration is that the Investor still holds on to the REA tokens with an at least equal value of their initial investment.
For Example and clarification
If you invest i.e. 100 $ you will hold at least 100 REA token, and you would receive the 50% ROI so 50$ on top of the 100 REA token you hold.
Your initial contribution is never lost in the equation since the REA tokens will be worth at least the 100$ you put in since those will be again and again used to acquire and convert/sell real estate.
As an investor you receive the profits in ETH and you hold the REA tokens bought in the ICO – Those tokens are asset backed with real estate and will receive returns from those projects thus giving the tokens a “floor price” which will be a factor-x of the returns.
The Investor holds on to asset backed REA tokens and will receive constant returns.
2. If real estate experts use our platform to fund their projects we will take a fee for the emission of their own asset backed tokens with our system, this fee will depend on many different factors like complexity of the screening process, individual regulation, the amount of work it takes to secure our investors against the individual projects, the amount of capital to be raised etc. Conventional real estate crowdfunding platforms take up to 15% of the capital raised as a fee, since our structure and model is very different from those and our operational costs will be lower as well, our fee will be lower than that and we will attract a lot more experts to fund their projects with the crypto-community.
The global real estate crowdfunding market is on the rise with numbers growing exponentially. This market will by estimation grow to over 90 billion USD in 2025 and we will be the forerunners to pull this market onto the blockchain and generate fees from that.
3. With our Token we hedge against crypto-volatility,
your example does not pay regard to the actual REA token which we emit in the ICO.
Your Example should be:
You invest 1 ETH in the presale and receive 390 REA token (we exchange the ETH to FIAT like you assumed and receive – 300 $),
The 1 ETH is invested into Real Estate with 50% ROI.
After the project is finished there are 150 $ in returns waiting for you, while you still hold on to the 390 REA tokens which will be valued at at least 300 $ (initial price)
although it is much more reasonable to expect the value of the token to increase since after the ICO there will be a finite number of tokens, all asset backed and with the right to claim returns – driving value and conserving their initial value through their asset backed nature.
The 150$ USD will be converted to ETH and claimed by you.
If the Ether value has dropped you will receive more than 0.5 ETH, if the value of ether is up at the time of the exchange you will receive less ETH but still the same value.
All the time you also hold the initial REA Tokens valued at i.e. 2$.
Since we continue to invest your initial contribution into real estate and we are developing the platform with a global blockchain based reach you are actually a lot better off since you receive actual liquidity to spent while keeping the initial investment in REA tokens.
If you would have hodled your 1 ETH you would have to sell it to liquidate your returns – with REA you will stay in the ecosystem and can sell the ETH returns to liquidate while staying in the economic cycle.
If you have further questions feel free to ask, you can also join our telegram or slack groups via
www.realisto.ioBest Wishes
