DeFi enters real estate market as Aave announces crypto mortgages

Decentralized lending protocol Aave announced that it is getting into the business of tokenizing the most expensive purchase of most people’s lives: home mortgages. The company is working with Florida-based RealT to let people stake their tokenized real estate as collateral to take out loans.

How tokenizing of real estate works is that instead of buying a whole house, which is expensive, users can buy shares in houses. Tokenized houses can then be traded in Uniswap and anyone can buy even a piece of a property, according to Stani Kulechov, founder of Aave.

In addition to letting people buy tokenized shares in houses, RealT allows people to use Aave’s decentralized lending protocol, which currently supports a lending market worth $1.7 billion, to stake these real estate tokens as collateral for loans.

RealT tokens can be used as collateral to take out loans of stablecoins—cryptocurrencies pegged to a fiat currency, like the US dollar.

Real estate experts this could prove an important utility when a property’s value starts to increase and the owner wants to use that increased equity without selling.

The value of these RealT tokens will be determined by Chainlink, the decentralized price oracle service, a few times a year. RealT users will learn of this in advance.

RealT is a tokenized real estate investment platform, enabling fractional ownership in real estate on Ethereum. RealT’s tokenization of real estate solves the illiquidity of the traditional markets with frictionless transactions, access to public markets, and fractionalization of properties. One of the more novel aspects of owning RealT’s tokenized real estate is the ability to earn rent from the property on a daily basis. There are no reports yet on when this will become a reality. So just wait and watch the space for more information.


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