We are used to the idea of a landlord owning one or more properties which they rent out. The landlord can be a person or a company. In our digital age, we need something different, which is where the “DAO” comes in.
A what?
A “DAO” - or Decentralized Autonomous Organization - is a type of organization especially suited to the tokenization of property. Let's break down the key components to understand what this is about.
Decentralized: Unlike traditional organizations that have a central authority (like a board of directors or a CEO), DAOs operate in a decentralized manner. This means there's no single person or entity in control. Instead, decision-making is distributed among the participants.
Autonomous: The signifies that a DAO operates based on a set of predefined rules, without the need for constant human intervention. These rules are encoded in smart contracts, self-executing pieces of code that run on a blockchain. We publish those when some real estate is prepared for tokenization.
Organization: DAOs are designed to facilitate collective decision-making and coordination among their members. The members of our DAO have voting power proportional to their stake or ownership in the DAO.
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Smart Contracts: The rules governing the DAO are written into smart contracts on a blockchain from Algorand, which is fast and carbon neutral. These contracts automatically execute actions based on the consensus of DAO members.
Voting: Members of the DAO have the ability to vote on proposals. These proposals take decisions on investments, such as whether to sell or continue to own the property involved but could also be about making changes to the DAO's rules, or any other relevant decision.
Transparency: DAOs usually operate transparently and ours is no different, with all transactions and decisions recorded on the blockchain. This transparency helps build trust among members.
Token Ownership: DAOs often use tokens to represent ownership and voting power. This relates back to the meaning of “Tokenization” of real estate, which is what we are doing. Members acquire these tokens by contributing assets which can be in fiat currency through a debit card payment or bank transfer, or even by cryptocurrency, to the DAO. The more tokens someone holds, the more influence they have in decision-making.
While we are using a DAO for our tokenization of real estate, they can be used for a variety of purposes, such as managing a decentralized project, making investment decisions, or even governing a decentralized application (DApp). It's important to note that while DAOs offer increased transparency and decentralization, they also face challenges, such as potential vulnerabilities in smart contracts and the need to address legal and regulatory considerations. But you don’t need to worry on that score, as we have formed a legal entity according to the requirements of the regulatory bodies that will ensure compliance.
The good thing to know as well is that each token holder has the right to sell their tokens and has no financial liability to the DAO beyond their initial purchase of one or more tokens.
The DAO cannot be closed down while it still has at least one active project and, again, this would require majority approval by the token holders.
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