Tokenization in real estate is the process of converting all future economic benefits of real estate assets into digital tokens using blockchain technology.

This includes:

• Asset Representation: Create tokens that correspond to entire future economic benefits over an underlying real estate asset.
• Compliance and Legal Framework: Ensure that the tokenization process complies with applicable laws and regulations, such as securities laws, anti-money laundering (AML) guidelines, and know-your-customer (KYC) requirements.
• Blockchain Infrastructure: Develops and utilizes blockchain technology to issue, manage, and transfer tokens securely and transparently.
• Exchange and Liquidity: Integrate with platforms where tokens can be traded, enabling liquidity for traditionally illiquid assets.

Tokenization and traditional real estate investment differ significantly in how ownership, access, liquidity, and transactions are managed. Here's a breakdown of the key differences:

Summary of Key Advantages of Tokenization:

• Lower Entry Barriers: Allows smaller investments, making high-value properties accessible.
• Increased Liquidity: Tokens can be traded like stocks, compared to the illiquidity of traditional real estate.
• Efficiency: Transactions are faster and less expensive due to automation and reduced reliance on intermediaries.
• Global Reach: Enables international investments without the complexities of traditional cross-border transactions.
• Transparency & Security: Blockchain ensures immutable records, reducing fraud risk and enhancing trust

Propti platform is a digital system that facilitates the conversion of real-world real estate assets’ benefits into digital tokens that can be traded, transferred, and managed on a blockchain. Here's a step-by-step breakdown of how we operate:

• Asset Identification: The asset to be tokenized is identified. These are typically ready properties yielding excellent rental yields at handpicked locations with promising capital appreciation trends.
• Legal and Compliance Setup: The platform works with legal experts to ensure that the tokenization process complies with relevant laws and regulations (e.g., securities regulations, KYC/AML requirements).
• Security and Custody of Assets: A licensed bank or trust company holds the asset under lien until the tokens are in circulation.
• Valuation and Tokenization: The asset is appraised by a licensed valuation company, and all future benefits of the asset are divided into smaller units, represented by tokens.

• Smart Contract Deployment: A smart contract is created on the blockchain to manage the tokens. The contract contains rules for token ownership, transfer, revenue sharing, etc.
• Token Issuance:
  • Tokens representing rights over the future economic benefits of asset are minted
  • The maximum tokens minted for a specific asset are computed at the time of primary minting.
  • Each token is tied to specific attributes, such as future benefits of an income-producing asset, including terminal/sales value.

• Platform Interface: The platform provides a user-friendly interface where investors can view tokenized assets, perform due diligence, and make investments.
• Investor Verification: To comply with regulations, investors go through KYC/AML checks before participating.
• Purchase of Tokens:
  • Fund Wallet - Add funds in your preferred currency (USD, EUR, AED, INR, etc.) to purchase USDT
  • Buy Tokens - Use your wallet balance of USDT to purchase tokens in listed properties.

• Ownership Record:
  • The blockchain ledger records token ownership, ensuring transparency and immutability.
  • Investors can view their token and currency holdings through a digital wallet integrated with the platform.
• Revenue Sharing:

  If the tokenized asset generates income (e.g., rent from real estate), revenue is distributed to token holders in additional proportionate tokens.

• Secondary Market Access:
  • Tokens can be traded on Propti’s marketplace, offering liquidity.
  • Investors can sell their tokens to others without the need for lengthy property sales or legal processes.
• 24/7 Trading:
  • Unlike traditional markets, tokens can be traded round-the-clock offering greater flexibility.

• Blockchain Security:
  • The platform uses blockchain to secure ownership records and transactions against tampering.
  • Smart contracts ensure that rules (e.g., restrictions on token transfer, minting, burning, etc.) are enforced.
• Regulatory Oversight:
  • The platform integrates regulatory safeguards, such as limiting token sales to qualified investors in specific jurisdictions.

• Audit Trails:
  • Blockchain provides an immutable record of all transactions and ownership changes.
• Performance Reports:
  • Platforms often provide dashboards for investors to monitor asset performance, market value, and income distributions.

Propti ensures transparency in tokenization to build trust among investors, meet regulatory requirements, and foster the long-term success of our tokenized ecosystems. Here are key strategies that we deploy to ensure transparency in tokenization:

• Decentralized Ledger: Blockchain ensures that all transactions, token ownership, and asset-related data are recorded immutably.
• Audit Trails: Provide an open, permanent, and tamper-proof record of every transaction and ownership change.
• Transparency for Stakeholders: Allow investors, regulators, and auditors to verify data at any time.

• Open-Source Code: Publish smart contract code to allow third-party audits and ensure that terms are enforced as programmed.
• Independent Audits: Engage reputable blockchain auditing firms to review and certify smart contracts.
• Clarity of Rules: Clearly define and encode rules for revenue distributionand token transfers into the smart contract.

• Disclosure: Provide comprehensive information about the underlying asset, including:
  • Independent Valuation reports.
  • Legal ownership structures.
  • Historical performance data (e.g., rental income for real estate).
• Documentation: Property Brochure, Property Title Deed, Valuation report, Rental agreement and otherlegal documents in an accessible format.
• Ongoing Updates: Regularly update investors about asset performance and market conditions.

• Third-Party Experts: Use independent appraisers to assess the value of the underlying asset to avoid conflicts of interest.
• Frequent Reassessments: Update valuations periodically to ensure accuracy and fairness.

• Jurisdictional Adherence: Ensure compliance with securities, anti-money laundering (AML), and know-your-customer (KYC) regulations in all jurisdictions of operation.
• Token Holder Protections: Define and enforce investor rights through legal frameworks.
• Regulatory Reporting: Provide clear and timely reports to relevant regulatory bodies.

• User Dashboards: Offer token holders a secure portal where they can:
  • Monitor token performance.
  • Access financial statements and income distribution records.
• Notifications: Provide real-time alerts for major updates, new appraisals, or governance changes.

• Order Book Visibility: Allow investors to view buy/sell orders and pricing in Propti’s marketplaceto ensure fair trading.
• Transaction Details: Make trade histories and token pricing trends publicly accessible.

• Neutral Custodians: Use a licensed bank/Trust company to safeguard underlying assets and reduce conflicts of interest.
• Advisory Committees: Form advisory boards to provide oversight and represent the interests of token holders.

• Reports: Conduct and publish regular reports by a licensed audit firm in the jurisdiction of the asset location.
• Performance Metrics: Provide analytics on token performance, asset appreciation, and liquidity.