Diversification from Centralized Stablecoin
--
We believe that Real Estate Tokens (RET) generated by tokenizing Real Estate is an exciting and potentially superior alternative to stablecoins such as USDC and USDT.
There are two reasons for this: one reason that impacts one’s personal wealth and portfolio, and a reason related to the security of the network.
Personal Wealth Management
Often times, crypto folks speak of taking profits and diversification. Usually this means taking profits by converting crypto assets such as ETH into stablecoins such as USDT, USDC, or DAI. Diversification could mean the same thing, or it could mean buying non-crypto assets such as Real Estate, Equities, etc.
However, we suspect that using centralized stablecoins such as USDC or USDT obscures a great unspoken danger lurking in the shadows: Regulatory Control. A single regulatory edict from authorities can freeze the underlying assets that back the value of USDC or USDT. The degree to which USDC and USDT are centralized is the antithesis of the cypherpunk movement and the ethos of decentralization. When USDC and USDT work, they work great. But there is certainly a tendency for regulators to turn on a whim and suddenly decide they need to scrutinize and reclassify the legality, conditions and terms under which fiat backed stablecoins can and cannot be used. Recently, these regulators have even been advancing arguments that these stablecoins are securities.
Do you want to store your value under a regulatory regime that can change overnight and destroy your portfolio management diversification strategy?
Furthermore, many of us started dabbling in bitcoin and ethereum due to concerns around inflation, hyperinflation caused by QE, stagflation, and any other “-flation” brought about by printer go BRRR. So how does it make sense to diversify into fiat pegged tokens which are going to zero in the long run? USDC and USDT are vulnerable to the inflationary policy created by the US Federal Reserve. Every US dollar will worth less in terms of purchasing power with more fiat being created and put in circulation. RET on the other hand provide the stability of real world assets while ensuring that the value keeps up with inflation, which ahem — perhaps is not as temporary as they say. Oh, you say there is no inflation? You are correct — the inflation is non-existent in your inflation index, as long as you take out “nonessentials” such as beef, pork, eggs, real estate…
Security of the Ethereum Network
This section is a bit technical and more long term focused — which by the way, is exactly the mindset of folks we want to attract to CitaDAO. This platform is not for a quick flip. In the long term, if USDC or USDT continues to serve as the dominant stablecoin products on Ethereum or any given network, they will play an outsize if not dominant and determining role in deciding how the network may fork in the future.
In the long term, we agree with Sam here, and in fact, are in discussions with teams to build such a primitive to enable a new stablecoin backed by RET — but that is for another article…
In the present now, stablecoins already pose a huge existential risk to the integrity of the Ethereum network and any blockchain where there is a non-trivial amount of centralized stablecoin.
Real Estate is far more decentralized than any single stable coin, as each property will need to be seized one by one through lengthy legal processes in order to freeze any single asset. This is because each RET will have different lawyers, trustees are diversified into different jurisdictions, and there is a large amount of case law/precedent which supports the approach in which RET has been generated.
In the future when there are either new stablecoins generated by collateralized RET (ala MakerDAO and ETH), or when RET are included into different protocol’s collateralization portfolio (e.g., MakerDAO, cream.finance, abracadabra.money), there will be yet another alternative.
In the meantime, we believe that RET and RAI are your best options for a portfolio diversification strategy that will prove superior to centralized stablecoins. When taking into account the Ethereum network’s long term integrity, this is doubly true.
About CitaDAO
CitaDAO.io is a Decentralized Finance (DeFi) platform for Real Estate to be tokenized on-chain, built on the Ethereum ecosystem. CitaDAO aims to solve the lack of liquidity, access limitation, and lack of composability in existing real estate ecosystem by creating interoperability with other DeFi applications/primitives that operate on the Ethereum protocol. Real estate token allows the community to diversify their portfolio on-chain to generate stable yield through real world assets that have constant liquidity through AMM — interested in building the future with us?
Follow us on Twitter: @citadao_io
Join our community on Discord: bit.ly/citadao
Or check out our website: citadao.io
Disclaimer: The information contained in this communication is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. This communication should not be relied upon or the basis for making any investment decision or be construed as a recommendation to engage in any transaction or be construed as a recommendation of any investment strategy
