Cryptonews Podcast host Matt Zahab recently chatted with Jag Singh, the CEO and co-founder of re.al, a Layer-2 built to facilitate deep on-chain liquidity for tokenized real-world assets (RWAs).
In an exclusive interview, Singh talked about the massive benefits of tokenizing the right RWAs, which assets the crypto natives have the most appetite for, and what new RWA use cases are on the rise.
He told us about buying and renting a property in just 15 seconds, as well as the upcoming re.al rewards program.
10x Better User Experience
Tokenization of real world assets has significant potential, not just for crypto, but the economy as a whole.
Some of the well-known benefits include instant transferability, proof of ownership, and deep liquidity, Singh said.
An easy-to-understand use case, he continued, is buying a property.
Going the TradFi route, purchasing a property, renting it, and collecting the rent, are all processes that require a long time and plenty of paperwork to complete.
But on-chain, it’s completed in fifteen seconds.
The property is tokenized and already tenanted, and the rent is regularly deposited into the owner’s wallet in USDC.
The owner may want to borrow against it or sell it, which also takes a few clicks.
“Just that process, the kind of user experience is 10X better,” Singh said.
The RWA sector is poised to become a dominant force in the crypto industry over the next decade due to several factors:
• Practical applications of RWA
• Interest from major players
• Optimism among experts pic.twitter.com/g8uvRDsyTy— AlΞx Wacy
(@wacy_time1) August 16, 2024
Re.al buys properties through a separate entity and then sells them. At the moment, it’s not homeowners themselves directly making sales, but that should come later, he added.
The system will become more decentralized in the future and will come with onboarding ramps for more people to plug into the chain themselves.
In the meantime, the process is a lot more efficient. The team has removed the lawyers, the paperwork, and the manual work of buyers going to find the property, as well as the need to collect the rent themselves.
“All of the headaches taken away from you, all of the costs are kind of abstracted away from you,” Singh stated.
Also, at the moment, re.al focuses on ensuring that the yields are high on single family residential properties, because “that’s ultimately what our user base is looking for.”
New Use Case: Payment-Free Mortgage
Another use case the re.al team is excited about, Singh said, is on-chain loans against the property.
The way RWA works, users don’t pay interest every month in the same way they would with a mortgage. “It just eats into your collateral.”
For real estate, the typical interest rate on-chain increases by some 5% a year.
Therefore, said the CEO, “what you end up with is a payment-free mortgage, payment-free loan, which I think is a very appealing product if you can package it correctly and get the regulatory stuff sorted.”
This payment-free loan doesn’t currently exist. However, the average American spends more than half of their income on their primary dwelling. Imagine freeing up those funds, the CEO suggested.
As the tech progresses and unlocks areas we previously couldn’t understand, “I think we will find novel use cases and things that weren’t previously possible because of the composability of DeFi,” he said.
Exciting times for re․al and the @arbitrum ecosystem!
Arbitrum is rolling out major technical upgrades through 2024 and 2025, and as an Arbitrum Orbit chain, re․al is set to benefit in big ways.
Let’s break down what these updates mean for the future of re․al https://t.co/vaJKGur46t— re.al (@real_rwa) August 21, 2024
Furthermore, on the crypto native side, there’s a demand amongst most crypto/DeFi native users for real-world assets that basically allow people to diversify and hedge their gains.
DeFi natives have capital sitting on-chain and want to keep it there.
“In the short term, that’s what I’m most excited about,” Singh said, “building for that audience that’s already here right now and just wants more and more assets, basically, so that their entire network, everything will just sit on-chain.”
Tokenized Watches Are Out, But Speculating on Their Price is In
Besides real estate, re.al sees a lot of appetite in a few other areas as well.
Notably, watches and wines aren’t it.
The team spent a lot of time making partnerships and handling the logistics that such large services demand – but there was no demand.
For watches specifically, people want to wear them, Singh argued. They don’t want to keep them on-chain.
However, what they want to be able to do is speculate on their prices. “This is going to go up,” the CEO remarked. “I think that’s probably more fitting than tokenizing them directly and bolting them.”
Therefore, re.al is actively seeking a team now to work with and build something like this on-chain.
Speculators serve an important purpose, but dnt forget builders pump our bags. The pendulum has swung too far, a swing back is inevitable
— Jag Singh (@jagTNFT) August 8, 2024
Another opportunity lies in the demand from family offices and high-net-worth individuals for tokenizing art and similar RWAs.
“They basically want to take an on-chain loan against this thing [and] get the USDC,” Singh remarked.
Rewards Season Two is Coming
Singh remarked that the team now focuses on total-value locked (TVL) and liquidity. Everything could potentially be tokenized, but the question is how to build demand among crypto natives.
A related focus point is re.al’s rewards/points program. Season 1 is ending with August, and Season 2 begins.
Additionally, a live calculation of all points/rewards for transparency.
That is, for every 1000 points, you get 1 $RWA. The points multiplier is explicitly communicated, and users get 10% for the users they refer.
You can use my ref link here: https://t.co/tkbnUuvbkO— Viktor DeFi
(@ViktorDefi) August 28, 2024
While Season 1 focused on TVL, as well as getting the chain up and running, Season 2 will prioritize builders, onboarding more people into the ecosystem, building core pieces of DeFi infrastructure, and other tokenization protocols.
Therefore, in the near-term future, said the CEO, the team expects to see “a bunch of new protocols” launch on the chain, “lending, leverage yield farming and different assets being tokenized on the chain,” he concluded.
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That’s not all.
In this interview, Singh also discussed:
- a value-accruing token that accumulates all L2 fees so the governance token holders get back 100% of sequencer fees in ETH;
- calculating yields in RWA;
- re.al talking to a variety of tokenization protocols;
- thoughts on Blast, Polygon, and Arbitrum;
- TradFi adopting the 24/7 crypto-market system is a challenge but not impossible.
You can watch the full podcast episode here.
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About Jag Singh
Jag Singh is the CEO and co-founder of re.al, a Layer-2 built to facilitate deep on-chain liquidity for tokenized real-world assets (RWAs).
re.al seeks to redefine how RWAs are integrated into decentralized finance (DeFi), using yield-generating real-world assets as novel building blocks in existing DeFi primitives.
The post Jag Singh, CEO of re.al, on 10x Better User Experience with RWA Tokenization and Buying a Property in 15 Seconds | Ep. 365 appeared first on Cryptonews.
