How Blocksquare is Bringing Property Investment to the Masses

In this exclusive interview, learn about the journey from Ethereum exploration to creating a platform that brings transparency, liquidity, and accessibility to property investment. Blocksquare’s unique approach allows investors to own fractions of real estate assets, simplifying investment and transforming property management.

Ishan Pandey: Hi Denis, I am thrilled to welcome you to our "Behind the Startup'' series. Could you please provide insights into your background and what motivated you to co-found Blocksquare?

Denis Petrovcic: Hi Ishan, thank you for extending your interview invitation. I have always been deeply fascinated by the built environment and how it influences our daily lives.

Real estate is the largest asset class in the world, however, extremely inaccessible as an investment and most people around the world will never be able to ripe the benefits of investing in a cash-flowing asset that is the backbone of the fundamental parts of our economies.

In early 2016 I came across Ethereum and started digging into it and it was around that time when my first thought of transferring the value of a single real estate asset onto tokens came to mind. A year later, Blocksquare started to take shape and today we have grown into an amazing team of 35 people that has so far brought $100M worth of real estate assets on-chain across 20+ jurisdictions.

Ishan Pandey: Could you explain how Blocksquare's real estate tokenization system works and how it differs from traditional real estate investment methods?

Denis Petrovcic: Sure. Blocksquare's system converts any single real estate asset into 100,000 digital BSPT tokens. These BSPT tokens are unique to each property and allow multiple investors to buy, own and trade fractions of the property, making real estate investment more accessible.

Our platform also simplifies the distribution of rental income, which is automatically sent to token holders. Trading these tokens is straightforward and secure, as it happens directly on the Ethereum blockchain without intermediaries.

Compared to traditional real estate investment, tokenization lowers the barrier to entry and provides greater liquidity. Investors can buy small portions of a property and trade these shares easily, unlike traditional real estate which often requires significant capital and is harder to sell or buy. Plus, the blockchain ensures transparency and trust in all transactions.

In essence, Blocksquare makes real estate investment more accessible, liquid, and transparent.

Ishan Pandey: What potential benefits does tokenization offer to both investors and property owners?

Denis Petrovcic: First of all, access. Today, you can get exposure to a specific real estate market in a matter of minutes. For investors, tokenization lowers the barrier to entry, allowing them to diversify their portfolio with real estate assets without needing substantial capital. It also provides liquidity, as tokens can be traded on secondary markets, enabling investors to easily buy and sell their stakes.

Additionally, tokenization is set to create new ways of collateralization and property-backed peer-to-peer lending.

This opens up innovative financial opportunities, expanding how real estate assets can be used and invested in. Platforms like Oceanpoint will drive protocol-driven liquidity engines, enhancing user-driven secondary markets and making the trading of these assets even more dynamic.

For property owners, tokenization offers a new avenue to raise capital by selling fractional ownership of their assets. This flexibility can be particularly useful for managing real estate portfolios. It can also streamline property management and reduce administrative costs through smart contracts, automating tasks like rent collection and profit distribution.

Furthermore, tokenization can facilitate rent-to-own agreements between tenants and landlords, providing a clear path to homeownership for tenants while giving landlords a steady income stream and potential for future sales.

In summary, tokenization democratizes real estate investing by making it more accessible, liquid, and transparent, while also introducing new financial mechanisms and simplifying property management for owners.

Ishan Pandey: Oceanpoint.fi represents Blocksquare's entry into the DeFi market. How does this protocol bridge the gap between decentralized finance and real estate assets, and what opportunities does it unlock for investors?

Denis Petrovcic: Oceanpoint is our innovative solution to connect DeFi and real estate. It's an open-end DAO that tokenizes real estate assets, making them more accessible and liquid within the DeFi ecosystem. Oceanpoint is currently in a protocol build-up phase, with each new iteration bringing us closer to v1.0 — a liquidity engine for instant buying and selling of tokenized real estate assets across our ecosystem of partner marketplaces.

For example, a relatively new feature, Oceanpoint v0.4, allows anyone to own tokenized real estate and earn boosted returns through staking. While staking property tokens isn't mandatory to earn revenues, it lets users redirect their proportion of rental income paid in stablecoins to the DAO's treasury, in exchange for receiving a potentially higher compensation in BST.

Another exciting development, launching in Q2 2024, is Oceanpoint v0.5, which introduces Marketplace Pools. These pools work as a launchpad and enable participants who stake BST to support new and emerging certified partners, helping them launch their own tokenized real estate marketplaces using Blocksquare's infrastructure. This feature is set to create a truly global network of marketplaces, connecting investors to regional real estate opportunities and fostering growth of our partners ecosystem.

In summary, I would say Oceanpoint bridges the gap between DeFi and real estate and unlocks new opportunities for both property owners and investors, enhancing liquidity, access, and returns in the real estate market.

Ishan Pandey: Blocksquare has been recognized for its innovative approach to real estate tokenization. Can you share any insights into how the industry has evolved since Blocksquare's inception?

Denis Petrovcic: Since Blocksquare's inception in 2017, the real estate tokenization industry has evolved significantly. Knowledge and acceptance have increased, solidifying the industry's presence as one that is here to stay. The institutionalization of Bitcoin with ETFs has also brought more trustworthiness into the crypto industry.

Our infrastructure and platform have evolved into a robust product that any company can use to enter the real-world asset (RWA) tokenization market in a matter of weeks. We have a proven track record to back this up, demonstrating the effectiveness and reliability of our solutions.

Additionally, the entry of major financial institutions like BlackRock into the tokenization space highlights its potential. BlackRock's initiatives, including partnering with Securitize to tokenize assets and launching a tokenized fund, underscore the growing recognition of tokenization's transformative power.

Overall, Blocksquare has been at the forefront, driving the adoption of real estate tokenization and shaping the future of the industry.

Ishan Pandey: What regulatory challenges and considerations does Blocksquare face in its operations, and how does the team navigate these complexities to ensure compliance and security for users?

Denis Petrovcic: Navigating the regulatory landscape is a top priority for us. Real estate tokenization involves compliance with various financial regulations and real estate laws. We work closely with legal experts to ensure compliance, conduct thorough KYC/AML checks, and maintain robust cybersecurity measures.

A major milestone was the world's first notarized tokenization of a real estate property, integrating with the Slovenian land registry. This breakthrough makes transactions legally binding and unlocks a potential $16 trillion market. Our approach ensures secure and transparent property ownership by combining blockchain technology with land registries.

In 2024, we started working with CMS Law to further enhance our compliance framework. This collaboration helps us navigate complex regulations and maintain high standards of legal and regulatory compliance.

By achieving these milestones and adhering to stringent standards, we provide a secure and compliant platform for our users, positioning Blocksquare as a leader in real estate tokenization.

Ishan Pandey: With the rise of tokenization, how do you see the future of real-world asset (RWA) tokenization evolving, and what role do you envision Blocksquare playing in this future landscape?

Denis Petrovcic: The future of real-world asset (RWA) tokenization is incredibly promising. As more assets become tokenized, we’ll see a significant increase in liquidity, accessibility, and transparency across various markets. Tokenization allows for fractional ownership, making it easier for individuals to invest in high-value assets like real estate without needing substantial capital.

While Larry Fink, CEO of BlackRock, predicts that "the next generation for markets is tokenization," I personally believe that in the real estate context, it is likely that thousands of marketplaces will facilitate billions in real estate value transactions among millions of users. The main reason is that real estate is very local and hard to scale across jurisdictions.

At the heart of Blocksquare's vision is the creation of a vast network of marketplaces operated by third-party Certified Partners, connecting investors to regional real estate opportunities. This decentralized approach allows us to cater to the unique characteristics of local real estate markets while leveraging our global platform.

I envision Blocksquare playing a pivotal role in this evolving landscape. Our platform and technology are designed to streamline the process of tokenizing real estate, making it simple and efficient for property owners and investors alike. By continuing to innovate and expand our offerings, we aim to set industry standards and drive widespread adoption of RWA tokenization.

In the future, I see Blocksquare not only facilitating the tokenization of individual properties but also enabling the creation of diversified real estate portfolios and new financial products. We’re committed to empowering users with greater investment opportunities and contributing to the growth and maturity of the tokenized asset market.

Ishan Pandey: How does the increasing value of cryptocurrencies like Bitcoin impact the tokenization of real-world assets, particularly in terms of investor sentiment and market dynamics?

Denis Petrovcic: The increasing value of cryptocurrencies like Bitcoin significantly impacts the tokenization of real-world assets. As cryptocurrencies gain value and mainstream acceptance, they bring more attention to blockchain technology, which is essential for asset tokenization.

Higher cryptocurrency values boost investor confidence in digital assets, making them more willing to explore tokenized real estate and other assets. This growing interest increases demand, liquidity, and market activity for tokenized investments.

Additionally, as institutional investors and major financial entities engage with crypto, the credibility and acceptance of blockchain-based investments rise. Investors who have profited from cryptocurrencies are also more likely to diversify their portfolios with tokenized real estate, seeking stable, long-term assets.

In summary, the rising value of cryptocurrencies enhances investor interest in tokenized real-world assets, driving adoption and liquidity. This trend supports the growth of organizations like Blocksquare, enabling us to innovate and expand our offerings to meet increasing demand.

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