Decentralized Finance (DeFi) is an emerging peer-to-peer financial system based on blockchain technology that eliminates any middlemen to lend or borrow funds from other crypto users. It is a decentralized financial product and service that functions without any centralized authority, bank & institutions to manage financial transactions. Integrating DeFi with the real estate platform facilitates a seamless investment in real estate properties and provides real-time tracking of properties and high liquidity. How DeFi Affects the Real Estate Industry If you are a real estate property owner, then you will be curious to know how to create DeFi real estate platform and how DeFi affects the real estate industry. Here are some of the key features of DeFi in real estate. DeFi real estate is an evolving platform that aids buyers and sellers in the marketplace to have a smooth and flawless trade of real estate property Anyone from any part of the world can access the DeFi real estate platform and make transactions to buy, sell, and trade real estate properties by tokenizing DeFi offers tokenized fractional ownership that helps attract more small investors with better financing options DeFi real estate applications & services offer quicker transactions and also cater to a lower transaction fee for real estate trading without any intermediaries DeFi Lending and Borrowing Platform Working Model Storing crypto assets in wallets doesn’t accrue any yield, this is where the DeFi Loans help. Users who want to lend their assets to others can utilize DeFi lending platforms by depositing their coins into Smart Contracts The borrowers need to deposit crypto assets as collateral that must be more valuable than the loan amount or at least equal value to the loan amount The lenders will get the newly minted tokens native to the protocol in return Using Smart Contracts the users can lend assets to the borrowers through lending pools Each lending pool has a distinct approach to borrowing, hence it is best to research to identify the interest type before opting for a loan to borrow; same applies to the lender P2P lending allows borrowers to directly go for loans from the DeFi platform These loans help the lenders to earn interest by lending the assets to others Tokenizing Properties Every year that passes, the percentage of tokenizing real estate properties is surging significantly. DeFi smart contracts help to tokenize the assets. DeFi real estate platform, developed on the blockchain network, helps to illustrate any kind of real estate property document and can convert it into digital assets like NFT. Tokens help to prove fractional ownership or authority over assets like holding a share of the company. Tokenization helps you yield a regular income, by lending the assets to others using DeFi platforms. The users can lend assets to the borrowers through lending pools using smart contracts. Smart Contracts Smart contracts connect the buyers and sellers directly which reduces the time and effort in real estate investing. Automated smart contracts help investors save more money as it verifies the identity, ownership, and available funding without any intermediaries. Smart contracts offer diverse ways for users to communicate and also leverage security through blockchain. It helps to tokenize the properties to list on the digital exchange that is available for buyers to purchase as per their specific requirements. Benefits of DeFi DeFi evacuates the maximum number of issues faced by traditional financial systems. DeFi apps help to avert human errors in real estate as it functions through smart contracts. The key benefits of DeFi are: Accessibility Accessibility is one of the key influential factors and main advantages of DeFi applications over traditional methods. Anyone with an internet connection can use it to make transactions from any geographical location to buy, sell, trade, and store assets without obtaining approval from any authority. Transparency DeFi empowers remarkable transparency in the transactions to the users. It significantly improves transparency as every transaction is taking place through the decentralized finance applications and it is visible to everyone. In DeFi all data, code, and transactions are transparent to all and it builds faith among users. Borrowing Speed DeFi platforms help its users to get loans quickly. In the conventional method, the users need to provide their personal data to avail of a loan which may even lead to security breaches. Meanwhile, in a decentralized financial system, the only requirement is the user needs to connect the digital wallet to the site and make a request instead of sharing personal details. The absence of third-party vendors makes the loan approval process faster. The key advantage of DeFi is you can sell a fraction of collateral property if the value rises and repay the mortgage sooner. Fractional Ownership DeFi provides a range of new opportunities in the real estate world by allowing fractional ownership. It eliminates the barriers to real estate investing by offering the choice to break off a huge investment. Small investors can also purchase fragments of a property that helps them to cut the investment capital through a DeFi platform. It also benefits the owners as they can sell the property to multiple buyers. Liquidity Real estate is an illiquid asset as it is a lengthy process and potentially takes more effort to sell and turn into cash. DeFi eradicates the whole concept by trading real estate properties as tokens. The users can trade the properties for fiat currencies through cryptocurrency exchanges. DeFi allows the sellers to trade the properties more easily to get the cash much quicker and turns the real estate into a liquid asset. Future of DeFi In Real Estate DeFi is already starting to revolutionize the financial services in the real estate sector. DeFi has several advantages like transparency and flexibility over the centralized banking system. DeFi will make a huge impact on real estate investing by developing peer-to-peer real estate-related services and transactions without any intermediaries. This decentralized financial system with blockchain technology solutions will be the future of real estate and makes transactions more secure. Photo by on Tierra Mallorca Unsplash
