An early overview of the Sonce platform!
Once Upon a Time
The humble beginnings of Non-Fungible Tokens (NFTs) on blockchains have been demonstrated in many proof-of-concept applications — from virtual kittens to trading cards to collectible digital artworks.
These blockchain applications are recent, making their debut just under five years ago. Today, we can already look back at these fun projects as reminiscent artifacts of the good old days of blockchain.
NFTs are now here to stay in the DeFi world — and they’re bringing assets onto the chain like never before.
Betting Against the House
Once real-world assets are tokenized, their DeFi journey can begin. These platforms are backed by companies that handle the tokenization process and serve as a trusted party in the process.
Putting NFTs on the blockchain was a game-changer as decentralized real estate enabled fractional investments. The concept is similar to how NEO, a popular blockchain with indivisible currency, can be traded fractionally with the help of token wrapping in a DeFi environment. Now, investors can diversify even a small portfolio in real estate by investing in numerous properties without having to commit the entire cost of the property, the legal mumbo jumbo, and sale and purchase agreements.
A Security System
Aside from the usual benefits of NFTs being easily tradeable with just a blockchain transaction, tokenization also added a layer of security to the ownership of property through these platforms by making it much, much harder to commit fraud.
However, these platforms are still mainly an interface where a company mints the required NFTs to complete the tokenization process. Tokenization in itself is not particularly complicated — it’s simple enough to be automated.
So why not let a DAO handle the work?
It’s Complicated
The DAO can only do so much. It cannot throw a problematic tenant out of your property, neither can it go on the offensive when it comes to collecting overdue rent.
That does not mean that the DAO is useless on its own. There is a lot of manual work that can be offloaded to the DAO which will also mean an increase in security and improvement in governance.
Meet Sonce — an asset digitization platform by RiveX.
Sonce’s dApp and DAO aim to bring the tokenization industry one step deeper into the DeFi world. While the ideal 100% DeFi solution is still far from feasible or attainable at this point in time, Sonce is a platform that aims to leverage on-chain governance to control how such tokenization is performed.
Once an asset is digitized, an NFT is minted by the DAO itself. When the tokenization is complete, the property is then represented by ownership of the said token.
As real-world assets are merely tokenized and still cannot, as of today, be digitized since the process is handled by real estate companies serving as platforms. This stands as a roadblock to the true, complete tokenization of digital assets.
The keyword here is credibility. If someone offered to sell you their house with just a single blockchain transaction, you cannot be blamed for being hesitant. It does sound too easy. Since off-chain real estate agents are not bound by the same governance administered by the DAO, there is still room for fraud and bad actors to take advantage.
However, the push still continues. The DeFi world in itself has its own checks and measures against bad actors and that in itself, even though limited to the reaches of the DAO and the blockchain, is still better than nothing.
Asset in, Token out
While the digitization of assets is a lot more complicated than putting your title deed into a scanner, the complicated part of the process is handled by a Decentralised Application or dApp.
The Sonce dApp which will soon launch will provide some options for you, just keep in mind that minting property and gold option NFTs directly will not be possible as an end-user of course, but rather handled through a third-party on-demand. The “Standard” NFT minting option will be open to end-users to mint whatever NFTs they wish.
Once you connect your wallet you’ll be greeted by a dashboard with your digital assets and their status. Every digitization is a transaction written to the ETH blockchain — and therefore may take time. You can click on any of these which links you directly to the transaction on Etherscan and to the OpenSea NFT marketplace.
When you are ready to digitize your asset, you can open the digitization screen to begin. You can fill up the required details on the form, attach an image and any associated documents and then mint the required token.
At this point, this is where the dApp starts to work its magic. The coding in the back hashes your uploaded files and prepares to write this data to the ETH blockchain. Once the transaction is ready, you can confirm it and have it transmitted.
When the transaction is mined, the NFT will be minted and sent to your address — and that is it. You have now digitized your asset! This NFT will now be freely tradable on the OpenSea NFT marketplace.
Care must of course be taken in this process, as simple as it is. Remember that the ETH blockchain, like virtually any other blockchain, is immutable — you can never undo a transaction that has been mined, and what has been confirmed stays forever. Therefore you must triple check all your entries before proceeding to mint the NFT that will represent your now digitized asset.
Home on the Range
The blockchain is global and agnostic — it could not care less where you are transacting from. By extension, so is the DAO.
Tokenisation of assets has brought yet another benefit to the world of tokenized real estate — a revolutionary disruption to the world of property investment.
Tokenised assets are no longer bound by regional restrictions — especially the ones set by governments on real estate investment. This is a breakthrough as real estate is an industry highly built on location, location, location. With this development, investors can broaden their real estate portfolio without having to traverse oceans or weave through tricky paperwork. It is tradeable anytime, anywhere.
On the inverse, the Sonce NFT minting system also enables the opposite. Once a real-world asset is tokenized it can be used as collateral for lending and even mining purposes on the chain. Though this application for NFTs is still new, it sits comfortably in the world of DeFi and will find favor easily with both new and seasoned DeFi players alike.
Your Side of the Room
Sonce’s NFTs also allow for fractional trading, similar to the example mentioned earlier. There are many possible applications for this ranging from shared ownership to inheritance arrangements though the most appealing would be to generate income.
Sonce’s fractional trading is made possible by minting ERC-20 fungible tokens parked under the NFT that represents the asset, with each ERC-20 token representing a share of the NFT. From this, the share token holders will be allocated the rights to cash flows generated by the asset should it be rented and allows them to receive a proportional share of such income, which could be from rent or lease.
The Golden Goal
Aside from your own assets, Sonce also brings another exciting trading product to the blockchain — Binary Options.
Binary Options are simple and often fun ways to play with price speculation. Some like it fast-paced, some play the long game. Sonce brings this to the blockchain by minting NFTs that represent different binary options.
A simple explanation about how Binary Options work is to place a bet on whether the price of an asset will be above or below a value at a certain time. This value is known as the Strike Price. A PUT option means you bet on the price being higher, while a CALL option bets on the price being lower.
Instead of how Binary Options are presented in some mobile apps, each Sonce Option NFT available for purchase would state whether the option is a PUT or CALL, the strike price, and the expiry time. When you see an option you resonate with you can opt to purchase the option and write the transaction to the blockchain. This would indicate that you have selected the said option.
Since the strike price, expiry time, and the option are embedded in the NFT, the user can hold onto the NFT indefinitely. If the purchase should be entitled to a reward because the option selected turned out to be correct, the user can transfer the option back to the Sonce DAO to receive their rewards. If not, they can keep and ignore the NFT in order to save on gas.
If the price exceeds the strike price at the expiry time, the reward will be the premium paid for the option NFT plus the difference between the strike price and the price at the time of expiry. If the price is lower than the strike price at the expiry, the premium is deemed forfeit. More on this in a future article!
About RiveX Foundation
RiveX is a chain agnostic interoperable layer-2 solution across different blockchain protocols. RiveX aims to empower the next generation of decentralized applications, decentralized finance, and enterprise solutions. RiveX has comprehensive interoperable DeFi solutions such as RX Wallet which aims to integrate DAPPS from different blockchain protocols to enable an interoperable DeFi ecosystem within RX Wallet itself.
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