Diversification Via Non-Custodial RWA Investments

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7 May 2024

Under Siege
Self-custodial solutions have been under heavy attack, especially within the United States. Many are calling for the outright ban of self-custodial wallets as DeFi protocols, specifically DEXs, continue to experience tremendous opposition. Resistance is often indicative of the right decision, and by the right decision I mean the most beneficial, or advantageous.
We have discussed tokenization at length over the years, especially as a technology that will eventually trigger a mass migration of real-world assets onto the blockchain. Many influential individuals and entities have echoed this in recent months, and is an affirmation of what was predicted many years ago.
The aspect of custody is of course still a huge concern for many. However, while self-custody is still an option, it provides an avenue of diversification for investors who are not so sold on the idea of Crypto, or, wish to hedge their Crypto portfolios during bearish seasons. Physical investments that are simultaneously owned and “held” in a private and digital form are of course the apex of real-world assets.
Tokenized real estate is an avenue of real-world assets that I have previously addressed as a viable alternative for the more traditional investor who wishes to gain a greater level of freedom and ownership rights. Furthermore, it’s an upgrade, which can simplify and enhance the current forms of ownership.
For example, owning and purchasing property tokens via a platform like Lofty.ai enables the digital ownership of fractional real estate. Not only that but tokens can be withdrawn from the platform and held in a non-custodial wallet. The Lofty.ai tokenized model runs on Algorand, enabling anyone with an Algorand wallet to have private custody of their tokens.
Eventually, all ownership will be in the form of a digital certificate/token. As I mentioned earlier, the finer points of regulation regarding custodial solutions still need to play out. That being said, not all regulatory laws are equal, or standardized. Some jurisdictions are more favorable regarding Crypto. The recent exit of Cryptoneurs from the UK is a good example.
Many wealthier Crypto enthusiasts are moving to Dubai, especially those who are operating Crypto-based businesses and YouTube channels. The ongoing negativity and uncertainty have finally triggered a mass exodus. This will continue until there is clarity, as well as if the provided clarity is favorable or not. Essentially, those with means will go where they are treated best.
A Viable Bull Market Exit Strategy
Many will be looking to exit into stablecoins when a perceived cycle top is in sight. However, another viable alternative might be in the form of traditional assets, including real estate. The fact that these assets can be held in exactly the same form as traditional Crypto assets makes this idea a lot more palatable to the Crypto enthusiast. Investing in real estate via Lofty’s tokenized model is relatively inexpensive.
A single token is usually near $50, although I have seen tokens trading at lower valuations. Interested parties can make use of the following link to receive a $50 gift certificate, which can be used to give your tokenized real estate portfolio an initial boost. Several platforms offer a similar type of product to Lofty. However, Lofty is more of a true blockchain-based, tokenized model to others.
Another RWA project that has recently piqued my interest is Polymesh, which appears to be another top-notch project built on Polkadot/Substrate and is essentially a layer 1 blockchain due to it being a parachain. Polymesh is designed for regulated securities and promises to provide a truly professional and fully regulated experience. Lofty.ai gives you direct access to own fractions of physical properties via a tokenized model, while Polymesh is more of a speculative investment.

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Final Thoughts
Homes in America have seen a sharp increase in value in recent years, and choosing to rebalance some Crypto profits into tokenized real estate investments might be a great idea. At the end of the day, real estate trumps cash so together with a stablecoin allocation there should be an investment in real estate or another asset of a similar nature. Real estate tokens are also a lot more liquid than traditional real estate.
This enables investors to seamlessly rotate capital between their real estate and traditional Crypto portfolios. Tokens tend to appreciate along with the market, and simultaneously, offer rental income. In other words, the ROI is twofold. The appreciation in terms of the valuation of the property, as well as the rental income. It can simultaneously also function as a hedge. Anyway, that’s it for this one. See you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.