Blocksquare’s real estate tokenization Protocol provides our Client a standardized method of digitizing the value of a single real estate property, either partially or in full.

The Protocol is the process of creating a ‘PropToken’ smart contract – a standard Ethereum ERC-20 smart contract with a defined maximum issuance of 100,000 digital tokens, extended with unique information identifying a specific real estate property, and additionally limiting transactional rules according to the issuer’s requirements (which users can transact with the tokens is defined within a separate ‘DataHolder’ smart contract).

To transfer economic value deriving from the specified real estate property, a Public Corporate Resolution is created and signed by shareholders of the issuing legal entity. The signed resolution is made public through an upload to IPFS – a distributed file system that ensures the legal document has a fixed online address, while the file itself can not be tampered with after it has been uploaded and becomes in a way public. The location of the file is defined as a unique IPFS hash and recorded within the PropToken smart contract. The ‘PropToken’ now points towards the Corporate Resolution and vice-versa, so the legal effects of the corporate resolution work in conjunction with the tokens managed by the ‘PropToken’ smart contract.

The corporate resolution is used to transfer any and all net revenues (revenues upon deduction of all expenses) that the issuing legal entity generates within the scope of its commercial and trading activity with the specified real estate property to the individual digital token holder of the PropToken smart contract, where 100,000 digital tokens represents 100% of any and all net revenues.

The above method of tokenizing a real estate property or multiple properties forms the Protocol. The protocol combines readily available technologies and legal procedures: