Problem statement

Buying, selling and managing real-world investment properties is a struggle. It takes a lot of time and paperwork.

Elevator pitch

Interact with strangers on the blockchain and exchange value and services with minimal risk by participating in a network of trust that anyone can verify.

Solution to the problem

I believe that soon people will want to represent real-world properties as equity tokens. Those properties will be tradable and have many fractional owners. There will be a need for trusted property managers responsible for maintenance, recurring payments of dividends etc. Today there is no way to build human trust on blockchain thus there is no one to manage those real-word properties and there is no infrastructure which could facilitate this kind of marketplace either. Smart contracts designed in line with a new standard would provide verifiable past performance and provide a way to earn reputation and trust.

There is a need for a standard way of assigning some trust score to entities like property managers on the Cardano blockchain. This is how it could work: Listing entity (company that legally and outright owns some property) sells shares of a property by minting equity tokens and offers them at the market at the price they want to it sell for. Along with tokens, property’s master wallet is created. Master wallet (governed by smart contract) receives all income generated by property to later distribute it fairly. Master wallet is responsible for minting and burning trust tokens. Investors (wallets that own equity tokens) using their private keys will:

• vote on various decisions,
• approve or disapprove property manager’s actions,
• receive their share of profit generated by the property. Property manager (person or a company represented by identity token) maintains property and takes a fee for doing it. If investors are happy, property manager will be allowed to burn trust tokens they receive periodically together with money to cover agreed upon property expenses. This process will increase their trust score in the network. Not burning trust tokens will decrease their trust score. If multiple dapps developers would implement standard way of recognizing and assigning new trust score it would incentivise people who need to be trusted to invest in their credibility, because it would not be tight to a single application or company but it would be for ever recognizable by anybody with access to internet thus creating a network effect. You are property owner and need trustworthy manager → you ask potential managers to send a signed message with a proof that they successfully manage or used to manage such and such wallets. You are an property manager and looking for customers → you make sure your potential customer is on Cardano blockchain. Only this way you will work for money and provable trustworthiness which will accumulate accumulate over time and bring you more business.

Example

Imagine a real-word investment property like old-school vending machine (but really could be anything physical). There are couple of problems with it:

1. It is expensive.
2. It needs space, it can break.
3. Income will not be in digital currency (you need to trust somebody to convert it to crypto). So what happens if we tokenize it? First of all, we can crowdfund the purchase, so the first point is out. But there is no way to solve the other two problems without a real human manager which exists on the blockchain. We need somebody to fix it when it breaks (which means they must have access to some money to which owners also have a right), and because it is an investment we need a way to receive dividend and prove its performance to the next investor when its time for us to sell our share (good dividend will likely increase price of the property). Along the way there will be decisions to make, like for example: do we want to sell Coca-cola or Pepsi? Do we want to change location of our machine from expensive shopping center to cheaper collage campus or not? Good property manager will execute on those decisions and should be awarded with universal trust score which will be accepted by others (but not transferable to others). I believe this is all possible to implement on Cardano blockchain.

Plan

My plan is to:

1. In 4 weeks develop set of smart contracts in Plutus that will serve as a proof-of-concept for this imaginary scenario. This will include contracts driving: master wallet, decision voting and manager approval or disapproval.
2. In one week create a website with basic introduction to the standard and explain purpose it serves to attract developers that don’t have yet experience with Plutus.
3. In one week create a technical documentation for how similar contracts must be created in order to have compatibility between them. I estimate it will take me up to 6 weeks learning and working full-time to complete. Requested funds will cover:

• $500 website design
• $7500 my compensation as Plutus developer.

Challenge question: What applications will provide the most value for end users in 2021?

My new standard will introduce new currency to the crypto economy which is human trust. It will be measured in actual dollars spend on things that were promised they were going to be spend on. If successful, it will have a huge impact on what developers will be able to build on Cardano blockchain when utilizing this new standard. You will be able to implement things like: insurance, arbitration, more transparent ICOs, peer-to-peer lending, property management (as explained in detail) and many more areas of life where trust and reputation are essential.

Challenge metrics impact

It might take longer time but potential for impact is massive. Trust is something that does not exist today on blockchain. In fact trust-less nature of blockchain is what attracts a lot of people to the crypto space, but I believe that if we introduce trust back to the blockchain it will only broaden its appeal and provide completely new possibilities.

Definition of success

• In 3 months I will be able create my own dapp following this standard.
• In 6 months at least one other developer will create dapp based on this standard.
• In 12 months people will invest time and money to gain trust and reputation on the network.

Next steps

If successful, my next step would be to create a blockchain explorer website where instead of all transactions I would focus only on transactions related to smart contracts adhering to my standard. That would include all actions related to: decision making, approvals, ownership changes, payments etc. Based on all those inputs I will also be able to calculate trust score for property managers.

Comparison with other ideas

Native tokens for physical assets (https://cardano.ideascale.com/a/dtd/Native-tokens-for-physical-assets/351135-48088) - focuses on distinguishing tokens with metadata but lacks solution for interactions with those tokens (like voting and delegating entities responsible for managing assets). If there is a standard way of representing physical tokens I’ll definitely take advantage of this but my plan is to do so much more then that. Decentralized real estate (https://cardano.ideascale.com/a/dtd/Decentralized-real-estate/351225-48088) - my idea is not to have single marketplace for curated assets, but to create a standard that will allow co-existance of many different markets (and to create so called ecosystem). They just need to agree that they respect trust score that was created on any of the other platforms and implement smart contracts following common standard so people can earn trust using their service. An authentic review ecosystem (https://cardano.ideascale.com/a/dtd/An-authentic-review-ecosystem/352771-48088) - I believe that it is possible to have trust without KYC identity verification. Trust is earned by executing on shareholders decisions and not by showing some papers.

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