How Does RealT Tokens Work?

Each property is held by a separate LLC; RealTokens represent fractional ownership shares of that LLC, granting proportional rental income and property value appreciation

Novel legal structure wrapping real estate in LLC shares tokenized on Gnosis Chain. Regulatory classification (security vs. utility) varies by jurisdiction. Only available to accredited US investors and non-US investors.

Weekly rental income from physical properties is collected off-chain and distributed on-chain to RealToken holders proportional to ownership share

Bridges physical rental cash flows to on-chain yield. Critical dependency on off-chain property management quality — tenant payment collection, maintenance, vacancy management all happen off-chain with limited on-chain verification.

RealToken Money Market (RMM) built on Aave V2/V3 fork allows RealToken holders to borrow stablecoins (xDAI/USDC) against their tokenized real estate at up to 50% LTV

Aave fork adapted for illiquid RWA collateral. Key risk: liquidation of RealTokens requires finding a buyer for tokenized real estate fractions, which have very thin secondary market liquidity.

RealToken prices are set by RealT based on property appraisals and rental yield calculations, not market-driven price discovery

Centralized price oracle controlled by the issuer. No independent price discovery mechanism. Property valuations may lag real market conditions, especially during real estate downturns.

REG (RealToken Ecosystem Governance) token distributed via airdrops over 5 years for community governance of RMM and ecosystem parameters

Governance is nascent with limited participation. 500M total supply distributed over 5 years. REG FDV is minimal relative to ecosystem TVL.

RealT charges property management fees (typically 10-12% of rental income) plus tokenization and transaction fees

Standard real estate management fee structure. Revenue depends on maintaining high occupancy rates and rent collection efficiency across 500+ properties.

RealT manages 500+ properties with reported serious habitability issues — mold, structural failures, unpaid taxes totaling $3M+. Detroit sued RealT and 997 affiliated entities. If property management collapses, rental yields stop but token holders have limited on-chain recourse.

RealT sets its own token prices used for RMM lending collateral valuation. In a real estate downturn, RealT could delay marking down property values, allowing borrowers to maintain positions backed by overvalued collateral. Conversely, sudden revaluations could trigger mass liquidations with no liquid market to absorb them.

RealTokens have extremely thin secondary market liquidity on DEXs. During a real estate crisis or RealT operational failure, token holders cannot exit positions quickly. RMM liquidations would push tokens onto a market with insufficient buyers, causing cascading value destruction.

RealTokens are securities offered via Reg D exemption to accredited US investors and Reg S to non-US. If the SEC determines the offering is non-compliant or RealT fails to maintain exemption requirements, token trading could be halted across platforms.

Operating primarily on Gnosis Chain limits DeFi composability and user access. Low Gnosis Chain validator set and limited network effects create infrastructure dependency risk for the entire RealT ecosystem.