Quobands: A Funding Mechanism for Crowd Construction
19 Pages Posted: 16 Feb 2018 Last revised: 20 Feb 2018
Date Written: February 17, 2018
A quoband is a smart contract that represents ownership of physical property and allows multiple stakeholders to own, fund, manage and invest in it. Unlike REITs, quobands can interface directly with the property title represented as a non-fungible token on the blockchain. The scale of the property can be as small as a house or as large as a city-state or special economic zone (SEZ). A quoband can be used as an open, equity-based mechanism to securitize and crowdfund property development projects in the place of more traditional approaches such as a mortgage. Ownership of the title is divided using tokens, allowing the holder to receive dividends from revenues produced by the property. Quobands can be structured as an equity or a debt, or a hybrid (similar to Mezzanine debt). In a fixed (debt-based) quoband, the issuer would be able to do a “quote recall”- buying back the tokens at an agreed schedule at a set price plus an additional coupon rate until full ownership is regained. For larger commercial or industrial developments such as an SEZ, government land lease or city-state, a floating (equity-based) quoband would be implemented. In this model the issuer would maintain a partial stake and continue paying dividends to investors indefinitely. The token price would float freely on the quote market to reflect the perceived value of the property. This paper lays out a general specification of the quoband model and its application to some real estate development use cases.
Keywords: Blockchain, Proptech, Startup Societies
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