STO Analysis: BlockEstate
BlockEstate is planning to launch its very own security token offering (STO). According to the official whitepaper, the idea behind the project is pretty simple:
Proceeds from the STO will form a fund that can then be used to purchase promising real estate in U.S. (North and South Carolina) with profits from the leasing or resale of the real estate being used to buy out and eventually burn the native token, a.k.a. BEAT. This method will increase the cost of the tokens over time. The remaining profit goes to the acquisition of new real estate and the cycle continues.
The investment will be of two types: long-term and stable assets which are expected to get a 6-9% per annum and high-yielding but risky assets with an expected yield of 15-30% per annum.
The investment scheme is further described in the whitepaper. In particular:
Thanks to its partnership with Polymath, which is responsible for the release of the BEAT security token, the underlying asset will be built according to the ST-20 standard on the Ethereum blockchain. The total number of tokens offered for sale is 100 million but the team has the right to issue an additional 10% for its members in the case of a full collection of caps and an increase in the fund’s estimate of at least 25%. This tokens will serve as a form of performance fee with the BlockEstate team. Team tokens are locked for five years.
In terms of the distribution of proceeds from the STO, the main part (93-99%) in the first year will go to direct investment in long-term real estate projects as described in the scheme above; 0.5% per quarter for operating expenses; and 1-7% of the fund’s value will be held in dollars as a reserve.
Profit Sharing Mechanism
BlockEstate doesn’t have a dividend payout system as such. The company decided to go in another direction: once in a quarter, 50-100% of the profits (depending on the success of the fund) will be allocated toward a token buyout from the exchange and their subsequent burning. This should increase the overall token price on the market.
According to the team, this model is advantageous in terms of taxation. However, the real reason for going down this path could be that the performance fee is in tokens and they have more incentive to increase the overall token price. Also, in 5-10 years, the fund may be disbanded or resold, and all profits could be proportionally shared among investors.
Investor Protection Mechanism
Investor Protection mechanism implies that if the BEAT price drops to 20% or more, the company will initiate the stabilization plan and will use its resources for the emergency purchase of tokens to return them to the previous level.
The team is pretty solid with experience in the sector.Steve Skinner has more than eight years of business development experience. Colby Harris has over 12 years of experience in the finance sector. Brad Galbraith and Rusty Pulliam have a vast experience in the real estate sector, but they seem more of advisers than part of the day to that team.
Advisers come from various companies with which BlockEstate has some partnerships.
Polymath and Matador are responsible for issuance and distribution of the tokens. OpenFinance Network is the future token listing venue. Coinlist will provide the KYC/AML checks.
For security tokens, real estate sector has a chance to be ahead of the rest. The BlockEstate case can illustrate another mechanism for protecting investors and an alternative way of making a profit through burning tokens.
- Official Website: https://blockestate.com/
- Description: ownership of real estate fund shares
- Token Name/Ticker: BEAT
- Type: st-20 security;
- Total Supply: 100 million (tokens have not yet been released), lock 12 months for all investors;
- Token Price: $ 1, bonuses depending on the size of the investment, accept BTC, ETH, and Fiat;
- Hard Cap: $ 50 million.
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