Crypto Mortgage

How DeFi is transforming the real estate industry

By Milo

May 8, 2023 4 min read

Table of contents
How DeFi is transforming the real estate industry

Real estate has long been a popular investment choice due to its potential for long-term returns. However, the traditional real estate investment process can be slow, expensive, and complicated. Decentralized finance (DeFi) is an emerging field which strives to address the downsides to traditional finance through the development of faster, cheaper, and more accessible way of investing in real estate. Here, we'll explore how traditional and decentralized finance can work in tandem to achieve optimal outcomes in real estate investing.

Key takeaways

• Tokenization & blockchain technology enhances liquidity, accessibility, and streamlines transactions in real estate investing. • Cryptocurrency volatility and DeFi's lack of regulation can pose challenges. • Successful DeFi use cases in property tokenization and sales showcase potential industry transformation.


Examples of how traditional and decentralized finance can be combined to achieve optimal outcomes

One way to combine traditional and decentralized finance is through tokenization. Tokenization involves creating digital tokens that represent ownership in a real-world asset, such as a piece of real estate. These tokens can then be traded on decentralized exchanges, providing investors with increased liquidity and access to a wider pool of potential buyers and sellers.

Another way to combine traditional and decentralized finance is through the use of blockchain technology. Blockchain technology can be used to create smart contracts that automate real estate transactions, reducing the need for intermediaries and streamlining the process. For example, a smart contract could be used to automatically transfer ownership of a property to a buyer once certain conditions have been met, such as the completion of a home inspection or the transfer of funds.

Explanation of potential risks and limitations

While combining traditional and decentralized finance can offer many benefits, there are also potential risks and limitations to consider. One risk is the volatility of cryptocurrency prices. If the value of a cryptocurrency used to purchase real estate drops significantly, investors could suffer significant losses.

Another risk is the lack of regulation in the DeFi space, which could lead to fraud or other illegal activities. Bad-actors have been able to exploit vulnerabilities within several aspects of DeFi in order to steal digital assets. In addition several DeFi platforms have liquidated or transferred user assets without authorization, effectively robbing user of their digital assets.

Real-world examples of traditional and decentralized finance working together in real estate

The use of DeFi in real estate transactions has already been demonstrated in several real-world examples. For instance, in 2021, Propy, a real estate technology company, partnered with Securitize, a DeFi platform, to tokenize a $30 million property in California. This collaboration allowed investors from all over the world to participate in the sale of the property using cryptocurrencies. Another example is the sale of a $22.5 million Manhattan townhouse in 2021, which was made possible through the use of blockchain technology and smart contracts. These examples show the potential for DeFi to transform real estate transactions by increasing accessibility, reducing costs, and improving transparency.

The collaborations between traditional and decentralized finance in real estate have the potential to greatly benefit investors by offering increased liquidity, access to a wider pool of potential buyers and sellers, and streamlined transactions. However, the lack of regulation and potential volatility in the DeFi space should also be taken into consideration.


The bridging of traditional and decentralized finance in real estate is an exciting development with many potential benefits, but it is not without its challenges. By combining the strengths of both traditional and decentralized finance, investors can access new opportunities in real estate investing. Looking ahead, we can expect to see further integration of traditional and decentralized finance in the real estate industry, as the benefits become more widely recognized and the technology becomes more widely adopted.

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.


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