Consulting for an STO investment platform in real estate
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Consulting for an STO investment platform in real estate

PixelPlex consulted the customer on the development of a real estate STO platform that aims at enabling fractional ownership of housing markets for those who cannot afford to buy a home. We defined the core system components, mapped out the solution’s architecture, and specified the technical criteria needed to deliver a successful solution.

Details

  • Website:Startup in real estate
  • Location:USA
  • Date:2022

Team

  • Blockchain consultants2
  • Business analyst
  • Project manager

Project goals

  • 1

    Define the long-term vision of the investment platform

  • 2

    Research and compile a list of core third-party integrations

  • 3

    Elaborate on the solution’s tech stack

  • 4

    Outline a list of business criteria as well as risks and dependencies

  • 5

    Provide guidelines and advice on security token implementation

Work done

  • Consulting on the development of a fully-fledged STO platform for real estate
  • Creation of a high-level vision of the solution’s key components and architecture
  • Tech stack and blockchain platform specification
  • Research into third-party integrations needed to provide a smooth user experience
  • Refinement and in-depth analysis of the customer’s business strategy
  • Definition of potential business and technical risks

Business opportunity

Our client is a US-based startup in real estate. After analyzing the real estate market, the company found out that many people in the US have limited access to homeownership, and the situation has been getting worse. House prices are rising at roughly 4% per year while in many major cities, property prices have grown by 10-20% annually over the last few years.Determined to make a difference, our client decided to create a blockchain-powered digital platform that would enable fractional ownership of housing markets for those who cannot yet afford to buy a home. The platform is poised to empower aspiring homeowners to invest in their local housing market and provide the best savings vehicle for homeowners-to-be, thereby helping them tap into a multi-trillion-dollar market opportunity.To bring their vision to life and gain a better perspective of the solution and its technical components, the client reached out to PixelPlex as a reliable and experienced blockchain and STO consultant.

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Solution

PixelPlex blockchain and STO consultants analyzed the customer’s requirements and worked out a comprehensive development roadmap, as well as a vision and scope document that encompasses a detailed technical vision of the platform, outlining its core integrations, business risks, and dependencies.We also compiled a list of system components, helped the client select the most suitable blockchain for their digital investment platform, and developed security token implementation options.

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Details

Technical vision

We advised the customer to leverage the following tools and frameworks for the development of their digital platform:

JavaScript
TypeScript
Node.js
Nest.js
Express
TypeORM
REST
JWT
PostgreSQL
Redis
RabbitMQ
Docker
Docker Compose
Kubernetes
Nginx
React
web3-react
SWR
Web3Auth
Solidity
Python
Polygon
Infura
Prometheus
Grafana
Sentry
ELK

Blockchain

The client wanted to create the investment platform on the blockchain since this technology can provide greater inclusion and liquidity in the real estate realm and enable investors to own a small portion of a large portfolio of housing assets. Plus, the robustness of smart contracts allows for the smooth transfer of tokens and seamless income distribution.

Considering this, the client requested our blockchain consultants to execute research into various blockchain platforms, look into their competitive advantages and limitations, and estimate their robustness and viability.

After thorough consideration, we advised the customer to opt for Polygon as it boasts:

  • Great scalability capacity
  • High levels of security
  • Well-developed ecosystem
  • Low transaction fees
A couple during the examination of the real estate

Major features

We thought through and outlined the following core features of the solution:

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KYC/AML

The ability for users to be verified on the platform in order to buy and sell tokens, as well as use other features of the platform

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Funds management

The ability to create fund profiles based on original creation documents for subsequent tokenization and asset management via tokens

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Native tokens

The ability to issue security tokens for each fund so that potential investors can purchase them for profit

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Portfolio management

The ability to monitor the status of investments by analyzing token statistics, investment fund reporting, and the economic health of funds, as well as manage dividends, including withdrawals and reinvestments

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Voting

The ability to make asset management decisions about funds by voting with tokens that represent ownership of those funds

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Reporting module

The ability to create and send detailed, interactive monthly reports. The module displays real-time portfolio status and generates individual monthly and annual reports

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Wallet connection

The ability to connect a crypto wallet in order to buy and sell tokens in exchange for cryptocurrency

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Payment system

The ability to buy tokens by credit card or bank transfer

Key system components

We advised the client that the platform should include the following components:

  • A set of smart contracts hosted on the blockchain

    The Security Token contract is predicated on the ERC-20 token standard and is necessary to verify the possibility of making a transfer.

  • Backend logic represented as microservices

    The backend part is supposed to consist of a set of microservices interconnected by a message broker in the form of an event bus or via the gRPC protocol.

  • Content Management System (CMS)

    A CMS is needed to edit data, such as application content, questionnaires, and FAQs.

  • Frontend application

    The application is responsible for the functionality on the user's side. It interacts with internal APIs (Backend, CRM) and integrates with third-party services such as wallets, blockchain, and KYC providers.

  • Admin panel application

    Similar to the frontend application, the admin panel app provides functionality on the user side but only for users with admin rights.

Third-party integrations

Authentication service

We advised the client to opt for Web3Auth for executing user authorization and authentication because of its ease of use, compatibility with multiple blockchains (including Polygon), and high level of security and compliance.

Payment processing service

After careful consideration, our team proposed selecting Prime Trust as a payment processing service. This will be responsible for controlling the entire payment cycle and monitoring the payment processing system.

Pool management service

Our tech experts recommended the integration of a pool management service for creating new pools with the deployment of new contracts, storing and retrieving general pool information, implementing the initial sale of tokens, and distributing pool rewards.

KYC/AML service

We gave priority to Prime Trust as a KYC/AML provider. Users will be required to pass the KYC procedure to be able to trade and transfer tokens on the platform. After this, the smart contract system will call a whitelist contract that will request the system add the user to the whitelist.

Trading service

A trading service is needed to execute the logic of token secondary sales. It will also be responsible for storing and managing orders, providing access to orders for users to complete a sale or purchase transaction, and monitoring order execution on the blockchain.

Statistics service

The statistics service is needed to generate and keep records of statistical data such as transaction history and token statistics, as well as high-level statistics on funds and investors.

Blockchain service

We advised the customer to leverage QuickNode as a blockchain service. This will serve as a communication link between the system and the blockchain, provide mechanisms for sending transactions to the blockchain, help monitor the status of accounts and contracts, and send events to the event bus when the user's balance changes.

Security token implementation options

Our STO consultants examined the customer’s business case and advised them to consider the three options for implementing security tokens within their campaign:

  • 1Implementation through the T-REX (Token for Regulated Exchanges) standard
  • 2Implementation of the EIP-1400 standard by ConsenSys
  • 3Implementation of ERC-20 in conjunction with Whitelist contract

User roles

Investor

A registered and verified user who has the right to buy/sell fractional ownership in the investment funds, access portfolio management tools, and dispose of the profits generated by investing in the funds.

Administrator

A representative of the client team who, on behalf of legally registered funds, can create fund profiles on the platform. Administrators will also manage the content of the platform, initiate voting, and prepare reports for investors.

Sponsor

A user who creates and issues security tokens for the funds. The sponsor maintains a fiduciary duty to investors and has the ability to manage the assets of the fund.