From Chaos to Control: The Benefits of Investing In Digital Real Estate With Parcl🏡
Key Takeaways🍿:
- The US real estate market has been in a consistent downtrend since 2010–2011 due to a combination of factors and failures🇺🇸
- Solana’s Priority Fees have increased the cost of spamming the Solana network, resulting in less inefficient transaction processing☀️
- Parcl offers investors the opportunity to expose their portfolios to single-family homes, townhouses, and condos with as little as $1 and up to 10x leverage🏡
INTRODUCTION:
The year is 2045 & we all live inside, not inside our homes but inside this digital world that has been brewing since the turn of the decade. A shift that we all could foresight is now extending into the world of real estate, providing a dying market a lifeline. Before we explore the concept of digital real estate and how it can alleviate some of the persistent issues that centralized systems create, we need some background as to how the past 5 years have led to a housing crisis tipping point.
The 5-Year Slip-Up📉:
It has been argued by macro analysts at length about the fundamental issues that have led to a plagued housing market. Analyzing the chart above, we can easily conclude a chart (which looks like a shi**coin) that has been in a consistent downtrend since 2010–2011. A combination of factors and failures have led to this, but the existing home months supply can be the first example of the shortage in affordable housing options. This leads to demands for housing to outpace the supply affecting low-income households.
Digital real estate cannot provide a solution to the degree of homelessness. This is different from what this analysis suggests; however, the FAILURES in the housing market can suggest that digital real estate can be an entry-level option providing more respectable investment returns than the scope of housing. There is an element to the housing market that isn’t just about people having homes but also people making money on homes which is where Parcl creates the evergreen solution.
Solana’s Return To The Promise Land☀️:
Q1 of 2023 proved the robust ecosystem behind Solana and overall developments, which have contributed to ongoing growth initiatives & investment in the ecosystem by The Solana Foundation. Many users on Solana are often concerned with network outages & the safety issues that come with a weak network; however, with “Prority Fees,” the cost of spamming the Solana network has increased, resulting in less inefficient transaction processing. According to Messari’s State Of Solana Q1, this average will likely increase with more Solana native wallets introducing and integrating priority fees.
Failing Housing Market + Solana Uptrend = Parcl Product Market Fit 🔺
Many projects in this industry need help finding their product placement to match the overall needs of a wider audience. Often crypto solves problems never created in the first place and matched with dormant ecosystems.
Solana is eliminating its problems, and the overall Housing market is continuing its trend. This means Parcl can come in and kill two birds with one stone.
With access to over 5 million properties with NO minimums, Parcl offers investors the opportunity to expose their portfolios to single-family homes, townhouses, and condos with as little as $1. Real estate investing for traders needs to take the next step up to counteract the failures of the housing market. With up to 10x leverage, users can consider longing & shorting real estate markets to access the returns on property values for high-demand cities like New York, Miami, or San Francisco.
As assessed previously, the state of housing isn’t promising. With Parcl’s mission towards diversity and sustainability, cities on Parcl maintain a cumulative annualized volatility of around 7% annually.
Knowing the background around Parcl and where the solutions come in for the market allows us to look further into how an ecosystem of value has been created around digital real estate products.
Parcl creates value through its propositions, creating a fully immersive decentralized approach to real estate markets.
Parcl Value Propositions:
- No Minimum Investment
- Accessibility
- Broad Exposure
- Precision Data
- Ease To Use
These value propositions, coupled with the architecture of Parcl, creates what is a real estate investing experience tailored to crypto natives.
The Architecture & Advantages👨🔧:
Achieving mass adoption by aiming to disrupt archaic markets is always a risky business model; however, Parcl is already familiar with the scope of risk as their story began during one of the most perilous times in history, COVID-19. While the pandemic resulted in real estate valuations fluctuating like never before, founder Trevor Bacon considered the possibilities of trading the value of areas offering investors exposure to direct regions rather than a specific house or building.
This puts the architecture behind Parcl into perspective as it attempts to restructure the barriers associated with real estate investing.
With an interactive UI similar to many top defi LPs, Parcl breaks the parameters of real estate investment through the ability to invest in cities and neighborhoods, which are represented as Parcl indexes.
These indexes are accommodated under the RWA narrative as the first real-world assets to represent a city’s residential real estate market have been developed by Parcl. Parcl indexes represent the median price per square foot in the regions they offer which can then be freely traded on the platform with numerous liquidity pools.
The architecture of Parcl alone gives users direct access to the real estate market and a slice of the RWA market, which has been cited with the potential to grow to a $16 trillion business opportunity by 2030.
Coupling real-world assets with a high-end UX/UI, Parcl’s architecture sets it up to extract the noncustodial AMM model with perpetual synthetic assets that provide several key features.
Parcl Key Features:
- Isolated Pools
- Solvency
- Price Execution
- Zero Credit Risk
- Optional Liquidity Provision
- Exposure
- Diversification
- Cost Effectiveness
- Leverage
- Improved Liquidity
Many native crypto investors are staunch in their stance toward decentralization.
This often leads to confirmation biases and sticking to having crypto in their portfolios. This has pros and cons; however, Parcl finds the middle ground by offering users investment products outside of crypto (real estate) through a DeFi model.
The Parcl liquidity pools denominated in $USDC provide yield opportunities with long or short exposure to the price feed. Once the single price feed and $USDC have been set at creation, LPs can provide liquidity on a per-pool basis through the isolated trading market.
Parcl offers three token vaults:
- Storing Collateral Vault
- Trader Liquidity Token Vault
- Protocol Fee Vault
Real Estate Indices vs. Fractional Ownership🌗
Comparing Parcl to other iterations of digital real estate, a unique selling point that stands out is that Parcl has taken a very professional approach to digital real estate rather than the minting land plots route taken by the likes of Yuga Labs. Digital real estate trading through RWA submerges multiple mechanisms, which makes the “real estate” process focus on neighborhoods & areas rather than specific buildings.
The specific land plot mechanism faces many barriers to entry that can also be synonymous with breaking into real estate investing. There needs to be a significant outlay of capital upfront, which many people can’t afford. This is where fractional ownership vs. real estate indices comes in.
Thinking through the lens of a defi expert looking to expose their portfolio to real estate, a significant knowledge gap increases the probabilities of risk in favor of reward. Knowing how to navigate the real estate market and select co-investors would also be a concern for a defi expert. Real estate indices instead track a specific segment of the real estate market or the entire market itself, allowing an investor to be exposed to as many facets of the market at once.
Real estate indices will enable the investor, who may not be a real estate expert but is a charting crypto expert, to track the entire real estate market performance and calculate where the reward is on their side on the risk parameters.
Each method has pros and cons; however, the balance isn’t suitable for the crypto expert, but Parcl delivers three main parameters as a solution.
Parcl Delivering On Solutions
Parcl offers solutions by acting as the following:
1. Exposure mechanism
Users can use Parcl to gain exposure to real estate markets through liquidity pools and RWAs representing cities and neighborhoods in high-demand real estate markets.
2. Provider of liquidity
Parcl’s liquidity pools incentivize LPs onto their protocol by exposing them to net trader Pnl and fees.
3. Hedging tool
Traders can leverage their positions by going long or short.
By users interacting with the protocol to invest in digital square feet of real estate in neighborhoods, the price is tied to the feed, which represents the average price for that given area. Pyth oracles source the external data to ensure maximum validity and create a relationship between real estate investing and crypto assets that have never been bonded.
Chain Wars⛓️
The chain tribalism in crypto can be summarised with Animal Farm memes all day. While everyone is arguing about which chain is better and new iterations are launching every day, the L1/L2 landscape could look worse than it is currently. Solana managed to do something many chains have failed: revamp the sentiment around their chain through ongoing development.
Devs want cheap fees and fast transactions, and so do users. By Parcl building on Solana, they can develop an ecosystem that isn’t scarred by blockchain network parameters.
Solana The Place To Build?
According to Messari’s State Of Solana Q1 2023, The Solana Foundation has raised over $600m in seed funding for the ecosystem supporting projects of all shapes and sizes.
A robust network of contributors and investors all aligns with the potential a project has to succeed, and with Parcl’s $4,1m seed raise in July 2022, the likes of Solana Ventures, Coinbase Ventures & Dragonfly Capital are all co-investors.
Competitive Landscape Solana Vs. Avax: Parcl Positoned Cleverly📦
The data behind ecosystem and developmental progress can often identify some critical factors as to why a project chooses to build on a chain. Parcl building on Solana allows them to be on the receiving end of an increasing TVL in the past two quarters, as evidenced below.
Compared to Avalanche (still responsible for some great projects), the TVL has been facing severe down spikes (representative of the broader market) without any sign of recovery. While Solana has also, in the grand scheme of things, been facing a down-trending TVL, they have managed to show some sign of recovery into the new year.
This benefits those already submerged into Parcl’s protocol and users analyzing the overall scope and trend of defi looking for chains with growing TVL, active users, and deep liquidity.
Parcl manages to meet the crossroads of uptrends while maintaining the persistence of exposure to real estate products. As the Solana ecosystem moves towards emerging consumer applications vs. DEXs & NFT markets, there is the potential for Parcl to benefit from the general increase in consumer apps with a solution for real estate being consumed in crypto.
Demo Easter Egg🥚
It would be cruel to provide this much alpha on Parcl without an in-depth rundown on how to get started and expose your portfolio to the real estate market today!
- Most Solana native wallets like Phantom & Sollet work for the Parcl protocol.
Once you have loaded up your wallet with $SOL & $USDC, you can select from the several US geographical markets they offer, with international markets coming soon.
- After selecting a market, you would like, the Parcl dApp provides additional data on that market with the price per square foot of residential real estate, which is, in this case, the price feed.
With the same wallet you have your $SOL & $USDC on, you can take one of two positions in your selected location:
Buy:
- Essentially a long position meaning you expect the price to go up.
- The bet is against the price of your area increasing in return for a profit and the risk of losing capital if the price decreases.
Short:
- A short position is hedging your capital against the price of your area going down.
- If it goes down, you will profit; if the price increases, you will risk losing capital.
Using Parcl’s advanced trader modes, you can leverage your positions to increase the earning power and amplify the collateral applied to the price movements.
- Once you have concluded what order you have placed, a submit trade button will confirm your position. The platform provides you with your entry price and exchange rate, which is the ratio of deposited $USDC to Liquidity Tokens.
To further increase autonomy over your positions, the Parcl protocol enables you to manage your positions from the designated areas trade page, where a position card will show:
- Entry Price
- Trade Direction
- Leverage
- Date & Time Position Opened
Parcl Made Real Estate For Crypto Natives🏡
Concluding our experiences with Parcl, we can see a team devoted to building a real estate product that solves the inefficiencies the real estate market inevitably provides for crypto natives.
Building on Solana with the sentiment toward the ecosystem shifting allows Parcl to leverage the advanced developer background and the deep liquidity typically associated with the Solana ecosystem.
Parcl takes digital real estate to a high-end defi protocol level and ensures traders know the landscape through frequent market updates via their blog.
In the latest update, they cited the following factors that traders should consider | Source
Blending crypto to real estate has always been considered a lucrative market. Still, Parcl’s unique features and architecture can set the standard for integrating the two asset classes.
References
As a reminder, this is not a trading signal or investment advice; it is an opinion, and each trader/investor should know and understand the risks of trading cryptocurrencies. This should not be regarded as financial advice; feel free to familiarise yourself with our NFA disclaimer.
The R Roundup Additional Links:
The RR Chat💬: https://t.me/TheRRChat
The R Roundup Announcement Channel📣: https://t.me/TheRRoundup
Russian DeFi: https://twitter.com/RussianDefi
Twitter: https://twitter.com/TheRRoundup
RR Labs Twitter: https://twitter.com/TheRRLabs
Instagram🤳: https://www.instagram.com/therroundup/
Members Library🔒(Contact Admin In Telegram Chat For Signup Form): https://therroundup.substack.com/
Reddit: https://www.reddit.com/r/TheRRoundup/
LinkedIn: https://www.linkedin.com/company/the-r-roundup/
NFA Disclaimer: https://docs.google.com/document/d/1AoWc3qanyzmzSiZFCGUaG1oiKRHmxvGj02JY3ibnIqg/edit?usp=sharing
Phantom 🎭: https://t.me/ThePhantomReport
