The Defiant

Driving DeFi Innovation: Solving Real Estate’s Liquidity Issue

Sponsored

Parcl increases access to investors seeking exposure to real estate prices via Real World Asset (RWA) Indexes

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Driving DeFi Innovation: Solving Real Estate’s Liquidity Issue [Sponsored]

The $320 trillion global real estate market, traditionally one of the most inaccessible asset classes, is being shaken up by the arrival of Parcl, a DeFi real estate trading platform.

For younger generations, market challenges have made it harder than ever to invest in real estate. Home ownership rates are at nearly 20 year lows, partially due to the tedious and outdated processes they require. Real estate must adapt to the 21st century: DeFi presents a viable opportunity to decrease prices and expedite processes.

Parcl leverages blockchain technology to democratize access to real estate, allowing DeFi traders to gain exposure to entire cities through Real-World Asset (RWA) indexes. These indexes track the price movements of a city's residential real estate market, innovating investor access in high-demand markets like New York and Los Angeles.

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Key Features of Parcl

Isolated Pools: All cities in Parcl have their own separate pools. This ensures traders can freely select the city they wish to trade in.

Pool Solvency: Because traders exit positions into liquidity tokens, solvency is achieved because all pool stakeholders own a percent of the pool as opposed to a direct claim on some underlying collateral.

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Price Execution: All trades are executed at the Oracle price set by the smart contract.

Zero Credit (Margin) Risk: Leverage is applied to price movements and the protocol offers up to 10x. Additionally, leverage is applied to skew impact fees on position opens that worsen skew AND in funding fees calculations, which both compensate the pool for the leverage risk.

Optional Liquidity Provision: The liquidity pool can function without liquidity providers. It is because collateral brought by traders is converted into liquidity tokens as well.

Fractional Ownership vs Parcl’s City Indexes

"Rather than taking a physical home and putting it onto the blockchain, Parcl allows users to gain exposure to high-demand cities around the globe with the best data available to initiate smarter trades," explains Bacon. “This innovative approach ensures greater liquidity and scalability, boosting the stability of real estate as an investment class.”

Parcl’s approach to real estate investment allows users to invest in cities and neighborhoods rather than specific buildings. Parcl improves liquidity to one of the world's most illiquid assets. Trading RWA indexes reduces the entry and exit timeline to mere minutes, allowing users to manage their portfolios proactively. Parcl focuses on entire neighborhoods inside the world's best-performing cities, unlocking access to high-demand markets and enabling users to invest in multiple cities at once.

Built on the Solana blockchain, Parcl offers cutting-edge data analytics, a liquidity pool for passive income earners, and the flexibility of entering and exiting positions. It also enhances traditional leverage capabilities, allowing advanced traders to leverage their original investment up to 10x for greater returns.

“Bringing even 1% of the real estate market on-chain could be enough to bring DeFi into mass adoption,” Bacon said. “Parcl is working to deliver DeFi’s next ‘killer app’ by accelerating access to a legacy asset class for investors around the world.”

For DeFi traders and medium to long-term real estate investors alike, Parcl presents a straightforward way to gain exposure to the favorable dynamics of specific geographical areas.

Parcl Labs, the protocol's data provider, is the powerhouse behind the project, offering granular insights into real estate values across multiple geographies and property types - on a mission to index every property in the world.

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The platform recently unveiled eight new markets to its ever-growing list of tradable city indexes – including Boston, Atlanta, Philadelphia, Chicago, Seattle, Denver, Portland, and Washington. Bacon shared that the addition of more North American cities such as Austin are on the near term horizon, with global cities including markets like Paris, London, and Singapore following shortly thereafter. Parcl's expansion into new territories will pave the way for more investors to build truly global real estate portfolios, significantly driving mainstream investment into real estate.

Parcl is breaking down barriers for the next generation of real estate investors, showcasing the power of blockchain to solve significant problems through the use of RWAs.

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