Tokenizing & Fractionizing Everything: OPTIMIZE 1.0
“OPTIMIZE” aims to become a blockchain powered digital marketplace for fractionized NFTs (cryptovantage.com) representing either Micro, Small & Medium Sized private equity or real estate.
By doing so it will enable individuals to diversify their private assets holdings with the same ease as if they were publicly listed securities thereby providing participants of the network with both extra diversification and liquidity.
OPTIMIZE will first have to foster the digitalization of property & private company ownership records or in the absence of regulatory infrastructure create “Digital Twins” (James Regenor YouTube) of those records. We assume that the digitalization of those records should be recognized and supported by local authorities as countries like the UK are conducting digital Land Registry pilot programs (entrepreneur.com) and the token issuance and secondary trading free from regulatory hurdles so long they are treated as “equity/securities tokens”. (securities.io).
While the end goal is for “Anyone who wants to buy or sell parts of a “non-public” cash flow generating asset” to be our customers we will start by defining our target customer as home or micro/SME owners who want to sell equity in their “small” business or home with the intention to either diversify their holding or simply raise liquidity.
To further define our targeted customers and reduce our potential competitors we will focus on those owners whose businesses have positive cash flow and the ability to pay some sorts of dividend/rent. As discussed later this will also help us limit fraud and non-performing contracts.
While some customers might initially join Optimize because their liquidity needs cannot be satisfied through traditional channels due to hefty intermediary/processing costs or simple neglect we want to encourage them to buy and sell. In essence we want them to perform some sort of Asset Swap to diversify their holdings.
Our message is “We all own too much of a few things, let’s diversify”. This identity/message should fit well with our target customer as most SME owners have most of their net worth tied to their company and home. (growthsmart.com)
The ability for our clients to conduct further transactions on our Ethereum powered platform should boost the network effect and liquidity should increase the price of their holdings creating a positive feedback loop (Crhistian Catalini).
We will implement a “Value Chain” (Joshua Gans) strategy and partner with local real estate agents and local accounting firms a bit like “Propy“ deals with agents (propy.com) in the case of real estate. We see it as the most realistic approach to avoid from competing with them and instead encourage them into reaping the benefits of bootstrapping a marketplace on the Ethereum blockchain. (hbr.com)
We will launch a native token “OPT” to incentivize local accountants and estate agents to be part of our network by either sharing their resources (databases) or directly promoting Optimize to their clients. The amount of “OPT” they would be given will represent the value of their contributions to the network. They will be naturally incentivized to promote further use of the marketplace as it will translate in price appreciation of the token.
To further accelerate network effects (Christian Catalini) and gain sufficient size to survive competitors (securities/equity tokens exchanges, traditional players…) we should also award clients with some native token on their first listing. After that we will charge commissions on transactions as a traditional marketplace.
The initial digitalization process of records could be quite costly and labor intensive. The current lack of existing blockchain trusted IOT devices such as VR in the case of real estate where one could assign extra value for premium standards of finish or store customer traffic sensors/digital reputation for businesses, will make us initially focus on creating local community marketplaces where people can view/monitor what they buy. It is even possible that in most equity/security token sales the buyers end up being the issuer’s regular clients…empowering local community and trust.
For the same reason we will limit initial smart contracts to those paying rents/dividends and avoid ICO type scandals. Performance, execution and low default rates will be core to our culture and vetting process. Our initial marketplace might therefore only consist of very basic deals where initial pricing is based on an oracle providing standard local price information and safe low yielding dividend in the case of businesses. Simple “Buyouts” provisions might exist. (as on niftex.com)
That is until technology allows users of our platforms to make more informed decisions or smart contract to better interact with the real world for non-performance resolution.
To summarize OPTIMIZE first brings verifiable and trusted blockchain backed equity issuance solution to a previously poorly served market segment by partnering with incumbents in the value chain to benefit from networks effects to bootstrap a marketplace (Christian Catalini, Joshua Gans).