The article emphasizes the importance of the adaptive use of theoretical results in computer modeling of economic growth. Computer models prove to be a powerful tool for analyzing and forecasting economic processes, but they have their advantages and limitations. Positive aspects include the inclusion of various factors in the model, the decomposition of the economic system, the consideration of international trade, and the possibility of modification. The limitations include unrealistic assumptions, the absence of some aspects (such as the shadow economy), and the failure to take into account economic cycles. It is concluded that for practical application it is important to get rid of unrealistic assumptions and develop system models based on mathematical validity.
In the era of technological progress, the
convergence of blockchain technology and real
estate markets has given rise to a
revolutionary financial instrument—real
estate tokenization. The Ukrainian real estate
and land sector is undergoing dynamic
changes and embracing digital innovations,
making it pertinent to explore the
opportunities and challenges presented by the
tokenization of real estate assets.
Tokenization, characterized as the process of
transforming real assets into digital tokens on
the blockchain, has the potential to reshape
traditional paradigms of real estate
investments. The implementation of
tokenization mechanisms based on blockchain
offers a pathway to democratize access to real
estate investments, enhance liquidity, and
introduce a new dimension to the country’s
economic landscape [
New digital technologies are reshaping
markets and offering novel economic
instruments for financial and investment
interactions. Despite these advancements,
financial markets predominantly continue to
rely on analog and archaic methods for asset
issuance, management, and trading. The
financial system is undergoing technological
changes, including the emergence of
programmable money and tokenized assets,
combined with modern digital technologies
such as artificial intelligence, Decentralized
Finance (DeFi), decentralized identifiers,
Decentralized Autonomous Organizations
(DAOs), decentralized gaming, metaverses,
and more [
One contemporary category within decentralized finance is the concept of tokenizing real-world assets, which combines features and functions of cryptocurrencies with rights to real-world assets. In a broad sense, tokenization refers to the process of converting rights to any assets into digital tokens on the blockchain. It involves transferring information about the properties of real-world assets onto digital tokens in a Real estate blockchain network, providing access to virtual asset markets and their utilization within decentralized economic spaces. This process opens new possibilities for financial innovation, offering increased liquidity, accessibility, and efficiency in the management of real estate assets. As we delve into the concept and significance of real estate tokenization, it becomes evident that this transformative approach has the potential to revolutionize traditional investment paradigms and contribute to the evolution of decentralized economies. The overall structure of tokenization is illustrated in Fig. 1.
vehicle (LLC/DST)
The foundation of asset tokenization is
blockchain technology, which ensures identity
protection during the automation of
interactions. Leveraging the secure and
immutable characteristics of blockchain
technology, tokenization facilitates partial
digital ownership of assets through secure
transaction records and swift settlement
processes. By digitally representing property
rights and associated benefits through the use
of smart contracts and blockchain technology,
liquidity can be enhanced, capital
requirements reduced, managerial processes
automated, and transparency improved [
Tokens representing rights to real estate, created during the issuance process, can be described as fractions of assets that represent the properties of rights and obligations
Fungible Token (FT) Non-Fungible Token (NFT) Governance Token (GT) Soul-Bound Token (SBT)
Standards in the Ethereum
network ERC20, ERC1155, ERC1400, ERC6551, ERC3643, ERC4626, ERC7540 ERC721, ERC5505 ERC20, ERC2767 ERC5516 concerning the underlying asset, offered to investors through crypto asset markets. The characteristics of such tokens are defined in smart contracts located on the blockchain, automatically executed upon meeting specific conditions. Real estate and land markets, which continue to use manual and laborintensive methods for administering and trading the underlying asset, deal with realworld assets represented by land, real estate objects, and associated rights endowed with specific features. Real-World Assets (RWA) are considered tangible and intangible assets in the physical world (e.g., real estate, bonds, commodities, future benefits, services, etc.). RWA tokenization provides access to virtual asset markets characterized by increased liquidity and easy access for investors. Additionally, the digital nature of property rights tokens allows their use in new, structurally, and formally different models of partnership and cooperation offered by the Web3 economy. Tokenized RWA markets today are represented by centralized (CEX) and decentralized (DEX) exchanges, TFT marketplaces, DeFi platforms, and DAOs, as well as investment opportunities in metaverses.
Models for representing assets in
tokenization depend on the infrastructure and
necessary tools. For example, the Ethereum
network offers several token standards for
representing various types of assets. The use of
a standard facilitates the tokenization of assets
and ensures interaction with network
products and tools, providing greater access
for investors. Token standards offer a set of
functions and attributes for their
representation in markets and the
implementation of functionality. For instance,
some tokens may confer voting rights in
strategic decision-making, providing them
with additional features. When choosing a
token standard, it is recommended to assess
the overall project strategy and key
characteristics of the asset. Standards propose
the following main classes of crypto assets,
both interchangeable and
noninterchangeable, which can be either alienable
or inalienable. Thus, the tokenization of assets
allows the modeling of complex systems of
financial interaction using various types and
classes of crypto assets [
Asset tokenization strategies and their
implementation in markets can encompass
various forms of token issuance, depending on
the token’s characteristics, its owner, and the
token’s utilization within the ecosystem.
Issuance forms may take the shape of Initial
Coin Offerings (ICO), Security Token Offerings
(STO), Initial Exchange Offerings (IEO), Initial
Decentralized Exchange Offerings (IDO),
Digital Tokenized Asset Offerings (TAO), and
other token issuance forms. Tokenized assets
serve as supplements to traditional assets by
expressing digitized asset characteristics in
tokens, providing additional opportunities on
liquid markets for virtual assets. Consequently,
small companies gain access to capital
markets. The token issuer, aligned with the
issuance purpose, independently determines
the number of units and the issuance mode
according to the emission plan. If necessary, a
set of token functions can be programmed by a
smart contract, including conducting
additional issuance, locking its transferability,
transaction sequencing, and more. Each token
represents a legal ownership right to the
underlying asset and can be distributed among
investors through subscription or on markets in
fractional shares, allowing partial ownership of
the underlying asset [
In the era of technological progress, the fusion
of blockchain technology and real estate
markets has given rise to a revolutionary
financial instrument—real estate tokenization.
The Ukrainian real estate and land sector is
undergoing dynamic changes, embracing
digital innovations. Exploring the potential
impact on investment models, market
dynamics, and economic growth, this research
aims to provide stakeholders, policymakers,
and investors with insights into the
opportunities and challenges of real estate
tokenization in the Ukrainian context. The
capitalization of global real estate markets in
investments through traditional investment
funds has reached nearly $2 trillion today [
Real estate has traditionally been one of the
most illiquid yet least risky asset classes,
requiring substantial capital commitments and
extensive, costly operations. As a more liquid
way to access the real estate sector, Real Estate
Investment Trusts (REITs) have, in the long
term, outperformed other major asset classes.
In 2023, real estate trust investments in the
United States increased by $58.27 billion.
According to S&P Global Market Intelligence,
the total amount rose by 13.5% compared to
$51.36 billion in 2022 [
As of May 2023, the market value of
tokenized assets on permissionless
blockchains is $2.15 billion. Citibank analysts
predict that by 2030, tokenized digital
securities will reach a value of $4 to $5 trillion,
with approximately $1.5 trillion expected in
the real estate sector [
The expectation is that tokenized real estate assets will evolve not only in capitalization but also in their structure. This will be facilitated by the emergence of more sophisticated token standards that enable interaction with informational and market instruments. The integration into a decentralized economic field of various blockchain networks will contribute to the development of multi-network DeFi markets, devoid of unnecessary bureaucratic procedures. The integration of Internet of Things (IoT) technology with real-time information collection about underlying assets will enhance investor trust in tokenized assets. Projects implemented today in the tokenization of real estate provide insights into the structure and scale of investments attracted through tokenization, as some of them are presented in the table below.
Trend analysis provides grounds to
consider the use of decentralized autonomous
organizations (DAOs) instead of the Special
Purpose Vehicle (SPV) mechanism for further
decentralization of tokenized assets. DAOs
may also encompass additional functions, such
as voting and rewarding loyalty and activity for
token owners. Additionally, each token can be
structured to represent ownership rights in a
specific company that owns multiple assets,
allowing for the structuring of investment
private portfolios [
The Law of Ukraine dated September 8,
2021, “On Virtual Assets,” allows for the
creation and utilization of tokenized assets in
Ukraine, defining the legal status of virtual
assets, providing legal protection to investors,
granting access to cryptocurrency markets,
and permitting banks to engage with
cryptocurrencies. However, as of the article’s
writing, the law has not come into effect and
may be subject to revision. Critics of the law
point out several unresolved issues, including
the need for a definition of the term “token,”
the classification of tokens based on the
underlying asset, the establishment of types of
collateralized tokens, regulation of the
tokenization process and circulation, setting
emission requirements for tokens, defining the
legal status of smart contracts, and issues related
to interaction with other jurisdictions [
Furthermore, it is suggested to incorporate
European regulatory models for the circulation
of tokenized assets and to use a consistent
conceptual and categorical framework in the
law to avoid conflicts [
The advantages of tokenization manifest in the
characteristics of tokens created using smart
contracts that execute automatically upon
meeting specified conditions. Within the token
ownership infrastructure, tokens provide
security, traceability, efficiency, and swift
execution of various procedures [
The absence of barriers and minimal entry thresholds for investors allows a larger number of participants to engage in trading.
The digitally structured form of tokens enables the selection of specific ownership characteristics when forming investment portfolios. Providing greater transparency and efficiency, tokenization can be an attractive alternative to existing mechanisms. The integration of real estate tokens into DeFi increases the variety of collateral in the decentralized economic space, preserving digital rights to rental or lease income for token owners. The security and fractional nature of real estate tokens make their inclusion in investment portfolios of investment, pension, and insurance funds working with crypto assets appealing.
Despite the advantages, the tokenization of real-world assets is accompanied by several serious risks and challenges. Regulatory obstacles are a major concern, characterized by their variability and significant differences between jurisdictions. Compliance with securities laws and requirements for virtual asset operations must be ensured. The storage of tokenized assets poses another significant challenge. To prevent theft and fraud, appropriate measures must be taken, and reliable asset storage solutions selected. Smart contracts and blockchain networks can be hacked or have software failures and vulnerabilities. Additionally, they must have legal force in relevant jurisdictions and consider dispute resolution processes.
Markets for tokenized asset infrastructure must provide liquidity and price stability with high trading volumes. Determining the adequate value of the underlying asset and dividing it into trading tokens can be subjective and inaccurate. Confidentiality and data security issues must be addressed in the tokenization process.
As of today, there are over thirty platforms offering solutions for asset tokenization, with more than twenty specializing in real estate asset tokenization. The main platforms, identified based on ratings, are presented in the table below with their characteristics.
These platforms differ in the solutions and tools they offer for investors and clients, levels of access to DeFi markets, blockchain platforms, standards for smart contracts of tokens, etc.
Characteristics Allows ERC1400-tokes on the Polymesh or the Ethereum blockchain. all operations are paid in POLYX, a native token of the ecosystem. Includes services such as reserving the security token ticker, configuring a security token, Automated distribution of security tokens via simple Security Token Offering, and Automated distribution of security tokens via USDtiered Security Token Offering.
Allows to issue, exchange, and transfer real estate assets in the form of tokens with the top level of privacy, security guaranteed by the blockchain immutability, and audibility while strictly following regulations valid in your jurisdiction. Includes services such as web- and mobile wallets, an admin panel, and integrations with external systems. Allows you to configure your identification solution or to integrate third-party services. The vital link between DeFi and traditional investment by facilitating the tokenization of typically non-bankable assets. Creates custom tokenization solutions for each business based on its needs and vision.
Makes it easy to enable the trading of real-world assets in a Web3 environment. Allows to issue, manage, and allocate tokens for trading. Enables all transactions via Web3, including token creation, sale, distribution, and so on. LenderKit
RealT Blockimmo
White-label investment software
Offers an investment infrastructure with third-party connectivity to enable real estate asset tokenization. Allows to build a tokenized real estate investment platform within the shortest time, while being confident that the solution will comply with all the regulations valid in the jurisdiction where the platform will operate.
Allows investors to invest in fractional ownership of single-family rental properties in the United States, offers investors access to a variety of single-family rental properties, including properties in both urban and rural areas, offers several features that make it easy for investors to manage their investments, such as a user-friendly platform and a team of experienced real estate professionals.
A regulated real estate tokenization platform with a low investment minimum offers investors access to a diversified portfolio of real estate assets, helps to reduce risk and maximize returns, and provides investors with transparency into the investment process. The selection of a platform should take into account the characteristics of markets for trading tokenized assets, as well as the qualitative characteristics of the blockchain network and the tokenization platform, along with the capabilities and limitations of the proposed jurisdiction. Below is a model for determining the efficiency of a real estate asset tokenization platform and the proposed criteria for such a model. where Y is the efficiency of the platform (dependent variable), β0 is the constant, βi are the regression parameters for each feature, Xi are the individual features (indicators of platform efficiency), and Ε is the model error.
It is important to determine which signs (Xi) can be considered to be key to determining the effectiveness of the platform. Example: • X1—Cost of transactions. • X2—Security. • X3—Speed of transactions. • X4—Scalability. • X5—Selection of standards. • X6—Availability of tools. • X7—Platform functionality. • X8—Effectiveness of jurisdiction. • Xn—others criteria.
Research into tokenization challenges to
achieve maximum impact suggests considering
the following advantages provided by
tokenization platforms: enhanced liquidity of
assets, faster and cheaper transactions,
operational transparency, and accessibility for
small investors [
These include tightness (spread between the
bid and ask), resilience (time to return to
equilibrium price after fluctuations), width
(number of rising/falling transactions), depth
(how much a transaction increases price
movement), and immediacy (time to execute a
transaction). There are several
welldocumented side effects and connections with
liquidity, including asset pricing, transparency,
and market efficiency. Considering the
structure of real estate tokens, measures can
be taken to increase liquidity, such as
fractionalization and the creation of pools for
retail investors, as well as trading on the
secondary market. Investors in real estate
tokens also have the opportunity to adjust risk
[
The presented process of real estate asset tokenization in the article holds potential for the Ukrainian economy by improving and simplifying procedures for accessing investments. Analyzing the legal foundations of asset tokenization allows conclusions to be drawn regarding the prospects of utilizing this innovative technology, particularly for small projects in agriculture and construction, seeking cost-effective means of funding. Access to virtual asset markets should be facilitated through both national and foreign tokenization platforms, taking into account national legislation and established regulatory provisions. The proposed recommendations can be considered in the selection of tokenization methods and the structuring of the corresponding investment model.