Context

Trends and Opportunities

A small number of land development projects are forming to develop and govern land using blockchain technologies.

There are projects large and small entering the space. Some already have a parcel of land they plan to develop. Others are crowdfunding projects with a goal of purchasing an island. Others still are contemplating the creation of an entirely new city run on the blockchain.

Many smaller projects are using DAO structures to align the interests of disparate participants around the development of each community. DAO structures include tools for voting, managing a shared treasury and tracking contribution and investment. Other projects are more centralized when existing funding is already in place. At the city scale are national governments and sovereign wealth funds who are dreaming big and considering blockchain technologies for use in urban planning and local government.

Each community shares a number of common challenges related to capital, planning and governance. While it is easy to conceptualize the subdivision, development and sale of a large land parcel, how exactly does this process happen? Who decides what the rules should be and how they are developed and adapted over time.

Answers to governance questions can be found not just in nascent land development projects, but also in the metaverse. The emergence of digital land, often sold as NFTs, provides a model for how communities can be sold and governed. Although these communities are virtual and often part of games, they often employ complex economic systems for governance, usage and taxation. As such, models created by such metaverse players are providing an interesting framework for the development and governance of real world land.

Challenges

From demarcating land parcels, determining covenants and construction permissions to oversight of construction and establishment of a community governance structure, each component requires an on-chain tool that interoperates with the others.

Few, if any tools exist to meet these challenges today. Communities are therefore forced to design their own. This is challenging because the problem set is large. Progress is slow and there is little interoperability outside the community.

Further complicating the picture is that fundamental issue of representing property ownership with blockchain assets. There is no common foundation, communities are taking a number of approaches that range from simply stating a future goal, to establishment of legal structures to proxy for ownership. Without common standards, it will be difficult to bring this property to market, and values will be lower due to a lack of trust from buyers.

There is also currently 32.6 trillion locked in global CRE (Commercial Real Estate) Investments[1]. This provides a large addressable market for disruption. As standards, regulation and best practices emerge, this market will transition to governance by blockchain.