LSRWA Tokenization Model
Last updated
Last updated
The RWA Token is designed to maintain a relative peg with the underlying real estate assets it represents. Each RWA Token represents a share of the pool of underlying properties, which also includes the rental income they produce. A simple calculation is used to determine the value of each RWA Token:
RWA Token Value = (Total Property Value + Total Cash Reserves) / Circulating RWA Token Supply
The RWA Token can be bought or sold on the Landshare platform for its underlying value based on the calculation above. This ensures adherence to the value of underlying assets and price stability in secondary markets such as DEX trading.
Now that we understand how the RWA Token’s value is determined, let’s break down each component of the calculation.
The value of properties is estimated using multiple valuation models, which utilize real estate information such as comparable sales, property characteristics, and price trends to provide a current estimate of market value for a specific property.
The estimated values of each property are added together and brought on-chain via . This allows our smart contracts to store the latest price of the properties and reflect that value in the token.
In addition to property values, the RWA Token will benefit from the rental income generated by properties. Cash reserves may include USD in a bank account or stablecoins on-chain. Similar to property values, every time the cash reserves change, the updated total will be stored on-chain.
Combining total cash reserves and total property value determines the total underlying RWA in the pool, so the final step of the calculation is to determine the value of each individual token.
The circulating RWA supply will include all tokens sold to investors. This total does not include unsold tokens from the offering. As tokens are sold from the offering, circulating supply will increase. Meanwhile, the proceeds enter the cash reserves, maintaining equilibrium as supply expands. In some cases, circulating supply may be reduced through redemption events.