We are planning the secondary market as an extension of InvestBay by the end of 2023.
Because all shares in an invested property are Polygon-based tokens recorded on the blockchain (a public ledger), they can be traded further. We have already built this system and final testing is currently underway.
If we stuck to blockchain technology alone, it would theoretically be possible to move them freely from one investor to another (in reality, more like from one address to another address) without any regulation. But because each token is backed by a share in a specific property – meaning that holding it entitles the user to an ongoing "dividend" (a share of the rent), to a share of the property sale proceeds at the end of the investment horizon, and additionally gives the token holder voting rights on important matters concerning the operation of the property – the free exchange of shares is limited to the InvestBay platform.
Shares can therefore be sold and bought among investors exclusively by those who have been verified through the KYC/AML process (Know Your Customer and Anti Money Laundering) and who have a bank account on file with InvestBay, to which their dividends and their share of the property sale proceeds will be sent.
Important questions and answers:
The dividend is allocated to the token holder who owns the token at the decisive moment. If the decisive moment is, for example, 31 March for the first quarter of a given year, then all of the quarter's income is distributed proportionally among the token holders who hold it at the decisive moment. So if investor A "got rid of" their share (which they had held since the beginning of the year) on 30 March, they are not entitled to this dividend.
In the investor portal, on the Secondary market tab, there are 2 categories - demand and supply. If an investor wants to sell their share, they can offer it to other investors and wait for their bid, or, conversely, get in touch with an investor who has previously expressed demand for that share. Conversely, if I as an investor am interested in a share in another project, I can express that wish by entering it in the demand category, or get in touch with an investor who has previously announced their intention to sell a share.
At the start, each share has the same price (500 EUR), and every year InvestBay issues an update of the property's value for the given investment opportunity (this takes into account the growth of the real estate market, the attractiveness of the given property, the estimated sale price and its operating results from the past year). If, for example, the estimated value of such a property has risen by 50 %, the new estimated price of one such share will now be 750 EUR. These estimates serve as a basis for supply / demand. It is entirely up to the investors at what price they buy or offer these shares on the secondary market.
If two investors agree on an exchange, InvestBay acts as the intermediary in their transaction. Using the integrated payment gateway, the buyer can pay (here the IB fee is 2 % of the agreed amount), and once payment is made, InvestBay transfers ownership of the token to the new investor.
When a token is created (minted), all tokens of the given project are the property of InvestBay. InvestBay is also the custody wallet for those investors who do not own a crypto wallet. From the blockchain's perspective, the tokens are still recorded under InvestBay, but each investor can easily (for a small fee required for the computing power needed to record the transfer transaction on the network - the so-called GAS fee) transfer it to their own paired wallet (MetaMask). To record such a transaction, you need to have Polygon's currency, the so-called Matic. There is no need to worry about the fees. For example, the GAS fee that was needed to mint the first token issue of the Prosecká vyhlídka project (357 tokens in total) was, in aggregate, just 0.66 EUR.
In addition to valid KYC/AML verification, you also need the MetaMask crypto wallet, which you can easily connect to your account. The MetaMask wallet (in Polygon network mode) is powered by the Matic currency, which is used to pay fees for the computing power needed to record operations into the public database (GAS). The exchange of shares is only possible to a MetaMask wallet that is connected to a verified investor's account.
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