We are planning to add a secondary market facility as an extension of InvestBay by the end of 2023. As all shares of the invested property are Polygon-based tokens and registered in the blockchain (public ledger) and as such they can be easily traded.
Based purely on the principles of the blockchain technology it is theoretically possible to trade the tokens reely between one investor and another (or rather from one specific address to another) without restriction. However, because each token represents a share in a specific property, i.e. the token-holder receives an ongoing "dividend" (a share of the rental income) and a share of the proceeds from the sale of the property at the expiry of the holding period, and in addition, the token holder also has voting rights on important issues related to the operation of the property, the free exchange of shares will be limited to the InvestBay platform.
As a result, only investors who have been verified through the KYC/AML (Know Your Customer and Anti Money Laundering) process and have a bank account listed with InvestBay to receive both dividends and a share of the sale of the property can sell and buy shares among themselves.
Who receives the rent dividend?
The dividend is allocated to the token holder who owns the token at the relevant time. For example, if the record date is 31 March for the first quarter of the year, all the proceeds from the quarter are divided pro rata among those token holders who hold the token at the record date. Thus, if Investor A "disposed" of his/her share (which he/she has held since the beginning of the year) on 30 March, he/she would not be entitled to this dividend.
How is the purchase/sale of shares handled?
There are two categories in the investor portal under the secondary market tab - supply and demand. If an investor wants to sell his/her token(s), he/she can either offer it on the platform to all of the other investors and wait for their offer, or, on the other hand, he/she can contact an investor who has already asked for a token(s). Similarly, if an investor is interested in a stake in another project, that investor can express their interest either by entering this interest into the “demand” category on the platform or by contacting an investor who has already announced his/her intention to sell their token(s).
Where is the value of the share determined?
Each share has the same price at the beginning (EUR 500) and every year InvestBay issues an update of the value of the property for a given investment opportunity (this takes into account the growth of the property market, the attractiveness of the property, the estimated selling price and the performance of the property in the last year). If, for example, the estimated value of such a property has increased by 50%, the new estimated price of such a single share will now be EUR 750. These estimates serve as a guide to pricing on the platform. It will be up to each investor to decide how much to buy or offer these tokens on the secondary market. And of course, in either case, the seller or buyer can make repeated changes upwards or downwards until they reach an acceptable strike price with a counter-party for those tokens.”
How does the exchange work?
If two investors agree on a trade, InvestBay acts as an intermediary in this trade. Using the integrated payment gateway, the buyer can pay the required amount (subject to an IB fee of 2% of the agreed amount) and, after payment, InvesBay transfers ownership of the token to the new investor.
Who owns a stake (token) on the blockchain and how to become a token owner?
When a token is created (minted), all tokens of a given project are the property of InvestBay. InvestBay is also a custody wallet for those investors who do not own a crypto wallet. From a blockchain perspective, the tokens here are still written to InvestBay, but any investor can easily (for a small fee that is required for the computing power needed to write the transfer transaction on the network - the so-called GAS fee) transfer it to their own paired wallet (Metamask). In order to write such a transaction, a polygon currency, the so-called Matic, is required.
The GAS fees mentioned here are very minimal. For example, the GAS fee for minting the first token issue of the Prosecka Vyhlidka project (357 tokens in total), cost only 0.66 Euros in total (i.e) for all 357 tokens.
What is needed after the secondary market?
Besides a valid KYC/AML verification, you also need a MetaMask crypto wallet, which you can easily attach to your account. The Metamask wallet (in Polygon network mode) is powered by the Matic currency, which is used to pay for computing power fees to record operations in the public database (GAS). The exchange of shares is only possible on the MetaMask wallet, which is connected to the verified investor's account.
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