Tokenization Process
Secure Tokenization: Funding Success and Asset Protection for Participants
Tokenization on Propbase allows real estate assets to be transformed into digital shares that can be accessed by a wide range of investors. Instead of requiring large amounts of capital for full property ownership, tokenization enables fractional participation, meaning anyone can own a portion of a property through blockchain-backed tokens. These tokens not only represent legal ownership rights but also give investors access to yield generated from rental income and potential property appreciation.
The process is carefully structured to ensure transparency, security, and compliance at every stage. Properties undergo due diligence, audits, and incorporation into a suitable legal entity before tokens are generated. Once listed, investors can participate in the funding round, subject to a soft cap (minimum threshold for the property to proceed) and a hard cap (maximum allowed funding based on asset value). If the soft cap is not reached, all investor funds are returned, although the seller may choose to extend the funding period to allow more participants to come in. If the hard cap is met, no additional funds are accepted, keeping the raise aligned with the property’s real market value.
This process ensures that both developers and investors are protected. Developers gain a secure and regulated way to raise funds, while investors enjoy confidence knowing their funds are held safely, the property has been independently verified, and yields will be distributed fairly. Furthermore, token holders are not locked in permanently — they can trade their shares on the Propbase secondary marketplace, giving them the kind of liquidity that traditional real estate investments lack.
Tokenization Flow
Token Application – A property developer applies to have their real estate tokenized on Propbase by submitting details of the property and ownership documents.
Due Diligence – Propbase reviews and verifies the property through audits, legal checks, and valuation assessments.
Incorporation – The property is incorporated into a legal entity that allows fractional ownership to be issued.
External Audit – A third-party auditor validates the property’s compliance, value, and offering documents.
Token Generated – The property is fractionalized into digital tokens on the blockchain, each representing a share of ownership.
Offering Listed – The tokenized asset is listed on the Propbase marketplace with full details, including funding targets, yield projections, and token pricing.
Soft Cap Reached – Once the minimum target is achieved, the property tokenization is confirmed. If not reached, funds are refunded, or the funding period may be extended by agreement.
Ownership Transfer – Tokens are distributed to participants who invested during the offering.
Yield Allocated – Rental income is distributed to token holders via smart contracts, ensuring accuracy and transparency.
Sell & Trade – Token holders can trade their tokens on the secondary marketplace, providing liquidity and flexibility.
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