Wednesday, June 10, Propy Inc., a Silicon Valley startup and real estate transaction platform, made history by successfully auctioning the world's first real estate-backed NFT.
The studio apartment auctioned off is located in Kyiv, Ukraine, and in 2017 it previously made history for being the first-ever blockchain-based real estate sale.
Propy conducted that first transaction of the apartment through smart contracts with Michael Arrington, TechCrunch, and Arrington XPR Capital Founder. He paid roughly $60,000 in the cryptocurrency Ethereum to buy that apartment.
After a 27-hour long auction of people from all over the world outbidding each other, the winning bid came in at 36ETH (approx. $93,000) by a man named Devon Bernard. The high-performing tech entrepreneur from California is now the owner of the world's first real estate NFT.
"I'm very excited to have bought the first real estate NFT from Michael Arrington with Propy. This historic property will be the first of many as crypto evolves the real estate industry. I feel lucky and grateful for the opportunity to participate in this event and own a small piece of crypto history in the making," said Bernard in a statement for Propy.
About the Property
The apartment is located in the Svyatoshino neighborhood near the Dnieper River in Ukraine, Kyiv. The studio apartment is 505.9 sqft with one bedroom and one bathroom.
The NFT included access to ownership transferred paperwork. It also included a printed cyberpunk picture, a unique digital art NFT by Chizz, a street artist in Kyiv, and the physical painting of the digital artwork on the apartment's wall.
How did the transaction take place?
Since the apartment was sold as an NFT, the buying and selling process works slightly differently from a traditional real estate sale.
Propy conducted the auction, which lasted a grinding 27 hours with bidders from all over the world with the starting price at $20,000. The winning bid came in at approximately $93,000.
The transaction took place with Arrington, the initial owner of the apartment, signing legal documents for the NFT (through Propy’s smart contracts) to transfer ownership to the buyer.
After the documents were signed, Propy conducted the NFT auction, received the payment in cryptocurrency, and then transferred it to Arrington’s wallet.
The winner, Bernard, then gained ownership of the apartment within minutes of filling out the KYC (Know Your Customer) details.
And for future transactions, this same process will be repeated every time that NFT attached to the apartment is resold.
Propy's Plans For Transactions In The Future
Propy is currently leading the blockchain-powered real estate revolution by creating a new means for buying and selling real estate and making a more efficient way for buyers and sellers to connect.
Natalia Karayaneva, CEO of Propy, explains in this Forbes article more about the technology behind NFTs (specifically the ERC 721 token) and how it enables "secure trading of digital assets."
Also, Propy and Helio Lending, a CeFi aggregation business that lends cryptocurrency to its users, announced their partnership together to enable real estate NFT’s to be used as collateral for loans.
This partnership marks a significant step towards building a platform that allows the companies to “leverage the promise of blockchain technology and non-fungible tokens (NFT) to achieve self-driving real estate transactions and opens new lending opportunities," as stated by Karayaneva.
Having a decentralized finance (defi) asset like NFT lets users borrow a cryptocurrency against it without a middleman, or having to go through a bank to get a mortgage.
Through the blockchain technology and with a decentralized network, this will cut costs with real estate transactions, make it possible for more people to access the market, and even make real estate transactions purely between the buyer and seller with just the blockchain platform doing the work.