Blockchain in Real Estate Market – a Chance for Revolution the Industry

Maciej Zieliński

04 Apr 2023
Blockchain in Real Estate Market – a Chance for Revolution the Industry


In recent years, the total value of real estate was estimated to over 200 trillion dollars. In comparison, the value of every ounce of gold ever mined by the humanity across the generations is around 30 times lower. However, despite experiencing such a rapid growth, real estate market fails to introduce meaningful innovations to accommodate and capitalize on its success. Introducing blockchain in real estate market strives to break the mould and end the age of stagnation.

Benefits of Incorporating Blockchain in Real Estate Market

It appears that Blockchain is an answer to many persistent issues with the industry, without the risk of increasing the costs. Its incorporation brings a number of benefits, from which we can single out the most important:

Benefits of Incorporating Blockchain in Real Estate Market
Identical records for many stakeholders
Easily accessible information
Decentralisation and digitalisation of mortgage register
Opening the market for the less affluent
A chance to increase the liquidity of the assets
Clarity of purchase and renting processes
Reducing the risk of fraud or manipulation
The appearance of smart contracts

The Urgency of Introducing Blockchain in Real Estate Market

The appearance of platforms such as Zillow, which allows its users to store and access the real estate lists was a ground-breaking event for the market. Nevertheless, as the time passed by, people noticed the faulty nature of such solutions.

Subscribing to such a service generates additional costs, and so a lengthy period of sale might prove to be a strain for the budget. What is more, there is no standardisation of processes and communication within the services – this can prove detrimental towards the accuracy or even the relevancy of data stored within them.

Innovative Platforms for Real Estate Industry

Decentralized databases, powered by blockchain technology, could potentially address numerous challenges faced by the real estate industry. By distributing data across a peer-to-peer network, brokers can gain more control over the content they offer while minimizing third-party involvement. This would facilitate access to highly reliable information for users without straining their budget.

A prime example of this solution can be seen in Imbrex's real estate market, which operates on the Ethereum platform. Through encryption and data storage within the blockchain, servers have no authority over the real estate agents' sale announcements. Moreover, Imbrex's listings are updated in real time, making them far more efficient at delivering the latest information compared to traditional platforms.

Secure Storage of Land Registry on the Blockchain

Despite increased digitalization worldwide, it is concerning that most mortgage registries are still held in paper form. These important documents are susceptible to theft, manipulation, and physical destruction due to their fragile nature. The Haitian earthquake tragedy serves as a poignant example where disappearing registries led to massive conflicts over property ownership.

The vulnerability of paper forms is not the only issue; centralization of data storage also poses problems if no backup copies are available during unforeseen disasters. Consequently, storing mortgage registries within digital blocks of chain can significantly benefit the real estate industry. Decentralizing the database would lower potential risks associated with destruction or theft, and ensure that server downtime doesn't interfere with operations. Additionally, blockchain technology ensures that information cannot be edited, eliminating possibilities of manipulation and forgery.

Consistency in Real Estate Transactions through Blockchain

A major challenge within the current system is its oversaturation with stakeholders who often lack trust in one another. This leads to significant risks linked to inaccurate and fragmented data concerning real estate assets.

Inconsistency in documentation for parties involved contributes to scams, insecurity, and ambiguity within land management processes. Clients may need to undergo the same procedure multiple times, causing frustration and discouragement. The demand for change has been highlighted through RICS research, focusing on how primary market participants acquire and utilize information.

That is why, the standardisation of documents can be a key to success for the real estate market. The creation of decentralized database has been a longstanding goal of many companies, one of which is Propy. Its platform is based on the technology of database of blocks, which saves the data on a network of millions of nodes. Thanks to this, stakeholders have an access to identical copies of data, the consistency of which is verified in the real time by a software installed to each and every device. In such a model, trust is not a factor effecting the smooth exchange of information as the system forces its users to remain credible.

This and many other similar innovations together with IREDEC (International Real Estate Data Exchange Council) which is focused on standardising the basic set of data needed to enact the processes of real estate, gives us a bright perspective for the future.

Blockchain in Real Estate Market - Co-owning and Democratization Era

Currently one of the biggest obstacles which beginner investors face in the real estate market, is the high entry level. Crowd owning may turn out to be their dream solution. If I cannot afford the funding myself, why wouldn’t I just cooperate with others to achieve it? BitOfProperty is one of the companies which will allow the purchase and division of assets in separate units. The following process Is based on the tokenization – creation of virtual substitutes of real funds, which is perhaps the most revolutionary innovations of blockchain. A potential investor can purchase the individual tokens which are an equivalent of his desiredpart of a real estate. This opens up the market for the investors with smaller financial capacity and provides them with opportunities they didn’t have before.

  • Tokenisation in Practise

Pre-war villas in one of Warsaw’s most prominent districts – Żoliborz are reaching the transaction prices of around 2.5 million zlotys (approx. 650k dollars) which vastly exceeds the monetary capabilities of an average buyer. However, lets imagine that our seller tokenises the house. Then, lets consider that five separate buyers purchase one token whichcosts 500k zlotys (approx. 130k dollars). Such a price is much more affordable for a much larger group of investors. In this particular case, the five of our buyers are going to sign a smart contract with multiple signatures, which is going to make sure that every single decision concerning the house is carried out democratically and without the need of third-party supervision.

  • The Increase in Markets Liquidity

Thanks to the process of tokenisation, the real estate market will cease to be perceived as a “playground” for the richest. It will allow its democratisation. However, its far from being its only benefits.

The tokens could potentially become something of a cryptocurrency, which can be freely traded with the usage of designated platforms. This would reduce the widespread problem of finding a potential buyer. Instead of selling an entire property, its owner could sell a separate token, which could be an equivalent of its separate part.

The Clarity of Leasing

The process of renting is also made easier with Blockchain. It is possible to create a platformwhich gathers the information about the properties and their potential tenants in its decentralised network. It makes the process for both parties – the tenant gets all the information in one place and the landlord gains certainty about their reliability. Such a model would gain a significant advantage in a situation when one property would have many potential clients. The landlord would have an ability to compare the applications of every one of them and choose the most trustworthy and the one who would be willing to pay the most. Rantberry is one of the examples of such an application that allows the long-term rent of property in over 50 countries including Poland.

The Innovative Possibilities of the Smart Contracts

The aforementioned smart contracts allow its users to bring some visible changes to the real estate market. The incorporation of them which is based on the blockchain system will help at automatizing and simplifying even the most tedious and complex procedures.

An example of their usage could the automatized methods of lease agreement, which besidethe ability to secure the interests of both sides could potentially allow for supervision of established terms like monthly payment of rent. The process will be simplified and will be made cheaper because it wont have to involve the third party.


Smaller and bigger investors, the landlords, real estate agencies and even the state institutions could improve their actions thanks to the introduction of the Blockchain technology. Land and building registration held in a scattered database, identical records for many stakeholders, tokenisation of the value of the property is not just a musing on the futurebut a reality which is implemented even today.

You have to think of the blockchain as a new utility. It is a new utility network for moving value, moving assets.

William Mougayar, autor The Business Blockchain : Promise, Practice, and Application of the Next Internet Technology

Thirty years ago, the data was stored on mere floppy discs , which had to be brought to the meetings for sides to exchange the information. Indeed, the internet has allowed to revolutionise the real estate market but it is Blockchain which could potentially provide it with the burst of energy it desperately needs in the ever increasing demand for innovation.

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Applying Game Theory in Token Design

Kajetan Olas

16 Apr 2024
Applying Game Theory in Token Design

Blockchain technology allows for aligning incentives among network participants by rewarding desired behaviors with tokens.
But there is more to it than simply fostering cooperation. Game theory allows for designing incentive-machines that can't be turned-off and resemble artificial life.

Emergent Optimization

Game theory provides a robust framework for analyzing strategic interactions with mathematical models, which is particularly useful in blockchain environments where multiple stakeholders interact within a set of predefined rules. By applying this framework to token systems, developers can design systems that influence the emergent behaviors of network participants. This ensures the stability and effectiveness of the ecosystem.

Bonding Curves

Bonding curves are tool used in token design to manage the relationship between price and token supply predictably. Essentially, a bonding curve is a mathematical curve that defines the price of a token based on its supply. The more tokens that are bought, the higher the price climbs, and vice versa. This model incentivizes early adoption and can help stabilize a token’s economy over time.

For example, a bonding curve could be designed to slow down price increases after certain milestones are reached, thus preventing speculative bubbles and encouraging steadier, more organic growth.

The Case of Bitcoin

Bitcoin’s design incorporates game theory, most notably through its consensus mechanism of proof-of-work (PoW). Its reward function optimizes for security (hashrate) by optimizing for maximum electricity usage. Therefore, optimizing for its legitimate goal of being secure also inadvertently optimizes for corrupting natural environment. Another emergent outcome of PoW is the creation of mining pools, that increase centralization.

The Paperclip Maximizer and the dangers of blockchain economy

What’s the connection between AI from the story and decentralized economies? Blockchain-based incentive systems also can’t be turned off. This means that if we design an incentive system that optimizes towards a wrong objective, we might be unable to change it. Bitcoin critics argue that the PoW consensus mechanism optimizes toward destroying planet Earth.

Layer 2 Solutions

Layer 2 solutions are built on the understanding that the security provided by this core kernel of certainty can be used as an anchor. This anchor then supports additional economic mechanisms that operate off the blockchain, extending the utility of public blockchains like Ethereum. These mechanisms include state channels, sidechains, or plasma, each offering a way to conduct transactions off-chain while still being able to refer back to the anchored security of the main chain if necessary.

Conceptual Example of State Channels

State channels allow participants to perform numerous transactions off-chain, with the blockchain serving as a backstop in case of disputes or malfeasance.

Consider two players, Alice and Bob, who want to play a game of tic-tac-toe with stakes in Ethereum. The naive approach would be to interact directly with a smart contract for every move, which would be slow and costly. Instead, they can use a state channel for their game.

  1. Opening the Channel: They start by deploying a "Judge" smart contract on Ethereum, which holds the 1 ETH wager. The contract knows the rules of the game and the identities of the players.
  2. Playing the Game: Alice and Bob play the game off-chain by signing each move as transactions, which are exchanged directly between them but not broadcast to the blockchain. Each transaction includes a nonce to ensure moves are kept in order.
  3. Closing the Channel: When the game ends, the final state (i.e., the sequence of moves) is sent to the Judge contract, which pays out the wager to the winner after confirming both parties agree on the outcome.

A threat stronger than the execution

If Bob tries to cheat by submitting an old state where he was winning, Alice can challenge this during a dispute period by submitting a newer signed state. The Judge contract can verify the authenticity and order of these states due to the nonces, ensuring the integrity of the game. Thus, the mere threat of execution (submitting the state to the blockchain and having the fraud exposed) secures the off-chain interactions.

Game Theory in Practice

Understanding the application of game theory within blockchain and token ecosystems requires a structured approach to analyzing how stakeholders interact, defining possible actions they can take, and understanding the causal relationships within the system. This structured analysis helps in creating effective strategies that ensure the system operates as intended.

Stakeholder Analysis

Identifying Stakeholders

The first step in applying game theory effectively is identifying all relevant stakeholders within the ecosystem. This includes direct participants such as users, miners, and developers but also external entities like regulators, potential attackers, and partner organizations. Understanding who the stakeholders are and what their interests and capabilities are is crucial for predicting how they might interact within the system.

Stakeholders in blockchain development for systems engineering

Assessing Incentives and Capabilities

Each stakeholder has different motivations and resources at their disposal. For instance, miners are motivated by block rewards and transaction fees, while users seek fast, secure, and cheap transactions. Clearly defining these incentives helps in predicting how changes to the system’s rules and parameters might influence their behaviors.

Defining Action Space

Possible Actions

The action space encompasses all possible decisions or strategies stakeholders can employ in response to the ecosystem's dynamics. For example, a miner might choose to increase computational power, a user might decide to hold or sell tokens, and a developer might propose changes to the protocol.

Artonomus, Github

Constraints and Opportunities

Understanding the constraints (such as economic costs, technological limitations, and regulatory frameworks) and opportunities (such as new technological advancements or changes in market demand) within which these actions take place is vital. This helps in modeling potential strategies stakeholders might adopt.

Artonomus, Github

Causal Relationships Diagram

Mapping Interactions

Creating a diagram that represents the causal relationships between different actions and outcomes within the ecosystem can illuminate how complex interactions unfold. This diagram helps in identifying which variables influence others and how they do so, making it easier to predict the outcomes of certain actions.

Artonomus, Github

Analyzing Impact

By examining the causal relationships, developers and system designers can identify critical leverage points where small changes could have significant impacts. This analysis is crucial for enhancing system stability and ensuring its efficiency.

Feedback Loops

Understanding feedback loops within a blockchain ecosystem is critical as they can significantly amplify or mitigate the effects of changes within the system. These loops can reinforce or counteract trends, leading to rapid growth or decline.

Reinforcing Loops

Reinforcing loops are feedback mechanisms that amplify the effects of a trend or action. For example, increased adoption of a blockchain platform can lead to more developers creating applications on it, which in turn leads to further adoption. This positive feedback loop can drive rapid growth and success.

Death Spiral

Conversely, a death spiral is a type of reinforcing loop that leads to negative outcomes. An example might be the increasing cost of transaction fees leading to decreased usage of the blockchain, which reduces the incentive for miners to secure the network, further decreasing system performance and user adoption. Identifying potential death spirals early is crucial for maintaining the ecosystem's health.

The Death Spiral: How Terra's Algorithmic Stablecoin Came Crashing Down
the-death-spiral-how-terras-algorithmic-stablecoin-came-crashing-down/, Forbes


The fundamental advantage of token-based systems is being able to reward desired behavior. To capitalize on that possibility, token engineers put careful attention into optimization and designing incentives for long-term growth.


  1. What does game theory contribute to blockchain token design?
    • Game theory optimizes blockchain ecosystems by structuring incentives that reward desired behavior.
  2. How do bonding curves apply game theory to improve token economics?
    • Bonding curves set token pricing that adjusts with supply changes, strategically incentivizing early purchases and penalizing speculation.
  3. What benefits do Layer 2 solutions provide in the context of game theory?
    • Layer 2 solutions leverage game theory, by creating systems where the threat of reporting fraudulent behavior ensures honest participation.

Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.


Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics


The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.


What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.