🚨 Fractionalized NFTs are illegal🚨

Logan Paul is in hot water again & RealT is bringing DeFi to security tokens!

April 11, 2022

Welcome to the 33 new Rainmakers who have joined us since last week. Join the 2,526 others who are laughing, learning, and staying at the forefront of tech every week!

This newsletter is brought to you by La Boulangerie!

La Boulangerie is a new food and beverage venture setting up a French bakery in Dubai. 🇫🇷🇦🇪 

Its goal is to bring quality and standards currently unseen in the emirate of Dubai and new services that will revolutionize the food delivery industry. They just launched their STO!

Gooood morning, Rainmakers! ☀️

As always, I have two captivating topics for you to dive into:

1️⃣  🚨Are fractionalized NFTs legal? 🚨 Logan Paul just launched a fractional NFT trading platform, but is it legal?

2️⃣  🏡 RealT is making moves... like serious moves: RealT just announced you can lend and borrow using RealT security tokens via the Aave DeFi application!

Without further ado, it's time to…

Get liquid 💧

🚨Are fractionalized NFTs legal? 🚨

Have you ever wanted to own a Bored Ape, Cryptopunk, or an NFT that was way out of your price range?

Or how about a signed rookie card of NBA legend Michael Jordan?

Yeah, me too!

These collectibles are unfortunately way out of most price ranges.

Fortunately, certain platforms are making it easier for the everyday person to afford items of similar caliber.

One platform, in particular, Liquid Marketplace, is democratizing access to the world's most prized collectibles for the fraction of the price!

How?

By fractionalizing each NFT/collectible into 'shares' you can become a 'part-owner' alongside many others, as well as trade them on a secondary market!

So when you go to your significant other and ask their permission to buy an expensive collectible, it's not quite as big of a deal.

"Wait, Jonah, this sounds a lot like a security token to me. What's the difference?"

That's a great point and my answer to that question is... it's complicated.

We have touched on this a few times now, but it's really getting out of hand.

When you fractionalize NFTs you enter a major regulatory grey area...

Especially, when you don't even try to be compliant!

There's one platform that is doing this the right way and I applaud them.

That platform is Rally Road.

Rally Road enables you to compliantly become co-owners (but actually co-owners) of world-renown collectibles and NFTs.

After reading through their legal docs - the assets offered use the Reg A exemption, as well as work in conjunction with approved brokers and ATS providers to enable investment and trading.

After searching for legal docs on the Liquid Marketplace... to make a long story short, I didn't find anything with substance. 

So if the SEC comes knocking on their door, they are essentially screwed.

Let's just hope for Logan's sake that this doesn't end poorly because the SEC isn't as forgiving as teenagers are.

🏡 RealT is making moves... like serious moves

One of the most prolific security token firms, RealT, just made one small step for mankind and one giant leap toward the transformation of the global capital markets.

RealT has fostered one of the largest security token communities, with STOs selling out within seconds and 200+ trading on the secondary markets.

They take a unique approach, as they offer fractional interests in single-family homes all over the US, with daily rent payouts to investors via the blockchain.

However, their trailblazing doesn't stop there!

The security tokens sold by RealT will NOW allow investors to participate in the DeFi ecosystem via Aave... for the first time ever!

“What does this mean?”

It means you can lend and borrow your security token to earn income and get access to liquidity while maintaining ownership

Yeah, this is massive.

Let’s get basic on DeFi and what this means for you:

Decentralized Finance or DeFi for short is exactly what it sounds like - financial activities on a decentralized blockchain.

The most common activities are staking and borrowing.

Think of it like this: There’s a massive pool of liquidity and you can do one of two things - either contribute to the pool and earn interest or you can borrow and pay interest.

In the traditional world, you can go to a bank and ask for a loan but could be denied and have to jump through a million bureaucratic hoops.

In DeFi world, you can do it instantly with no fear of being denied. 

Yep - instantly!

Let me paint you a realistic picture:

The tax deadline is fast approaching and you realize you didn’t plan appropriately, so you are in a bit of a pickle.

There are a couple of things you can do:

  1. Sell your crypto and pay taxes, but forced to pay the capital gains next year.

  2. Take out an overcollateralized loan, get immediate capital, and not pay taxes on this access to capital.

To be clear, An overcollateralized loan is when you put up more money than the requested capital.

For example, if you need $10K, you would put up $20K in crypto.

I could go on for years, but for the sake of both of our times, let’s get back to the subject at hand lol.

Now that you are an expert in DeFi, you see how powerful this is, right??

Imagine you need liquidity, but don’t want to sell your asset - you can simply borrow cash via a DeFi pool and maintain your ownership!

Hats off to the RealT and Aave teams for making this happen.

💦 What else is Drippin’

Thanks for tuning in! Keep an eye out each Monday for the next security token adventure 🧗‍♀️

Disclosures:

• No money or other consideration is being solicited, and if sent in response, will not be accepted; 

• No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through the platform of an intermediary (funding portal or broker-dealer); and 

• A person’s indication of interest includes no obligation or commitment of any