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The rise of onchain land ownership.

A primer on buying and selling land NFTs, and the future of onchain land ownership.

Drowning in paperwork, tangled in red tape, and barricaded by archaic legal hurdles, navigating the real estate maze feels like an endless nightmare. It's a universal agony for anyone who's dared to list or sell property—a system screaming for revolution. In an era where instant gratification is not just desired but expected, why does buying land feel like a leap back in time? Imagine snapping up land with the ease and speed of ordering your favorite book on Amazon, and it's yours—no waiting, no fuss.

Land ownership's next era is now loading. At Fabrica, we're here to demolish the delays of the old world and make the path to property ownership as seamless as streaming your favorite show. Goodbye, Blockbuster-era frustrations; hello, Netflix-level efficiency in land transactions. The future of land ownership isn't just knocking—it's already here, shapeshifting the land beneath our feet.

Taking land ownership onto the blockchain (or "onchain" to keep it short) makes the process faster, simpler, and more enjoyable. Our journey at Fabrica is living proof. Back in 2018, we broke new ground by tokenizing the first property as an NFT. Since then, hundreds of properties—across  the United States—are now onchain. Next, buying land from anywhere in the world will be a reality. No small feat, but a worthwhile endeavor for all who see the vision of owning land like it’s 2024.

The transaction hash recording Fabrica’s swap of land for ETH, June 2018 (courtesy of Cameron Morris)

What is onchain land?

Onchain land is the very same land under your feet—the tangible, real-world plots you can touch, live on, and build your dreams upon. Let's be clear: we're not venturing into the metaverse. It's land with genuine utility, offering the solid ground you need to lay foundations, both literally and figuratively. Real land, real value, reimagined for today's world.

Looking ahead, envision a future where every asset of value finds its place onchain. With a staggering value close to $400 trillion, real estate stands as the titan of asset classes, dwarfing the $2 trillion valuation of the entire crypto-verse. (For now.) The impending convergence of these two colossal forces—real estate and blockchain—is the unprecedented generational opportunity for land ownership.  

What do you actually get when you buy a land NFT?

In 2021, NFTs burst onto the global stage as a new medium for digital art. Yet, the technology extends far beyond that. Each NFT stands as a distinct digital token, its uniqueness verifiable onchain, mirroring the inherent value of real property. Simply put, each piece of land is tokenized into its own NFT.

At Fabrica, we zero in on tokenizing real estate's bedrock: the Title. Onboarding a property with Fabrica initiates the creation of a new Trust, transferring legal title so the Trust becomes the property's recognized owner in local jurisdictions. At the same time, an NFT representing this Trust is minted. Owning this NFT grants you full control over the Trust and the property itself.

Illustration of an ERC-1155 token, linked to a Trust holding a real property

What happens when you sell a land NFT on Fabrica?

With a land NFT, the property title stays under the Trust's name within the traditional local registry. The act of trading the NFT equates to transferring the Trust's ownership, which holds the property. This method is streamlined because it ties property ownership to the NFT. Engaging in buying or selling the NFT shifts full property rights, as detailed in the Operating Agreement, effectively sidestepping traditional processes.

Is it just a better way to buy and sell land?

Freeing land from the clutches of paper and digitizing deeds is a huge step forward for buying and selling land. Technology has upended every facet of our existence, and land acquisition shouldn't be left out. Tokenized assets bring a suite of benefits that lay the groundwork for applications once thought impossible.

Here’s how land NFTs stack up to the old way of doing things: 

  • Faster and safer: Leveraging digital assets via smart contracts makes transactions instantaneous and vastly reduces human error. A buyer, with the click of a few buttons and sufficient funds, can finalize the purchase in minutes and the seller receives funds instantly—a stark contrast to the traditional, weeks-long ordeal.

  • Cheaper and frictionless: Transaction costs plummet when human involvement is minimized. Onchain transactions streamline the entire process—distribution, trading, clearing, settlement, and safekeeping—merging them into one efficient layer.

  • More liquid: Historically, real estate has been an illiquid asset. Tokenization has upended this, enhancing market efficiency and facilitating a higher volume of transactions to unlock liquidity.

  • Lower entry barrier: Reduced transaction costs create opportunities for trading less valuable assets or even fractions of assets. This boost in accessibility democratizes investment, allowing a broader spectrum of individuals to buy in.

  • Borderless transactions: With NFTs as the vehicle for ownership, the process of buying a property is the same everywhere, regardless of where the property is located. Buying land in New York is now no different than in Bali.

Is this simply a better way to acquire and make use of land? Absolutely. Beyond the technology, there's a wealth of potential yet to be discovered with onchain land.

Property in Colorado, owned by The Terrain Project, tokenized as a land NFT on Fabrica

Where is this all headed?

To start, onchain land ownership enables smooth land transactions, ensuring asset holders retain full, direct, control over their properties. Next, streamlined ownership will help unlock even more potential from each property.

It’s still early, but we’re excited about a lot of different emerging use cases for onchain land:  

  • DeFi (Decentralized Finance): Previously, securing a loan against your property or facilitating a quick sale could drag on for months, with hard money loans often being an inconvenient option. Now, it's a matter of a few clicks. Check out Fabrica's integration with NFTfi to see it in action.

  • Composability and Interoperability: With your property tokenized as an NFT, it securely resides in your crypto wallet, ready for use in a plethora of web3 applications.  

  • Fractionalized Ownership: Giving more people the opportunity to invest in property through fractional ownership will offer access to a wider audience at a lower cost. 

  • DAO-driven Ownership: DAOs—networks of individuals united online—are altering land ownership by pooling resources to buy and manage property together. Examples include Cougar DAO and Coyote Commons. 

  • Investment Diversification: The composability of tokens simplifies diversifying investment portfolios with real estate, making onchain land ownership accessible worldwide.

  • Land Development: NFTs live onchain, yet they preserve the full allure and utility of the real-world assets they mirror. You can live on, cultivate, and build up the land however you desire.

The next decade is expected to see a significant increase in the adoption and development of onchain land—a shift that promises to reshape the future with its vast, untapped possibilities. We believe that the tokenization of real estate is poised to revolutionize the industry by making notary visits and hefty transaction costs practically unnecessary. Our goal is to modernize real estate ownership, simplifying and accelerating all processes to make them enjoyable—an overdue upgrade for the onchain era.

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