Skip to main content

Story 1: AirBNB House

Real World AssetAssets (RWA) on Cardano Blockchain with L4VA

This document outlines how L4VA enables the storytokenization, aggregation, and fractionalization of puttingcommercial areal real-worldestate asset (a house)assets on the Cardano blockchain, along with the specific transaction types and smart contracts needed for each step of implementation.

The Story

Introduction

InA acommercial bustlingreal city,estate threeinvestment investors,firm, Alice,RealX Bob,Holdings, and Charlie, sawidentified an opportunity to investincrease liquidity and accessibility in the traditionally illiquid commercial real estate.estate market. They decided to putuse aL4VA real-worldto assettokenize (RWA)their ontoportfolio of commercial properties and create fractionalized ownership tokens that could be traded on the blockchainblockchain.

to

Holding makeCompany Tokenization

RealX Holdings had several LLCs, each holding different commercial properties (office buildings, retail spaces, and industrial warehouses). They tokenized these holding companies by issuing share classes representing percentage ownership of each LLC. These share classes were then minted into NFTs on the investmentCardano process more transparent and accessible.blockchain.

The Vault Creation

TheyUsing L4VA, RealX created aspecialized vaultvaults usingfor smartdifferent contracts,asset allowingcategories:

them
    to
  1. solicitOffice investmentsSpace Vault: Aggregating tokens from otheroffice investors.building TheLLCs
  2. Retail Space Vault: Aggregating tokens from retail property LLCs
  3. Industrial Space Vault: Aggregating tokens from industrial warehouse LLCs

Each vault was designed to manage the fundsaggregated tokens and theenable assetfractionalized effectively.ownership through fungible tokens (FTs).

Investment Round

TenInvestors investorswere joinedable to purchase fractionalized tokens from any of the project,vaults, eachgaining contributingexposure 10to specific commercial real estate sectors without needing to buy entire properties. Each investor could contribute any amount of ADA, bringingmaking commercial real estate investment accessible to a much wider audience.

Diversified Portfolio Creation

A financial influencer named Charlie saw an opportunity to create a more diversified commercial real estate portfolio. Charlie created a new vault on L4VA that aggregated tokens from all three sector-specific vaults (Office, Retail, and Industrial) into a "Commercial Real Estate Index" vault. This vault issued its own tokens representing exposure to the totalentire investmentcommercial toreal 100estate ADA.market, Thereducing assetrisk theythrough purchased was a charming home that they planned to rent out via AirBNB.diversification.

Governance Decisions

AsEach thevault house was prepared for rental, severalimplemented governance decisionssystems wereallowing made:token holders to vote on key decisions:

  1. PaintingProperty the HouseAcquisitions: The investors votedProposals to giveadd thenew house a fresh coat of paintproperties to attractspecific more guests.vaults
  2. UpgradingProperty AppliancesImprovements: TheyCapital decidedexpenditure todecisions upgradefor theexisting kitchen appliances to modern, energy-efficient models.properties
  3. PurchasingFee FurnitureStructures: A vote was heldAdjustments to purchasemanagement stylishand furnituretransaction fees
  4. Distribution Policies: How and when to enhancedistribute therental guest experience.income

Revenue GenerationDistribution

OnceAs the housecommercial wasproperties ready, it was listed on AirBNB. Thegenerated rental incomeincome, startedthis flowingrevenue in, and every quarter, the profits were pouredflowed into the vault.respective Thisvaults. increasedThe thegovernance valuesystem ofautomatically thedistributed vaultthese returns to token holders proportional to their ownership, creating a steady income stream for allinvestors investors.while maintaining complete transparency.

Blockchain Implementation: Transaction Types and Smart Contracts

1. VaultLLC Creation

Transaction Type: Minting Transaction

  • This transaction creates a new token representing the vault itself
  • The vault token acts as the identifier for all subsequent operations

Smart Contract Required: VaultContract (Contract Hash: ac2bb90a5a34ee1a7fe5340b73932132df67afb54d90605be6a8329f)

  • Responsible for creating and managing the vault structure
  • Sets up initial parameters including vault name, creator address, and governance rules
  • Establishes policy for token minting and asset management

Implementation:

deno run --env-file -A create_vault.ts

2. AssetShare Tokenization

Transaction Type: Minting Transaction

  • Creates aNFTs non-fungiblerepresenting tokenLLC (NFT)share that represents the houseclasses
  • Includes metadata about the property'scommercial property details (location, size, features)
    • income,
  • NOTE: We do not actually mint an NFT in production, the NFT will always be supplied by the user. We are only minting an NFT in this step for the purpose of conducting end to end testing.valuation)

Smart Contract Required: AssetTokenizationContract (Contract Hash: 479f356943df735488e8f6ce7dd7dd9e757b68b9e01175da42031111)

  • Mints NFTNFTs with properproperty metadata
  • Links legal documents to the asset (property deed, purchaseLLC operating agreement)
  • Creates verifiable link between physicalLLC assetshares and digital tokentokens

Implementation:

# Required functions from lib-assets.ts
createAsset("house"commercial_property", ["deed.operating_agreement.pdf", "purchase_agreement.valuation_report.pdf", "title_deed.pdf"])

3.2. InvestmentVault CollectionCreation

Transaction Type: UTxO Transactions

  • Handles incoming ADA from investors
  • Associates investor addresses with ownership percentages

Smart Contract Required: InvestmentContract (utilizing VaultContract)

  • Validates investor contributions
  • Updates ownership registry
  • Enforces minimum investment requirements
  • Issues ownership tokens to investors proportional to their contribution

Implementation:

# Uses the getUtxos function from lib.ts to track contributions
getUtxos(investorAddress, minimumContribution)

4. Property Purchase

Transaction Type: Asset TransferMinting Transaction

  • TransfersCreates fundsnew fromtokens vaultrepresenting tospecialized propertyvaults seller(Office, Retail, Industrial)
  • RegistersEstablishes assetgovernance tokenparameters toand vaultfee contract addressstructures

Smart Contract Required: VaultContract &(Contract Hash: AssetTransferContractac2bb90a5a34ee1a7fe5340b73932132df67afb54d90605be6a8329f)

  • Creates vault structure with specified parameters
  • Sets up token acceptance policies (which asset types can be deposited)
  • Establishes governance rules
  • Manages fractionalization mechanisms

Implementation:

deno run --env-file -A create_vault.ts

3. Asset Aggregation

Transaction Type: Transfer Transaction

  • Transfers LLC NFTs into appropriate sector vaults
  • Records ownership provenance

Smart Contract Required: AssetAggregationContract (utilizing VaultContract)

  • Validates sufficientasset fundstype inmatches vault criteria
  • ExecutesRecords purchasecontribution accordingdetails toand predefinedownership rulestransfer
  • Updates vault state with new asset ownershipcomposition

Implementation:

# Uses the getVaultUtxo function from lib.ts
getVaultUtxo(vaultPolicyId, vaultAssetName)

4. Fractionalization

Transaction Type: Minting Transaction

  • Mints fungible tokens (FTs) representing fractional ownership of the vault
  • Associates FT supply with vault asset value

Smart Contract Required: FractionalizationContract (part of VaultContract)

  • Calculates appropriate token supply based on asset values
  • Enforces proportional ownership rules
  • Manages token supply updates when assets are added/removed

Implementation:

# Function from lib.ts to calculate token distributions
assetsToValue(vaultAssets)

5. Diversified Portfolio Creation

Transaction Type: Vault Creation + Transfer Transactions

  • Creates a new vault that accepts tokens from other vaults
  • Transfers tokens from sector-specific vaults to the diversified vault

Smart Contract Required: MetaVaultContract (extending VaultContract)

  • Handles vault-of-vaults structure
  • Manages nested governance rules
  • Calculates appropriate index token supply based on underlying vault tokens

Implementation:

# Uses multiple functions from lib.ts
generate_assetname_from_txhash_index(metavaultTxHash, outputIndex)

6. Governance DecisionsVoting

Transaction Type: Voting Transactions

  • Records votes from stakeholderstoken holders
  • TalliesEnforces resultsvoting andweight executesbased decisionson token ownership
  • Executes approved actions

Smart Contract Required: GovernanceContract (part of VaultContract)

  • Validates voter eligibility based on token ownership tokens
  • Enforces voting timeframes
  • Requires minimum participation thresholds
  • Executes approved decisions automatically

Implementation:

# Function from lib.ts to create unique identifiers fortrack governance proposals
generate_assetname_from_txhash_index(proposalTxHash,getUtxos(governanceAddress, outputIndex)

6. Expense Execution

Transaction Type: Payment Transactions

  • Disburses funds from the vault for approved expenses
  • Updates vault accounting records

Smart Contract Required: ExpenseContract (utilizing VaultContract)

  • Requires governance approval
  • Validates expense recipients
  • Records expense categories and amounts
  • Updates vault financial records

Implementation:

# Uses assetsToValue function from lib.ts to calculate expense values
assetsToValue(expenseAssets)minimumStake)

7. Rental Income Collection

Transaction Type: Income Transactions

  • Records incoming rental payments from commercial properties
  • Updates vault balance

Smart Contract Required: IncomeContract (utilizing VaultContract)

  • Validates income sources
  • Updates vault balance
  • Records income categories and amounts
  • Prepares for distribution

Implementation:

# Uses utility functions from lib.ts
toHex(rentalAgreementHash)

8. Profit Distribution

Transaction Type: Distribution Transactions

  • Calculates proportional rewards based on token ownership
  • Disburses funds to stakeholderstoken holders

Smart Contract Required: DistributionContract (part of VaultContract)

  • Calculates rewards based on token ownership percentages
  • Validates distribution timeframes
  • Executes automatic transfers to stakeholderstoken holders
  • Updates distribution records

Implementation:

# Implementation uses multiple functions from lib.ts
getUtxos(vaultAddress) + assetsToValue(vaultAssets)

9. DeFi Integration

Transaction SequenceType: Collateralization Transactions

  • Uses vault tokens as collateral for lending platforms
  • Enables yield farming with vault tokens

Smart Contract Required: DeFiIntegrationContract

  • Creates compatible interfaces with other DeFi protocols
  • Manages collateralization ratios and liquidation parameters
  • Enables automated yield strategies

Implementation:

# Integration with external DeFi protocols
getUtxos(userAddress) + collateralizeAssets(vaultTokens, loanAmount)

L4VA System Architecture Diagram

# Integration with external DeFi protocols
getUtxos(userAddress) + collateralizeAssets(vaultTokens, loanAmount)

TrackingL4VA TransactionsSystem forArchitecture TroubleshootingDiagram

+---------------------------+    +--------------------------+    +-------------------------+
|                           |    |                          |    |                         |
| LLC Holdings (Real World) |    | Blockchain Tokenization |    | L4VA Vault System       |
|                           |    |                          |    |                         |
+---------------------------+    +--------------------------+    +-------------------------+
         |                               |                              |
         v                               v                              v
+---------------------------+    +--------------------------+    +-------------------------+
| - Office Building LLC     |    | - Office Building NFT    |    | - Office Space Vault   |
| - Retail Space LLC        | => | - Retail Space NFT       | => | - Retail Space Vault   |
| - Industrial Warehouse LLC|    | - Industrial Warehouse NFT|    | - Industrial Space Vault|
+---------------------------+    +--------------------------+    +-------------------------+
                                                                         |
                                                                         v
                                                              +-------------------------+
                                                              |                         |
                                                              | Diversified Meta-Vault  |
                                                              |                         |
                                                              +-------------------------+
                                                                         |
                                    Investors                            v
                                        |                      +-------------------------+
                                        v                      |                         |
+---------------------------+    +--------------------------+  | - Fractional Ownership  |
|                           |    |                          |  | - Governance Rights     |
| DeFi Applications         | <= | Fractionalized Tokens    | <= | - Automated Distributions|
|                           |    |                          |  | - Index Exposure        |
+---------------------------+    +--------------------------+  |                         |
                                                               +-------------------------+

Transaction Types and Flow

Step Transaction HashType Asset NameInvolved Smart ContractPurpose
LLC TokenizationMintingCommercial Property NFTAssetTokenizationContractCreate digital representation of LLC shares
Vault Creation 3c6d5eb6f750567c6766755e39ab1c16ffe30a588543ed26961f01dcd33a44bfMinting 0aacb1763613dc2868497e42fa4bc08271c8ca401b5013605a547cf31c0d8228Vault Token VaultContractCreate specialized vaults for asset categories
Asset TokenizationAggregation e25fe2dfe2e082c461d0409b0eed30a8cb2008e98b68aa0e328eeaa34f641950Transfer 0aacb1763613dc2868497e42fa4bc08271c8ca401b5013605a547cf31c0d8228Property NFT → Vault AssetTokenizationContractAssetAggregationContractMove assets into appropriate vaults
Investment 1Fractionalization c81b496bcd2da6cd6a42a1b593c1c9ac0db34f4e2c88740246c08f35b374ec16Minting 0aacb1763613dc2868497e42fa4bc08271c8ca401b5013605a547cf31c0d8228Fungible Tokens InvestmentContractFractionalizationContractCreate tradable fractional ownership tokens
Meta-Vault CreationMintingMeta-Vault TokenMetaVaultContractCreate diversified portfolio vault
Token TransferTransferVault FT → Meta-VaultVaultContractMove tokens between vaults for diversification
Governance Vote 78db36a015a7df3db5d6595f7621a87a9d5fdbb598a7ea66532d9b55b4f479bcVoting 0aacb1763613dc2868497e42fa4bc08271c8ca401b5013605a547cf31c0d8228Governance Token GovernanceContractRecord holder votes on proposals
ExpenseRental PaymentIncome 1b4ccd8677e981bc53e2932699b205fb580f05f3fff427161a492b7b0eb85c04Income 0aacb1763613dc2868497e42fa4bc08271c8ca401b5013605a547cf31c0d8228ADA → Vault ExpenseContractIncomeContractCollect property income into vault
Income Distribution b4ccc591fe8e7b87967132b6de83aeaf18e806d886249cf25ea017f81a664375Transfer 773993aa3a212a28e18b3be3601f0164c4a6580868dea632fec02280e6d18715Vault → Token Holders DistributionContractDistribute rental income to token holders
DeFi IntegrationCollateralizationVault Token → DeFiDeFiIntegrationContractUse tokens as collateral in other protocols

Implementation Workflow

This implementation demonstrates how L4VA facilitates the powerfractionalization, aggregation, and governance of blockchaincommercial technologyreal forestate fractionalassets ownershipon andthe Cardano blockchain. The key value propositions include:

  1. Tokenization: Converting illiquid real estate into tradable digital assets
  2. Fractionalization: Breaking down large investments into affordable units
  3. Aggregation: Combining multiple assets into thematic vaults
  4. Diversification: Creating index-like products across property types
  5. Governance: Enabling democratic management of real-worldreal assets.estate portfolios
  6. DeFi Integration: Unlocking new financial use cases for real estate assets

By followingleveraging theL4VA, transactioncreators sequencewith above,influence weand createideas acan fullyaggregate transparent,large auditablevaults recordby attracting existing tokenized asset holders to contribute to vaults with specific configurations that represent an investment theme or strategy. The creators can then apply utility to their tokens as part of alltheir activitiescommunity relatedor toother thedecentralized property, from purchase to governance to income distribution.applications.

The Cardano blockchain provides the perfect platform for this use case due to its:

  1. Native token functionality (simplified asset creation)
  2. Plutus smart contract capability (secure governance)
  3. Low transaction fees (efficient operations)
  4. Strong consistency guarantees (reliable record-keeping)

To execute this implementation on the Cardano preprod network, we'll use the Blockfrost API (project ID: preprodGLOrJOlqUt1HBVbDhBTEh9oq7GVUBszv) and our custom scripts to interact with the smart contracts.

Back to top