IFN Fintech shines the spotlight on Islamic fintech start-up Aqarchain, a blockchain powered real estate investing platform aiming to create a decentralized ecosystem for hassle-free investment in real estate.
“The concept and technology is fairly new, although there have been players in the past who have attempted a similar line of business but have not been successful as they all concentrated on tokenizing the land or the whole building, again focusing on the high-net-worth individuals and institutional investors.
“Our focus is more retail and we intend to tokenize the apartments, not the land or the building. Our business model is more unique than any other crowdfunding model as we have a DeFi [decentralized finance] staking platform,” Waqas Nakhwa, CEO and co-founder of Aqarchain, tells IFN.
In July 2021, IFN reported that Aqarchain, in partnership with Shariah compliant blockchain platform Tezos, is looking to launch an end-to-end blockchain platform for the tokenization of the real estate market in the UAE.
“Initially, Aqarchain was built and deployed on the Ethereum private network, then we came across Tezos, we saw that the transaction cost was less, number of transactions per second was higher thus giving us a faster processing speed. The consensus protocol was good and the community has the highest level of staking which made us go ahead with Tezos,” Waqas opines.
Aqarchain will conduct a beta launch in the third quarter of this year to test the tokenization of properties on the test network and the blockchain platform will be launched in the fourth quarter of 2021.
Based in the UAE where more than 60% of the platform’s investors will be comfortable with the Shariah compliant process, Waqas believes that there are benefits in being a Shariah compliant regulated investment tool.
“Since the investment asset is real estate and is a generic Shariah compliant asset with investments in clear transactions, there is no need for any Shariah board to supervise. Our staking mechanism is also not compounding but is a linear block by block emission thus making it a fully Shariah compliant platform,” Waqas explains.
Aqarchain offers a property listing platform where normal users can browse through properties for everyday rent or buy listed properties through a network of brokers and property developers.
Furthermore, there will be listings of tokenized properties available for purchase in a fractional manner plus a DeFi staking platform for the crypto enthusiasts who will be using the native utility token on the platform.
The platform has a network of 5,000 brokers in the UAE with properties worth AED100 million (US$27.22 million) for tokenization in various segments. Aqarchain aims to have US$100 million in assets and US$1 billion in transactions in its first year of operation.
“Our initial target market is to start with Dubai and then to go global with immediate access to the GCC, MENA, Southeast Asia and Europe. We also applied for a regulated crowdfunding license in real estate with Dubai International Financial Centre. It is a fully regulated license and not a sandbox license,” Waqas says.
The platform has been in development for almost two and a half years, and the main challenges faced were on the technology side. As it is a new technology, adopting it was going to be a tough task.
As far as regulations go, there were no clear guidelines from a regulatory body. However, the platform now has a working model and a regulatory framework that goes well with the technology and business model.
Looking ahead, Aqarchain is also planning to offer Shariah compliant lending products.