BlockEstateDAO Capitalization Report

1. Overview

This Capitalization Report outlines how BlockEstateDAO’s tokenized assets align with financial reporting standards, valuation methodologies, and asset transparency principles. It ensures that tokenized real estate holdings accurately reflect their underlying value and remain compliant with regulatory requirements across jurisdictions. Additionally, this report provides integration guidance on incorporating capitalization data within the tokenized framework.

2. Valuation Methodologies

To maintain accurate and transparent tokenization, the valuation of BlockEstateDAO’s tokenized assets follows recognized financial standards and real estate assessment methodologies.

2.1 Real Estate Valuation Methods

  1. Market Approach (Comparable Sales Method)

    • Property value is determined by comparing recent sales of similar properties.

    • Used when there is sufficient market data for accurate pricing.

    • Regulatory Consideration: IFRS 13 alignment for Fair Value Measurement.

  2. Income Approach (Capitalization and Discounted Cash Flow)

    • Evaluates future income potential using Net Operating Income and Cap Rate.

    • For commercial properties or rental income models.

    • Regulatory Consideration: Aligns with International Valuation Standards (IVS).

  3. Cost Approach

    • Property valuation is based on the cost to rebuild it, minus depreciation.

    • Used in cases where comparable sales data is limited.

2.2 Token Valuation & Price Mechanism

To maintain consistency between token value and real estate assets, the following methods apply:

  1. NAV-Based Token Pricing (Net Asset Value Approach)

    • The DAO tracks the performance of its real estate holdings and provides transparency on their valuations. 

    • BESD tokens do not represent a direct claim on assets but may be used for governance and access to platform services.

  2. Market-Driven Token Pricing

    • If tokens are traded on secondary markets (DEX/CEX), price is influenced by supply & demand.

    • Integration of automated oracles ensures price accuracy.

  3. Hybrid Model (NAV + Market-Driven Pricing)

    • Establishes minimum price stability based on asset valuation.

    • Allows secondary market fluctuations while preventing excessive volatility.

3. Compliance with Financial Reporting Standards

To ensure credibility and investor confidence, financial reporting adheres to the following global standards:

Standard

Jurisdiction

Compliance Method

IFRS 16 (Leases) & IFRS 13 (Fair Value)

Global

Property valuations follow fair market value adjustments.

GAAP (Generally Accepted Accounting Principles)

USA

Financial reports structured according to GAAP for clarity.

FCA Tokenization Compliance

UK

Follows Financial Conduct Authority (FCA) guidelines for asset-backed tokens.

Securities Law & Compliance

USA / UK / DR

Tokens structured to avoid classification as securities (or to comply where necessary).

4. Asset Transparency in Tokens

For token holders to trust asset representation, transparency is critical. The following measures ensure real-time verification:

4.1 On-Chain Asset Representation

  • Each real estate asset has a tokenized representation, linked to a smart contract.

  • Investors can verify ownership rights via blockchain explorers.

4.2 Public Financial Reports & Audits

  • Quarterly updates provide insights into BlockEstateDAO’s real estate operations. These updates are informational and do not imply a financial return, ownership rights, or direct asset backing for BESD tokens.

  • Annual external audits ensure fund integrity.

4.3 Oracle Integration for Real-Time Pricing

  • Property valuation data is pulled from trusted sources using decentralized oracles (i.e., Chainlink).

  • Smart contracts update token pricing in real-time.

5. Integration Guidance

To incorporate the capitalization report into the tokenized framework, the following guidelines apply:

5.1 Smart Contract Adjustments

  • Token Supply Adjustments: Token supply is updated only when:

    • A new property is acquired.

    • An existing property is sold.

    • A revaluation leads to significant changes in asset value.

  • Smart contracts lock assets to prevent inflationary risks.

5.2 Financial Reporting Workflow

  1. Quarterly Valuation Updates

  • Annual formal appraisals for real estate valuation.

  • Quarterly DAO reporting based on property income and market data.

  • If Chainlink (or another oracle) is used, automated price feeds could provide monthly estimates to improve reporting without high appraisal costs.

  • Data is stored on-chain in an immutable format.

  1. Investor Dashboard Implementation

    • Investors access real-time valuation reports through a user-friendly interface.

    • All assets are publicly verified on the blockchain.

  2. Regulatory Oversight & Adjustments

    • Continuous monitoring of jurisdictional changes.

    • Governance proposals are limited to operational and strategic decisions. Financial oversight, including treasury management, remains under the control of the governing Board.