Co-Authored by: Lee Evans (TokenCrunch) & Allen Walters of the Tezos Publish0x Channel.
Inveniam, a New York City-based software-as-a-service company, is looking to bring Fortune 500 companies and large holders of commercial real estate assets utilizing their patent-pending technology onto the Tezos blockchain in the 4th quarter of this year, pending the completion of security audits for smart contracts.
Token Crunch has learned Inveniam is negotiating at present with four Fortune 500 companies and at least two family offices, each with assets under management of more than $5 billion. One of the potential counterparties is considering adding 12 high-end buildings onto the Inveniam platform – and by extension, the Tezos blockchain.
Inveniam CEO and Chairman Patrick O’Meara said, “We’d love for some of those assets to be on Tezos. We need some third-party audits to sign off on this and we’re ready to go live. It certainly is an exciting time. We want these assets to be up on Tezos.“
According to a spokesperson close to Tezos related development, “The situation regarding the audit is being addressed and steps are being proposed to enhance the overall smart contract auditing process on Tezos.”
Inveniam is no stranger to tokenization and has had a fully functioning tokenization platform since May 2017.
“We think we were the first people to tokenize equity under Delaware law” said Mr. O’Meara. “In February, 2018, we did our first on-chain arms-length commercial mortgage transaction. We engineered a $3.9 million debt financing deal that to this day is paying out every month, exactly as it should to a family office that lent money to a real-estate developer.
We are in the early days in the tokenization game, but the sky is the limit as to where this ends up.“
Inveniam has created a platform that provides real time data on low-frequency trading financial instruments, such as property. Says Mr. O’Meara, “This concept of tokenization of securities is nothing new. The London Stock Exchange has been dematerializing assets to paper for 450 years. What we are doing is the next evolution to dematerialize to a digital instrument and connecting code and data to it. Think of a building; every time you maintain the mechanical system, every time somebody uses a key fob, pays their rent, signs a lease or breaks a lease or gets an easement, the systems are updated, and we gather evidence of the update and credential it.”
One of the key aspects of the Inveniam offering is that the platform can be utilized by asset owners to work with their auditors to reclassify assets from Level III on a balance sheet to Level II. This is done for commercial real estate assets with world-class contributors like Cushman & Wakefield and Deloitte. To be clear, Inveniam does not value the assets, but rather provides a platform to gather the data and feed it to Cushman & Wakefield for an appraisal, and then to Deloitte for an audit. The data is held securely by the client in their own environment at all times.
Inveniam had previously only utilized the Ethereum blockchain, but they have recently started using the Tezos blockchain to tokenize assets after considering many alternatives.
Mr. O’Meara, who operates out of Northville, Michigan, said, “We love Tezos. We looked at many other chains and the reality is we are doing more and more on Tezos because the transaction costs are favorable vs. Ethereum. Last October, it cost me three cents every time I interacted with the Ethereum chain and right now it is costing as much as $20 a transaction because Tether volume is driving the fees up. We’re batching our transactions because what previously was the cost for thousands of transactions is what one transaction costs today, and that’s not tenable.”
Inveniam believes they have one of the most experienced teams in the asset tokenization space, according to Mr. O’Meara. “We have the former commissioner of the SEC, Troy Paredes, on our Advisory Board. Our President is Kerry Rudy, who worked for 18 years at Goldman Sachs and Lehman Brothers, and ran debt capital markets for PNC. Our Chief Technology Officer, Gary Maier, was the 20th employee at Blackrock, where he led the team that created Aladdin. Aladdin is the biggest asset manager there is, with over $20 trillion in assets on their system.“
One current project underway at Inveniam is to create a Net Asset Value (NAV) pricing solution to improve liquidity of assets that trade infrequently. One of the difficulties with illiquid assets is pricing: how best to determine the value of an asset that hasn’t been traded for several years. What has the return of the asset been over past years? What is the value of comparable assets that have been sold recently?
The current system that is used for price discovery is radically outdated and Inveniam is working on a solution that saves time and money and modernizes antiquated systems. One of the key components of the Inveniam solution is blockchain. According to Mr. O’Meara, “To price illiquid assets, it’s important to understand that the value of these assets changes over time and needs to be continuously assessed. To adequately determine the current value, several types of data need to be authenticated, evaluated and stored in a reliable manner.”
Inveniam has created a method by which this data can be securely audited, stored and time-stamped in a way that:
– On several administrative and legal levels, process-costs are dramatically reduced.
– Assets such as real estate and mortgages can be moved from Level III illiquid assets to Level II marketable alternatives.
– Reduces the time to assess real estate performance and data from 120 days to five days.
– Upgrades certain assets from regulated entities from Schedule BA to Schedule A – lowering the obligation to reserve 20% of the asset value to 10%, which means that large regulated institutions will be able to free up millions of dollars to be invested elsewhere.
For now, Inveniam sees broader collaboration with Tezos as a distinct possibility in the years ahead. Mr. O’Meara concludes, “If the Tezos community has assets that would benefit from data integrity and price discovery, we’d love to interface with them. I’d love to collaborate with somebody on Tezos.”
Co-Authors Note: If you are working on a project that utilizes the Tezos blockchain and would like to share developments with the Tezos community, please get in touch with TokenCrunch at email@example.com. We do not charge any fees for our articles and our goal is simply to deliver Tezos related news to the community.
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