When Web3 Gently Sweeps Over Real Estate
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When Web3 Gently Sweeps Over Real Estate
Whoever can build the first bridge between the virtual world and the real world will gain access to the path toward freedom.
Navigating Web3 tides with focused insightsI. On the Collapse of an Industry
If we rewind the clock back one year—to August 2021—anyone who said in their social media feed that within a year, bonds issued by most private firms among China’s top 30 real estate companies would fall to single-digit prices would likely have been labeled insane and publicly shamed into social oblivion. After all, at that time, although business wasn’t great, these were still billion-dollar enterprises, Fortune 500 companies, and honored guests at every financial institution.
Yet this seemingly absurd scenario has indeed come to pass. We’ve watched helplessly as an entire industry collapsed—from hosting grand banquets to seeing its towers crumble. Bond prices plunged from 95 to 5 in less than a year, plunging the sector into a brutal redemption journey. Compare this to the so-called largest Ponzi scheme in history—the crypto world—where Bitcoin dropped from its November 2021 peak of $69,000 into a bear market, now hovering around $20,000. Which one is more surreal?
Countless friends working in real estate are now enduring their darkest hour—losing not just wealth, but also health and confidence in their future. But if we extend our timeline and broaden our perspective, perhaps we can evolve a divergent path out of what seems like a narrowing road—one leading toward a world of infinite possibilities.
II. Land Has Been King for Three Millennia
Throughout human history, land has remained the most critical means of production and source of wealth. Especially in agrarian cultures across southern Eurasia, owning land meant securing the foundation of prosperity. Historically wise monarchs, when enacting reforms, often shifted taxation from headcounts (poll tax) to land-based levies—because while people could flee, land could not.
In Europe, where modern civilization originated, feudal lords ruled under a hierarchy—dukes, marquises, counts, viscounts, barons—with kings distributing land downward. Lords managed the people and revenue on their lands, and rallied for war when summoned. Thus, land was the ultimate reward across the feudal pyramid.
China followed a similar feudal model starting from the Zhou Dynasty. The much-praised "well-field system" divided a square plot into a nine-grid layout—eight outer sections belonged to individual farmers, while the central plot was cultivated collectively, with yields going to the state. Even after Qin Shi Huang unified China and replaced the “feudal enfeoffment” system with the centralized “commandery-county” system, there was little change regarding private land ownership.
From the Qin to Qing dynasties, successive regimes made flexible adjustments within the broad framework of private land ownership. For example, during Emperor Wu of Han's reign, heavy military spending pushed the state toward more public control over land—extracting greater surplus from peasants. Later, Northern Wei, emerging from the chaos of the Five Barbarians, introduced the “equal-field system” to attract population and stabilize society: settle in the north, cultivate uncultivated fields, and they become yours—similar to America’s westward expansion.
During the Republic of China era, Sun Yat-sen clearly advocated “equalization of land rights,” but failed to implement it due to fierce opposition. When the KMT and CCP cooperated in the Northern Expedition, initial progress stalled near Wuhan—while Communist teams advanced, they carried out land reform, seizing properties belonging to families of mid- and low-ranking KMT officers. With soldiers fighting at the front and their homes raided behind, morale collapsed.
After liberation, the system was clearly defined: a clean break. Land became publicly owned—belonging to the state or collectives. This laid the foundation for the housing reforms beginning in the 1990s. Premier Zhu Rongji launched national economic reform with housing privatization: land remains state-owned, but usage rights can be granted and traded. This taught ordinary citizens what a commodity economy meant—and has lasted for 30 years.
In agrarian cultures, land is seen as the root of all wealth. In East Asian Confucian tradition, land ultimately belongs to the central government: “All land under heaven belongs to the king.” No matter how private it appears, I can always find ways to take your land. Why did Western societies successfully institutionalize private land ownership? It took major events—like the signing of England’s Magna Carta 800 years ago, when nobles rebelled and forced the king to sign a charter including the principle that “private property is sacred and inviolable”—meaning even if I commit a crime, you may imprison or execute me, but cannot seize my lawful money or land.
III. Economic Models and the Rise of WEB3
Coming back to today, China’s full-scale real estate freeze amounts to a “hard landing”—similar to Japan’s property bubble burst after the Plaza Accord in the 1980s, or the 2008 U.S. subprime crisis—both instances where real estate served as the primary vehicle for correction during economic downturns.
In China’s unique governance and public ownership system, necessary adjustments were delayed because real estate played a crucial role as a reservoir for national wealth during the first three decades of explosive growth—making large-scale disruption unfeasible. In WEB3 terms, real estate’s role in national wealth resembles NFTs (Non-Fungible Tokens) relative to the overall TVL (Total Value Locked) in crypto—both characterized by high asset stickiness and poor liquidity. Before NFTs went mainstream in 2021, bear markets hit fast—most holdings were liquid tokens, easy to sell. But in the current bear market, some capital is locked in NFTs—how quickly can you really offload a Bored Ape Yacht Club NFT?
Sometimes I speculate: comparing China’s two decades of rapid economic growth with the blockchain bull run since 2020 reveals interesting parallels. The foundations of China’s reform era include:
- Relocation of global manufacturing hubs to China;
- Accession to the WTO;
- Rise of e-commerce;
- Mobile internet disrupting operations across civilian industries. The result: Made-in-China exports, wealth accumulation, part reinvested into internet sectors, part channeled into real estate (the “reservoir”). Hence, China’s richest individuals in the past decade were either in internet or real estate.
The first half of this pattern repeats throughout history—global economic leaders first become manufacturing powerhouses: from Britain during the Industrial Revolution, to the U.S. around WWI, then post-WWII shifts to Germany and Japan, followed by Asia’s Four Little Dragons in the 1970s–80s, and finally mainland China rapidly rising as the world’s factory. The second half adapts to contemporary advanced productive forces—mechanization, electrification, high-end electronics, and eventually the internet—each enabling widespread societal transformation.
Contrast this with the crypto bull market since 2020, which established new foundations beyond previous cycles:
- Rise of multiple public blockchains;
- Establishment of DeFi ecosystems at the base layer;
- Breakout applications via NFTs and blockchain gaming;
If we boldly assume this is only the beginning, many practical use cases remain to unfold: interoperability and security of blockchain infrastructure; integration of DeFi with traditional finance; utility expansion of NFTs; flourishing of games, social platforms, and entertainment under WEB3 consensus; hardware breakthroughs in AR+VR driving metaverse development…
IV. WEB3 Meets Real Estate
Let’s narrow our focus back to WEB3 and real estate. In the physical world, real estate closely mirrors NFTs—not only in strong asset stickiness and low liquidity, but also in other aspects: both possess investment and utility value (though NFT utility is still evolving—game passcards being one example); both require clear title; both consist primarily of non-fungible assets; and their value depends heavily on collective belief.
A new frontier thus emerges: if the crypto community already accepts virtual land as valuable (Sandbox metaverse plots, Otherside monkey lands, Illuvium game territories), can the tide of WEB3 bring new ideas and transformations to real-world land and housing?
A core member of W Labs participated in a blockchain-integrated real estate project back in 2016. It started with fanfare but ended without results. His conclusion: all on-chain efforts must still be redone off-chain—pricing, title verification, settlement, financing. The on-chain toolkit felt like a sword designed to slay dragons that doesn’t exist—or mere gimmickry. Every traditional step remained essential. How can a highly centralized industry like real estate meaningfully interact with WEB3, which champions decentralization?
Yet I believe something impossible five years ago may now be worth revisiting—especially since ERC-721 didn’t even exist in 2016. True industry transformation often requires prior participants to hit rock bottom before breakthroughs occur—just as seen in new energy, electric vehicles, or our own gaming industry.
In the next piece, we’ll explore potential WEB3-driven solutions for real estate—such as finding balance between decentralization and centralization: replacing traditional developers with DAOs (decentralized autonomous organizations); using SBTs (Soulbound Tokens) to verify real identities on-chain; employing NFTs for asset title registration; applying blockchain-based securitization for financing.
Whoever builds the first bridge between virtual and physical worlds will gain access to the path of freedom.
V. Where Does the Money Come From?
Real estate falls under the “alternative investments” segment of finance, centered on cash flow and leverage.
Over the past decade, Chinese developers maximized two types of leverage—operational and financial—enabling projects to generate near-infinite ROE (Return on Equity). Why? Consider this: a $10 million land parcel, acquired with a 30% down payment ($3 million), funded via trusts, private placements, or informal financing (“pre-development funding”). Construction begins, with contractors fronting costs. Once underway, developers secure bank development loans. Upon reaching pre-sale thresholds, buyer payments (including mortgages) arrive.
Thus, developers calculate profit simply as: pre-funding + contractor advances + development loans + buyer payments > land cost + construction cost + overhead. Since equity investment is minimal, returns appear theoretically infinite.
This uniquely Chinese model of zero-cost, massive-profit is clearly unsustainable—but in a winning streak, who can resist such temptation? Starting with Evergrande’s crisis, fast-turnover developers, stretched too thin without cash flow, have largely collapsed.
Now consider current WEB3 project cash flows: project initiation, institutional fundraising, IDO and INO launches, operational expenses covered by revenues (e.g., transaction fees). As long as: institutional funding + IDO + INO + revenue > operating costs + investor repayments, pure profit is achieved.
Does this sound familiar? Even more lucrative than real estate? It’s hard for project teams to lose money. Some malicious actors go further—claiming hacker theft to avoid repayment. Always the hackers’ fault. Analogous to China’s real estate model, such quick-money schemes in WEB3 are unsustainable long-term—though currently, WEB3 remains in its infancy, with everyone still experimenting.
What if we integrate real estate workflows into WEB3 systems? Just along the financing line, could it work like this:
- Step 1: Overseas project launch—“Metaverse Complex”—securing policy and land price incentives;
- Step 2: INO. Sell NFTs to institutional and retail investors. NFT holders gain ownership rights (securitized property rights), generating initial capital for land acquisition. Developer team holds founding NFTs (representing equity stake), bound by SBTs, non-transferable;
- Step 3: IDO fundraising. Issue tokens representing partial revenue rights (securitized income rights). These tokens can be used within the Metaverse Complex—for utilities like property fees—akin to Elon Musk accepting Dogecoin for Tesla purchases. This secures second-round funding for construction and operations;
- Step 4: Pledge some tokens to crypto financial institutions to borrow stablecoins (e.g., USDT), securing third-round funding to cover remaining costs.
These four steps can operate in tandem, with tokens and NFTs listed on digital exchanges per local regulations—unlocking seamless financing and exit mechanisms.
VI. Reimagining Roles for All Stakeholders
After publishing the first part, real estate professionals raised a key concern: physical asset development and title registration require government recognition. In reality, a legal entity must represent all stakeholders externally. Previously, this role belonged to the developer’s project company. In a WEB3 context, how should this role evolve?
The actual responsibilities need not change drastically. Six core functions—design, approvals, construction, marketing, administration, finance—remain best handled by professional developers. But whereas developers were once principals (甲方), in WEB3 they become agents (乙方). Who then is the principal? The DAO formed by NFT holders. Let’s illustrate:
- A forward-thinking developer acquires land for a “Metaverse Complex,” selects candidate sites, and launches NFT fundraising among institutional investors and early DAO community members. The team retains a portion of founding NFTs, representing project equity. Land titles are transferred to a legal entity, Company A.
- The DAO consists of all NFT holders, governed by a whitepaper outlining rules, decision-making processes, and governance structures. A council is elected to manage daily affairs and multi-signature control over the DAO treasury. The developer team is hired as project executor and manager of Company A. An independent law firm or third-party auditor is appointed to supervise Company A, ensuring the developer acts transparently (managing seals, accounts, budgets, etc.). Funds stay under DAO control, assets held in Company A under oversight—separating money and assets, minimizing opportunities for misconduct.
- DAO members are participants and fans, comprising several groups: NFT holders, token holders, speculators, partners from development and regulatory bodies. Proposal and voting rights are restricted—only those holding NFTs or above a certain token threshold may initiate or vote on decisions. The governance council maintains regular communication with the developer and supervisor.
This creates a tripartite structure of aligned interests and mutual oversight:
- Developers remain operators, holding partial equity, but manage only asset-holding Company A. Funding must be requested from the DAO treasury;
- The DAO represents true owners, the primary beneficiaries, hiring professionals to monitor the developer;
- DAO users are both decision-makers and investors, empowered to propose and vote on major initiatives.
VII. What Is WEB3 Really About?
Under traditional real estate models, conflict persists between buyers and developers—your gain is my loss—manifested in price disputes and quality issues. Lower quality and higher prices mean bigger profits for developers, losses for buyers—hence endless维权 incidents.
In the hypothetical WEB3 model described, the dual roles of owner and operator are separated. The DAO is the true owner. Developers may hold partial equity, but cannot freely transfer it thanks to SBT soul-binding. Major decisions follow DAO directives, with external supervisors ensuring compliance.
Some developers may feel constrained: why must I behave like a submissive spouse in WEB3 mode when I enjoyed full control before? Sorry—if you reject these terms, future users won’t buy in. I boldly predict: consumer identity and participant identity will increasingly merge. Look at today’s blockchain games—most players are community members. Any game team ignoring community input is doomed.
This isn’t new. Xiaomi’s success stemmed from the idea in the book *Participation*—users as co-creators. The awakening of user agency is the biggest difference between WEB3 and WEB2. We can foresee the end of WEB2 giants profiting endlessly from users’ private data.
Some old-school real estate veterans might say: “Brother Gua, isn’t this just a mix of last decade’s ‘crowdfunding + small-stake development management + private equity funds’?” Logically similar—but the WEB3 advantage breaks through by: using tokens to establish decentralized private ownership, smart contracts to ensure fair transactions, and immersive application scenarios to elevate user experience. This, to me, captures the essence of WEB3.
Traditional models rely on stacks of legal documents to define rights and obligations—breaches lead to lawsuits, chaos lasting years. WEB3’s benefit? Your assets are truly yours—held in your wallet, governed by code that executes automatically and immutably—realizing Satoshi Nakamoto’s vision of “trustless execution.”
VIII. Conclusion
China generates $10 trillion in GDP annually. Annual home sales hovered near $2 trillion for the past three years—this year likely halved to ~$1 trillion. Such a collapse delivers a massive blow to the national economy. As a two-decade veteran of real estate, witnessing a pillar industry undergo such painful restructuring, I’m deeply contemplating its possible futures.
Discussing WEB3 today may seem premature—hardware and software remain primitive. Facebook rebranded to Meta, invested billions over years, and barely made a splash. Today’s WEB3 space remains immature—more scammers than users, more hot money than real projects—but a nascent consensus exists, especially among youth.
Last month, I attended Dalifolia—“Ensuring WEB3 Happens in Dali”—a gathering of over a thousand digital nomads. Youth consensus shapes the future. Twenty-five years ago, using dial-up on a 486 PC, could anyone imagine today’s mobile life—walking around with a tiny screen, streaming videos and shopping anytime?
This article imagines a concrete real estate implementation based on current WEB3 mechanics—call it wild speculation or armchair strategy. But market potential is vast. Research firms cite figures like the $22.5 trillion opportunity below.
Right now, what matters most is daring to experiment and fail. Only by believing in the future can we find hope.
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