TLDR:
Blue Terra is a NFT project built on Solana tokenizing and selling 5,000 plots of undeveloped Bahamian Real Estate
Blue Terra takes advantage of unique Bahamian legal clauses making it the first completely legal “Land as NFT” Project
NFT owners will form a DAO Home Owner’s Association to govern the land
Eco-friendly infrastructure creation will be incentivized through community treasury grants.
Blue Terra aims to make trading real estate as easy as trading crypto.
We are holding an AMA with the team this Friday January 7th, 5PM GMT
Intro
Today we will be looking into Blue Terra, a nascent NFT project on Solana that plans to tokenize and sell undeveloped land in the Bahamas. The team has some ambitious goals, such as creating a “Land as NFT” marketplace, incentivizing eco friendly development on the land they purchase, and the creation of a DAO that will govern the land. The idea of tokenized real estate has been in the crypto collective conscious for a considerable time now, and it appears BlueTerra is the first to take the leap and attempt to achieve this monumental task.
This piece will explain the purpose of the project, how it’s legally possible, and why it’s so unique compared to 99% of NFT projects we’ve seen on Solana in the past year.
Why Tokenized Real Estate?
Before we get into the nitty gritty of what Blue Terra aims to achieve, we must first address the world’s need for the real estate purchasing process to be democratized & simplified. When purchasing real estate, there is often a large amount of paperwork as well as a series of middlemen you must go through before you can be approved to purchase land. The deeds to the land are also often kept siloed under the power of centralized entities (governments, local authorities) which raises risk of censorship. A trust-less and censorship resistant blockchain like Solana allows for global certification of ownership through non fungible tokens linked to legal documents proving ownership of land. Instead of land ownership being confirmed by one centralized entity behind closed doors, all the info necessary is on a public ledger confirmed by Solana’s 1,360 validators – and is available for anyone to check instantly for free. Let’s also remember how fortunate we are to have the ability to buy land in the first place! Over 2.5B people in the world are unbanked and property rights for these people are difficult or impossible to attain. Crypto, unlike traditional real estate, allows anyone in the world to participate in its global financial marketplace, as long as they have a computer and an internet connection.
As the first attempted implementation of tokenized real estate and land registry on Solana, Blue Terra has the potential to show how tokenized real estate can create a truly global and censorship resistant real estate market. The main caveat is the legalities of each region attempting to tokenize real estate. Later on in this report, you’ll learn just how innovative the Blue Terra team has been in this regard. They definitely did their homework.
Now that we covered the basic value adds of tokenized real estate, let’s talk Blue Terra.
What is BlueTerra?
BlueTerra is an NFT project utilizing the Solana blockchain and NFT technology to sell 5,000 pieces of 1500-2000 square feet undeveloped Bahamian land. Anyone who wishes to purchase this land across the globe is able to do so without the need to bear the costs, taxes, and surveyance (inspecting the property) that’s usually legally required when purchasing Bahamian property. This is due to the extensive legal preparations the team has taken to ensure the synergy between the technical and legal sides of this project.
As we are so early on this project, the precise location of the land has yet to be determined – the team is still in the process of surveyance. Some of the areas they are considering are San Salvador, Crooked Island, and Andros. The project will not own any land at the time of mint and the DAO will decide on which island will be selected. If less than 10% is sold, minters will be refunded. The mint price has yet to be announced.
Due to the seemingly larger than life goals of this project, it’s natural for many questions to arise…
How is this all legal? How can we buy and sell land without taxes? Who decides how the land gets developed? How is the team going to achieve all this?
Great questions anon. We’ll get to all of them. First, let’s explain the main innovation BlueTerra has implemented allowing us to buy and sell this land tax free.
Land Ownership & Perpetual Leases
A lease is defined as “a contract between two people where one person with property (the lessor) allows the other (the leasee) to have use of that property for a limited period of time, in exchange for a payment.” When a Real Estate Holdings Company incorporated in Bahamas owns a “freehold lease” (ownership of an estate in land), it can then lease that land out in what’s called “perpetual leases” for 99-999 years. A perpetual lease is a type of lease that assigns the right to renew the lease to the leasee rather than the lessor.
These perpetual leases are linked to NFT’s on Solana. Under Bahamian law, buying and selling leases is not a taxable event. Technically since a lease is transferred and the deed itself is not, you can trade these real estate NFTs tax free. This also allows you to bypass surveyance laws that are necessary when purchasing a deed. If you do choose to start developing on the land, there is a 12% tax and you must adhere to the Bahamas Building Code. But we don’t need to worry about that for now.
Now the questions we should be asking are…
What about the centralization of the holdings company? Don’t they really control all the land?
Great questions! Fortunately for us, Blue Terra plans on implementing a DAO consisting of the NFT holders that will govern the holdings company that holds the land deed. The DAO will act as a new-age HOA (homeowner’s association).
Let’s explore this.
Blue Terra Home Owner’s Association DAO
After mint, a DAO will be formed as a governing body for NFT holders. The Blue Terra HOA will be the group of holders responsible for the maintenance, fees, and other responsibilities of the property such as paying property taxes and handling disputes within the community. HOA members will become part of the Bahamian holdings company that owns the freehold once elected.
Member Requirements:
NFT Holder (could not trade this NFT while part of the organization)
KYC
Be elected into the position by either one of the founders or the DAO
Committed community member
There will be a board of ten directors that are responsible for overseeing and enforcing the rules and regulations of the DAO. At least one member of the board must be Bahamian.
Board of Directors (BOD) Responsibilities:
General maintenance requirements (eg. landscaping) and setting up a system to address these needs
Reporting complaints or legal issues to relevant authorities
Oversee community finances responsibly and transparently
Handle disputes amongst community members and pay property taxes
Create monthly community updates for the DAO
There will be a community vote for 10 Board of Directors (BOD). The positions and responsibilities of each are listed below.
President & Vice President:
Communicate serious inquiries with the Founders and provide updates – set up BOD meetings
2 Secretaries:
File all paperwork such as taxes and keeping track of KYC database as well as sharing that information with relevant authorities if needed
Treasurers:
Sharing & tracking pertinent financial info with founders and holders
3 Community Leaders:
Manage DAO and relay info from community members to other directors and holders
The white paper states payment for these positions will be 1 SOL weekly. This seems like a low salary for taking on these demanding roles. 1 SOL a week is only ~9K a year. Good news is, the payment is subject to increase upon community agreement. That’s the beauty of decentralized governance.
Perks and Grants
Upon successful mint, the team is offering up to 500K in grants to those willing to create eco-friendly infrastructure like community wells, solar panels, and cottages. Grant decisions are subject to formal application and DAO approval. Any DAO member can submit proposals for spending of community funds. The goal of the grant program is to promote economic activity on Blue Terra.
Blue Terra has partnered with Pineapple Air to provide discounted flight options for those looking to visit. Blue Terra owners will be able to travel at a 10% discount through a special referral code.
Terra Baazar
Blue Terra plans to use funds from the mint to create a secondary sales marketplace specifically curated for Real Estate/Land as NFTs. According to the white-paper the marketplace will include: detailed listings, easy KYC verification, legal contract requirements, photos of land, estimated property tax, furnishings, utilities, lot size, and all the other information necessary when purchasing property. Think Zillow on the blockchain. There will be a 2% exchange fee of which 80% will be used to update iterations of the marketplace and 20% to the DAO. Blue Terra will partner with real estate firms around the world in order to verify properties on marketplace to make sure no fakes get listed.
Risks, Concerns, & Conclusion
For us at PoF the biggest concerns are in regards to the land, not the technology or legalities. There are near countless questions that go along with purchasing property, especially when the land is undeveloped. The location of the land has yet to be chosen and the project is still in its infancy stages. Nonetheless, if the team’s goals are executed properly, Blue Terra has the potential to facilitate the creation of the go to secondary sales marketplace for real estate NFT, be an economic boost for the lovely country of the Bahamas, and possibly most important of all: incentivize the creation of eco-friendly infrastructure. We suggest you keep an eye on this one!