Token Valuation
Last updated
Last updated
REITs determine the value of their properties through a combination of market data, professional appraisals, and accepted appraisal methods. Appraisals consider the property's physical characteristics, location, and economic conditions. REITs hire appraisers to conduct appraisals and consider factors such as property size, age, condition, and local real estate market supply and demand. The appraisal, along with market data, is used to estimate the net asset value (NAV) of the property and is included in the REIT's portfolio valuation.
Gypsy will, at minimum, once a year has a property appraised to ensure an accurate depiction of the fair market value of the token backing.
The backing price is the estimated value per token. Each token is backed by the Gypsy Treasury, which holds real estate and fiat.
The backing price is determined by first getting the NAV or net asset value of the Gypsy Treasury. This is the sum of all the assets held. To do this, we sum up all of the most recent home appraisal prices and add them to the number of stablecoins held.
After the NAV is determined we need to divide it by the current supply of Gypsy. This gets the assets held per token.
Gypsy has partnered with Parcl labs to bring on-chain real-time token valuation. The Parcl Price Feeds and the Parcl Protocol will provide real-time, representative, and comprehensive residential real estate pricing and enable a liquid market for real estate exposure.
The Parcl price feed provides an oracle that enables these price feeds to be used in smart contracts and Defi protocols. It is essential to have an on-chain price for a token to be used as collateral in Defi borrowing protocols to maintain the integrity of the stablecoin that is borrowed.
Gypsy will initially start off the protocol using standard NAV evaluation by using human appraisers with a plan to switch to real-time price evaluation as the PPF is ready. As for now, Gypsy will distinguish these two different price estimates as the fair value and estimated value.
The fair value: is the price per token as estimated by the appraisers
the estimated value: will be a real-time token valuation as determined by the Parcl price feed.
This hybrid approach is selected to allow investors to see an estimated, real-time estimate for their token backing while still ensuring the backing is representative of appraisal pricing.
