Kitsoft, as a part of the Public Association 'Virtual Assets of Ukraine' (further – VAU), acted as a technical partner and developed a prototype of a new generation real estate and land registry based on web3 technologies. The concept of a blockchain-based registry was developed by the scientist Dr. Oleksiy Konashevych and supported by the Dfinity Foundation.
Background
In 2017, Ukraine saw its first apartment sold for cryptocurrency. However, legally, the transaction still occurred in paper form, and the change of ownership was recorded in a traditional registry with the help of lawyers and officials. The development of a web3 real estate registry on the blockchain is a necessary prerequisite for creating a legal framework that will allow for the full automation of online transactions and provide more reliable protection of property rights.
Development of the prototype
The goal of the Blockchain Estate Registry (BER) prototype is to demonstrate a range of possibilities of new breakthrough technologies that have not been implemented anywhere in the world in government registry systems. In particular, this includes the tokenization of property on blockchain, introducing a new class of assets - title tokens, which, unlike other types of digital tokens, directly represent records of ownership rights to land and real estate.
The prototype demonstrates how property owners can transfer their assets from the existing real estate and land cadastre to the BER. Users will conduct transactions online, buying and selling tokens, using smart contracts and crypto wallets with electronic signatures.
The BER prototype offers a smart contract with functions through which the state registration authority can exercise its powers - for example, forcibly transferring tokens based on a court decision or as a result of inheritance and others. Bureaucratic work will be automated and minimized, which will reduce the human factor and all related risks. Real estate transactions on the BER will be automated using model smart contracts. After the launch of the BER, the number of standard smart contracts will increase to meet the market's needs: smart mortgages, smart wills, the creation and investment in decentralized autonomous organizations, decentralized finance contracts, and so on.
What the new generation of web3 registries will provide
- The creation of a web3 real estate registry will enable users to conduct transactions online from anywhere in the world, without intermediaries, with maximum speed, and minimal transaction costs.
- Compared to the traditional system of state real estate and land registries, the Blockchain Real Estate Registry (BRR) will expedite the processing of purchase-sale agreements and other asset transactions from several days to a few minutes.
- BRR will introduce new standards of cybersecurity based on data decentralization, which is of immense significance in the context of the current war in Ukraine.
- From an individual user's perspective, BRR will save a considerable amount of money in conducting transactions with their assets.
- Buying and selling real estate will be possible on blockchain-based platforms, which also opens opportunities for Ukrainian startups in the real estate sector.
How do we plan to develop the project?
The prototype of the Blockchain Real Estate Registry (BRR) is based on two blockchains: Internet Computer Protocol (ICP) and Polygon. However, in the future, there are plans to create a multi-channel system that will combine reliable and competitive technologies, while still allowing users to have the right to choose.
VAU plans to demonstrate the BRR prototype to the Ministry of Digital Transformation of Ukraine and the Ministry of Justice of Ukraine, with whom memoranda of cooperation have been previously signed. Piloting the project within the Ministry of Digital Transformation will provide an opportunity to study and test the product in more detail, in order to propose a mature concept for reform and the implementation of BRR into Ukraine's state administration system.
As a pilot project, VAU has signed a cooperation agreement with the development company KBD.estate regarding the implementation of the 'Glibivka' project, which involves constructing the first private city in Ukraine based on the BRR concept and asset tokenization technology.
Oleksandr Iefremov, CEO of Kitsoft, commented:
'The future of state solutions lies in decentralized systems that operate on open-source software. Such systems are resilient to failures and establish a high level of trust, as they allow users to independently manage which data they share and with whom.
Blockchain, as a decentralized system, prevents any single source from unauthorized modifications or control over the data. Therefore, a distributed network is more stable and secure. Currently, such a level of security cannot be guaranteed by other solutions, which might even seem quite secure. Hence, decentralized systems are the future of state services.'
Video presentation of the web3 real estate registry prototype.
For reference:
The Public Association 'Virtual Assets of Ukraine' was founded in November 2020 by the public organization (PO) 'Blockchain4Ukraine', the blockchain ecosystem 'Binance', and legal companies Juscutum and Arzinger. VAU's mission is to launch the market for virtual assets in Ukraine, as well as to implement blockchain in key sectors of business and the public sector. The association also includes companies such as Kitsoft, DTEK, and other participants.
Oleksiy Konashevych is a Doctor of Law, Science, and Technology with a thesis on 'Tokenization of Real Estate on the Blockchain'. He has published 24 articles and runs his own YouTube channel 'Blockchain State'. In 2021, he was invited to speak before the Committee of the Australian Senate. His research findings on new generation real estate registration were included as recommendations to the Australian Senate's Select Committee as a technological and financial hub to the National Cabinet for launching a blockchain pilot project in the field of land registration.
Kitsoft is a Ukrainian IT company specializing in GovTech. It is the developer of the Diia portal and online services on the portal, the Government portal, the Unified Platform in the field of ecology 'EcoSystem', anti-corruption services for NAZK Polidata, 'Whistleblower Report Portal', and other state systems.