New architecture and land ownership systems on third-generation blockchains.

Why start with Land ownership?
As the oldest form of ownership, land ownership is the basis of most of the ownership logic in the western world.

Because of its significant position in human history, ownership today is inseparable from our rights. It also informs the logic we have for various other forms of property.

We use a system of receipts called title deeds to uphold a ‘bundle of rights’. These determine our obligations and our restrictions in a physical space. These rights are legally enforceable. This makes land ownership valuable to the owner as it is connected to the law enforcement of the country more generally.

“As with all property, possession is considered proof of ownership, unless higher proof of ownership exists. For example, a person in possession of a pen is considered the owner, unless contradictory proof of ownership exists eg: a receipt for payment of the pen by another person.” — Heath Bunting.

Land ownership logic can be seen as the basis for most other ownership logics: The concept of a land title deed extends to our everyday objects as a common receipt. But it’s a field that has seen very little innovation as there are a lot of stakeholders of land, making major land ownership reform very difficult.

If we take the position that our own systems are entirely shaped by the technologies available to us. It can be argued that traditional record keeping with all its flaws has defined the possibilities of ownership.

Blockchain technology as a public ledger system might lead to a change in how we own, run and manage our land.

The social contract of land ownership:

Land ownership is not just a physical contract but also a social contract; many of the rules of the land are determined by the landowners which allows there to be a level of social influence.

Owners create a conceptual framework for how humans relate to the physical world — the rights, restrictions, and obligations for using the space.

By shaping social rules, land law and land ownership systems form the bedrock for the majority of our social relations and economic interactions.

Land as a financial system:

Thanks to the stability of land law, most financial products evolved with land as the native form of collateral.

Landowners have high predictability because the probable risks, motivations, actions, and rewards can all be easily forecast by lenders.

This enforces a degree of self-regulating behavior as citizens borrow against assets in very predictable ways. Financial products like mortgages, loans and many other forms of debt are only considered safe because they are collateralized by the risk and reward ratio that is well known to all and implicit in land ownership. If you don’t pay what is owed you lose the place you live.

Domestic capitalism, land, and the future of domestic capital:

The high street mortgage is a major point for the production of money; away the everyday person can access large capital.

Mortgages allow people to borrow large capital against land as an asset, they open up new revenue for commercial ventures as well as additional domestic spending. They also enable citizens to release enough capital to produce various goods and services.

Land-backed loans historically have allowed continued economic advancement; they contribute to GDP growth and advance the real economy.

In this way, land has been fundamental to capitalism and domestic markets. An advancement in this area will lead to economic advancement, as land is implicitly connected with money and economic power more broadly. With innovation in land ownership and liquidity of land assets, we can expect to see a parallel innovation in the functions of domestic capital — leading to economic growth more widely.

Importantly and in contrast if the land is not used effectively, it is too centralize in the hands of the few, and value is not leveraged effectively and can lead to economic stagnation. So the democratization of new land ownership systems can lead to a new era of economic growth.

The creative land-lock:

Despite it having an important economic function. There are negative consequences of land being only seen as a financialised asset too. It means that the asset value of land is considered more important than the use-value of land.

How much it is worth? This is the key question in the housing market today.

Because of its leveraged financialised value, we can often find that the least risky, least inventive, and often the most oppressive economic spatial strategies emerge and inform the way the city looks, how it works, and functions. Often it is the forms with the highest suppression of any user’s rights, and which best maximize the asset value.

In this context, financial services become the major driving force behind how our cities look, feel, and are developed. In most cases, rather than enriching our cities, we lose many opportunities.

However, ownership has multiple functions.

“The very creation of the idea of individual property rights has become ingrained in our society and led to a seemingly unshakeable. But property rights are less concrete than most people think. It is actually incredibly rare that an individual would have exclusive control over their land. We should instead be thinking about the property as a bundle of rights, with the owner buying specific rights.

For example, the right to remain, the right to build, the right to possessions, and the right to light. Joseph Singer says that ‘full consideration of property rights in the same person is the exception rather than the rule; most property rights are shared or divided among several persons’. New ownership systems could disentangle these rights so that asset value and use-value of owning are more effectively respected and managed.”

An advocate for new ownership systems:

I believe that new ownership systems can be made to represent and reflect different rights, and blockchain liquidity systems will result in different models of financialization that are more sensitive to both the asset value and the use-value.

This not only has the potential to redefine our financial assets but also our democratic and social systems within our living environments. It will open the floodgates for a new industry in the built environment. New living practices and ways of designing the city become possible as part of a wider new industrial revolution.

New ownership systems are new contracts, and new contracts are smart contracts:

I am particularly interested in third-generation blockchains: The implications for innovation in land and housing: Third-generation blockchains are new public ledger systems that bring advanced features to contracts and ownership relations that have the potential to alter systems of living.

They allow programmable money, such as tokenization but also smart contracts. I believe these will lead to the point where an individual will pay for a coffee with a fractionalized share your house, but also enable new forms of housing and our cities to be developed.

Because land ownership is the basis of contract law, introducing smart contracts into land ownership systems has very large implications for the future of how domestic capital might function.

If and when it is adopted as the primary means of owning, managing, and developing property, third-generation blockchains will heavily influence how the built environment is developed, run, and managed.

Reducing the man in the middle:

Fundamentally blockchain’s major advancement is the ability to eliminate intermediaries. This reduces costs but also democratizes industries that have traditionally been monopolized, which opens up prospects for liquidity, and encourages us to view land differently to how it is today: as a fundamental commodity.

The modern property sector is rightly or wrongly an industry with an abundance of intermediaries. The landlord, mortgage broker, property lawyer, conveyancer are roles we have learned to live with and exist to make the role of selling and buying land and housing legitimate.

Each of these roles exists as a social mechanism because paper certificates imply the need for a centralized body for validation or contract control. They exist to solve very real problems that stem from our record-keeping, and the mechanisms of transition of ownership. Each is rewarded with profit when solving these issues.

These are all areas decentralized applications could challenge, making many of the roles we are preconditioned to respect obsolete. For example, why pay for an escrow service which relies on third-party trust when reliable software can perform the same function?

A list of all of the roles and industries that will be impacted by this technology.

Here I outline different pieces of the developing industry and the cascading innovation we can expect in relation to the implementation of these advancements.

1. Decentralized title deeds:
2. The paper-based system of property titles we currently use is based on ancient technologies and has security flaws implicit within them, these problems are patched up by a bundle of job roles, but are never fully resolved. This means that middlemen are required to authenticate and support similar tasks for each transaction. The result is an opaque conveyancing system with a chain of trained people that exist solely to secure authenticity.
   
   In the simplest and most direct sense, blockchain tokens can replace title deeds or represent an extension of a title deed stored onto the blockchain. This would mean owning a blockchain token, or a fraction of one would make it a valid expression of ownership of land or housing and associated documentation. This removes the need to use a paper-based public register. This unlocks unique abilities associated with the blockchain. It also means that Property deeds and titles can be exchanged and sold easier. Owners avoid costly contracts, reduce overheads and roles like the property lawyer and real estate broker that exist to support property exchanges.

2. Decentralised land exchanges:

Simply putting a land title onto the blockchain lays the foundations for completely new models of the land exchange. Decentralized exchanges (DEXS) can allow auctions, purchases, and sales without using estate agents, centralized auctions, or any centralized authorities. Reducing the need for this industry.

3. Decentralised mortgage provision (Defi, Demo from Defi):

DeFi will make roles we know like mortgage providers irrelevant with the decentralized liquidity and finance mechanisms newly available. Rather than apply for a mortgage it could be automated without a bank needing to mediate any relationship between lender and borrower.

It is also possible to evolve new ways of lending and borrowing for building construction and development projects using DEFI that are as of yet undefined.

4. Decentralised conveyancing:

NFTs on third-generation blockchains will make property conveyancers a lot less busy. Instead of paying a conveyancer for the validation of the transition of ownership, a blockchain transaction can be used as it doesn’t require any central body for authenticity and transfer.

Multi-asset NFTs will also open up entirely new models of land and building ownership that would be unmanageable with traditional conveyancing mechanisms. People can own shares of a single house stored on the blockchain, then rather than having two separate systems of ownership and decision making, on-chain governance can be used which allows the owner to vote on changes directly related to their ownership share. These ownership systems adopted en masse might allow cities to become more participatory and democratic.

Innovations like Babel also create the option for extensive liquidity of assets. A tiny share of some land you own could pay for your morning coffee.

5. Building societies in DeFi:

A building society is a financial institution owned by its members as a mutual organization. Historically Building societies members paid monthly subscriptions to a central pool of funds which was used to finance the building of houses for members. which in turn acted as collateral to attract further funding to the society, enabling further construction.

Putting land titles onto blockchain also opens the opportunity to introduce land assets into the decentralized finance ecosystem. And build new DeFi applications on top of this collateral. Of course, being independent of centralized entities such as big banks. This means that decentralized liquidity protocols could be used for immediate lending and borrowing against the land, using secured systems for borrowing and lending. Automatic issuance would make lending several factors quicker.

Building societies and housing associations ‘building and loan’ were prominent around the 1930s money was pegged to the gold standard and scarcity was still a defining feature of our monetary system. DeFi would allow new decentralized forms of building society to be possible. As equity can be locked into smart contracts to go towards the costs of building houses without a single custodian or party. Rent paid by the buildings reimburse investors but also provides continued liquidity. It’s possible to build more housing this way and an ecosystem of housebuilding is more advanced.

Why use conventional Building societies when you might build housing powered by DeFi . Members will be able to invest in a DeFi contract to allow other members to produce land and housing, the profits are then distributed to allow more housing to be built in the future.

6. Liquid land governance:

On-chain governance is an integral governance system built into third-generation blockchains which is significant as the governance system is the same as the ownership systems we use. Whereas previously, ownership has been cumbersome to change, this allows a fluidity of those seemingly solid ideas. This means that organizations with a blockchain ownership structure are provided with the native tools they need so that they can exercise rights easily around ownership. A large problem that paper-based ownership systems have never truly overcome.

7. Tokenised housing:

Tokenisation is the process of representing real assets (eg, fiat currencies, stocks, precious metals, and property) in a digital form, which can be used to create financial instruments for commercial activities. A land ownership model based on tokenized shares of the housing would be novel in it’s own right. But this also enables the shares to form a stable currency pegged to the overall asset value of the land valuation. In this way ownership can be fractional. Meaning new payment structures are possible because of land. This offers the possibility for rental payments to be distributed to multiple building shareholders fractionally and automatically. And a smart contract can take the place of the individualized landowner. There could feasibly be thousands of people who own a tiny share of a single building. When an individual pays to rent a smart contract this could feasibly mean that all holders automatically receive a tiny fraction of passive income from rent each month. Changing the rental market and opening it up to a wider level of finance.

8 Landlordless land (Housing DAO’s):
New forms of shared housing organization are possible with smart contracts that replace many of the duties of the landlord or intermediaries Involved in aspects like centralized rent collection and redistribution. For example, rather than paying money to a building manager, each month renters would pay to a smart contract that automatically settles all monthly expenses and overheads. This opens up new systems of profit distribution.

Rather than landlords profiting from the tenants, tenants might instead redistribute chains of revenue to the areas required and desired using liquid democratic processes.

Smart contracts will make property managers and many landlords obsolete. Why pay an intermediary to manage and distribute payments when this can be done using tamper-proof smart contracts and DAOs which are better and more secure.

In the style of a Condominium, a DAO means you may be able to completely remove several static custodian roles from the housing model eventually. Whilst carrying out the day-to-day aspects of this role automatically.

9. Community shares:
This same system can be a community share offer. Voting rights. Land value Oracles. Systems that provide verifiable data of the housing prices in the area of associated property ownership.

Architectural service provision:

Architectural services will be sold and delivered entirely differently. Design ownership can be more easily commoditized and licensed and could be sold as intellectual property and architectural invention.

Smart contractors (Web 3.0):
The way we commission contractors and perform architectural work will be managed entirely differently. A smart contract minimizes risk and is safer and more secure than regular contracts.

industries of ‘smart building contractors’ will emerge. Firms that are blockchain-friendly, and are happy to carry out work if requested by a digital landlord.

The way we tender and produce architectural work could also be entirely different. With the emergence of Web 3.0, there may no longer need to be a differentiation between human and the machine contractor.“Tim Berners-Lee (the inventor of the internet) had said that the Semantic Web (web 3.0) is meant to “automatically” interface with systems, people and home devices. As such, content creation and decision-making processes will involve both humans and machines” Extending this web 3.0 logic to the tender process, why use a centralized mechanism when you can have decentralized tendering protocol which contracts humans and machine learning for different parts of the work?

All of these systems will have an impact on the built environment and have the potential to alter the property sector. What’s more, it may alter the way we live. Enabling different land ownership concepts, eventually will impact what can be built in our cities, and most importantly — who it can be built by.

10. Remodelling land rights:

Because of the vast potential, the intersection between land ownership and land rights needs to be further explored, and it can be argued that changing our systems of land ownership will allow us to remodel how our rights and responsibilities are managed.

The way in which rights are tied up with our land could be more easily understood and better designed.This means we have the ability to evolve and progress our lifestyle in relation to our land governance structure, allowing more creative cities as a whole.

11. Advancing common and collective ownership of land:

One of the most creative challenges for land ownership is how a community of varied participants might own land. Any form of land without singular ownership is difficult to manage with paper-based ownership systems.

Centralized systems such as the state find it innately difficult to handle multiple nuanced requirements of different groups. Bureaucracy increases overheads which render democratic ownership unfeasible. Public land, common land, public housing, housing multiple collective owners, or land with the protected purpose of ownership have all faced difficulties here. Incentives around collective and multiple ownership are unclear for each actor as the number of inhabitants expands. Public ownership has regularly fallen prey to exploitation because of a lack of standard economic models that support the system as the actors within it change.

The solution is often to focus on the market system but within the built environment sector this prioritizes uninhibited self-interest which can easily lead to drastic exploitation, profiteering, and low-quality control measures in housing. The highly-priced box room, with the lonely tenant in a one-bedroom flat, is the image this creates.

A truly universal common ownership model has been difficult to define and implement in paper-based systems. All alternative models of ownership require a centralized body to run effectively. What does it mean to own something in common? Is it possible to manage common ownership in a decentralized way without a central body?

Third-generation blockchain can provide a valuable pathway for these projects to ensure a much more productive and fruitful relationship between the public, common and private interests.

We can expect entirely new forms of land ownership to evolve that are not yet defined. These might go far beyond the idea of private, common, or public ownership, and become more in line with the social processes native to the internet.

12. public/common systems.

Public housing. Little influence over their land.On-chain governance. Allowing ongoing development. smart contracts reduce the middle man. Reducing the need for over-dependency on the public sector. Co-operative ownership style. Share ownership model.

In this framework, democratic, common or even public land systems are more plausible. Chains of revenue are generated by tenants and re-invested according to the real needs of those communities that live tin them without exploitation from centralized bodies.

Giving more voter rights over public funding.

Blockchain systems.Public sector.The public sector is really under-resourced and underfunded.

13. DAO Building Societies:
DAO in relation to land ownership implies that new systems of architectural production are possible, as traditional development models would not allow them to occur.

If the right protocols are developed, third-generation blockchains might allow citizens to engage with the city more fruitfully as active citizens, as liquid, and quadratic governance means that town and city development proposals can be made and voted on, commissioned, and produced seamlessly. This opens possibilities and offers the ability to run and manage projects, and even entire towns and cities with multiple, decentralized public interests that allow them to grow and expand as the residents decide.

14. DAO towns:
Because these new ownership systems do not require a centralized owner they can expand participation and stake-holding as a decentralized autonomous organization (DAO). New members and rules can be easily introduced without the extra paperwork or solicitors costs.

Emergent models continued (Soon):

The speculation of the possibilities is groundbreaking, as the land ownership models that we are familiar with are entirely different. So can we imagine entirely different ways of existing within our cities, as well as new ownership models for a totally new landscape of multiple futures? I will discuss more on this topic soon.