🔴What problems does Zona solve?

Speculating on traditional assets is difficult. Using real estate as an example, for investors to go long on real estate in a specific city, they generally need to purchase physical property there. However, there are:

1. High transaction fees. Investors purchasing real estate are often required to pay up to 5% of the total purchase value to the real estate agent as a fee. A million dollar transaction would require a fee of approximately $50K.

2. Extremely time-consuming transactions. Lengthy negotiations with landlords and legal paperwork mean that investors may have to wait up to months before the transaction is finalized.

3. High operating costs. Investors are generally required to pay an annual property tax to the local government for holding a property.

There are additional hurdles if the desired city isn't one that the investor is a citizen of, including:

1. Higher tax fees. Non-citizens are generally subject to higher taxes when investing in real estate in most jurisdictions.

2. Regulatory risks. Although the current government may allow foreigners to purchase and own real estate, this may not continue to be the case when the next government comes into power. This is especially true in developing countries.

3. Currency risks. If the currency of the desired city falls, the investor faces a risk of losing money even though his investment was directionally correct.

On the other hand, there is no existing financial instrument that allows users to short the real estate market of a specific city. Although some investors may choose to short Real Estate Investment Trusts (REITs), this generally only provides exposure to the broader real estate market, instead of a single targeted location.

Lack of composability for current RWA landscape

Although we do see tokenized (or fractionalized) RWAs at the moment, these assets generally suffer from a lack of composability. Once these assets are tokenized, they remain idle within the holder's wallet, and are generally not integrated into the wider DeFi ecosystem.

Newer RWA protocols that tokenize more esoteric assets such as specific equities, real estate, or private credit funds have even higher barriers to wider DeFi acceptance, given the high level of due diligence required to verify the legitimacy of these assets. This lack of composability severely limits scalable RWA adoption, as tokenized assets remain capitally inefficient.