Property Token Lifecycle

A Fabrica property NFT follows a complete lifecycle from initial tokenization through potential off-ramping. This page provides an overview of each stage.

┌─────────────┐     ┌─────────────┐     ┌─────────────┐
│   On-Ramp   │────▶│   Onchain   │────▶│  Off-Ramp   │
│  (Issuance) │     │ (Transfers) │     │ (Redemption)│
└─────────────┘     └─────────────┘     └─────────────┘

Stage 1: On-Ramp (Issuance)

The on-ramp process converts traditional property ownership into an onchain NFT. A new property token is issued to represent the property.

Steps

1. Property Submission: Owner provides property information to Fabrica or another validator
2. Title Review: Validator verifies ownership, chain of title, and encumbrances (details)
3. Identity Verification: Owner completes KYC/AML verification (details)
4. Legal Wrapper Creation: A holding entity (typically a trust) is created to hold title
5. Document Signing: Owner signs deed and trust documents via remote online notary
6. Recording: Deed is recorded at the local jurisdiction transferring title to the holding entity (details)
7. Token Issuance: NFT is issued via the smart contract mint() function, with the property's definition and configuration

Result

• Property title is held by the holding entity (e.g., Fabrica Trust)
• NFT represents beneficial ownership of the property
• Token holder has full property rights as defined in the Operating Agreement

Stage 2: Onchain (Transfers)

Once issued, the property NFT can be transferred, used as collateral, or held.

Transfer Types

Note on Fractionalization: The ERC-1155 standard natively supports tokens with supply greater than 1, enabling fractional ownership. While basic transfer operations work at the smart contract level, the full fractionalization feature (including governance mechanisms and legal framework) is still under development and not recommended for production use. The current implementation is intended for small groups (e.g., friends or family co-owning property) rather than large numbers of passive investors.

Key Points

• Transfers happen entirely onchain without traditional deed recordings
• The holding entity remains the recorded owner at the local jurisdiction level
• Beneficial ownership follows the token as defined in the Operating Agreement
• Some jurisdictions require notification of beneficial owner changes (details)
• Validators continuously monitor and update confidence scores

Custody Types

How ownership is determined depends on the custody type:

• EOA (Wallet): Direct beneficial ownership
• Holding Contract: Ownership by the controlling entity/group
• Functional Contract: Temporary custody (escrow, collateral) without ownership change

Stage 3: Off-Ramp (Redemption)

The off-ramp process, also called redemption, converts onchain ownership back to traditional real estate ownership. The property owner redeems their token in exchange for full traditional title.

Steps

1. Initiation: Token holder initiates redemption through Fabrica platform
2. Document Preparation: Legal documents prepared to transfer title out of holding entity
3. Token Redemption: NFT is redeemed via the smart contract burn() function
4. Title Transfer: Deed recorded transferring title from holding entity to owner
5. Entity Dissolution: Holding entity is dissolved

Emergency Redemption

Property owners always have multiple paths to redeem, even if Fabrica is unavailable:

• Direct Contract Interaction: Call burn() directly via Etherscan
• Legal Assistance: A lawyer can assist in drafting a deed from the holding entity to the new owner

See Off-Ramping Process for complete details.

Validation Throughout Lifecycle

Throughout all stages, validators continuously:

• Verify property claims match local jurisdiction records
• Update confidence scores based on validation checks
• Generate and refresh metadata
• Monitor compliance requirements

The validation process ensures the NFT maintains its connection to the underlying real property.