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The concept of Web3 – encompassing technology, community and use cases – has caused significant disruption in the areas our society needs most. It shattered a lot of the assumptions we had about contracts, who controls the company, and how we can invest. And it really takes a combination of technology, community, applied to a good use case to make it work. We saw strong Web3 disruptions in finance, gaming and collectibles. However, one of the strongest disruptions caused by Web3 is the change in the way we look at investing. Once upon a time, investment opportunities were limited with stocks/bonds, real estate, art, etc being the main choice. However, Web3 can use smart contracts, DAOs and real assets to provide new opportunities that transcend borders and budgets. Let’s look at the details of this model and examine the tourism industry as an example, which is working to create an entire investment ecosystem. In particular, we will look at the so-called Arakis model to see how Web3 is revolutionizing the travel industry.
Web3 investment model: smart contracts, tangible assets, tokenized value
The Web3 investment model consists of three key elements: smart contracts, real assets and tokenized value. A smart contract defines a contract between the asset holder and the investor. When certain actions occur, when the value of the asset increases or decreases, the smart contract will automatically take predetermined actions that both parties have agreed to.
Unlike token speculation, this model is based on real, often physical assets. These may include assets that are expected to increase in value, such as famous paintings; or it may be an asset that is intended to generate income, such as a rental home. In any case, there is a generally understood value of these assets. Finally, the investment made is represented by the tokenized value. It is the expected long-term value of the asset, whether it is the expected increase in value at the time of sale or the expected amount of revenue over its useful life. Every investment always involves some risk and the Web3 model is no different. However, there are real assets behind the investment.
So what makes the Web3 investment model so different from the standard investments we have today? One of the key differences from the Web3 model is availability and access. If you have a significant amount of money to invest, then congratulations. However, for the vast majority of people, it is extremely difficult to raise enough funds to invest in companies, buy art, or trade in the financial markets. It’s a shame because a little money from a lot of people quickly becomes a lot of funding. The Web3 investment model breaks down what is required to participate in the investment. People from all walks of life can find a Web3 investment model they like, set up a wallet and spend a small amount of money to join. In many cases, this means either buying a token and staking, or recently buying an NFT that represents an investment (usually a physical asset) and that interacts with a smart contract. In this way, the NFT will operate according to the rules of the smart contract. Even if the investment is small, it can still generate a return for the investor.
Last question: why is the investment represented as NFT? This may be the most tedious part of all. As NFT, the investment becomes a ready and independent element. In other words, it is not permanently tied to the investor or even to the platform where the NFT was purchased. This means that NFT as an investment is unbound and can be traded to other users using the NFT marketplace.
Example: Arakis
Travel platform Arakis gives an example of this phenomenon in action. The platform works with members of the travel industry around the world. As new partnerships develop, the platform will issue specific NFTs, called Revenue Sharing Tokens (RSTs), which represent specific assets of travel partners. For example, the Hilton London hotel runs an RST, so when a user purchases it, a certain percentage of the booking fee goes to RST holders. As rooms continue to be booked, token holders will continue to receive a portion of the revenue share. If the RST costs a small amount, the revenue share may be small (and depends on whether the asset is distributable). However, it is an investment that provides a return and is available to a much, much wider audience.
The most important questions are: how far do we see the potential of RST in the travel industry? What type of travel companies (hotels, airlines, car rentals, tours, etc.) are likely to use RST the most?
Arakis founder Semil Vithani shared his thoughts:
“RST is a revolution in travel profitability, the main use of which is to create a revenue sharing model from any productive asset in the travel industry. This benefits both travelers and businesses by maximizing profits from each booking and putting profits back into the hands of travelers. Arakis will start implementing RST with hotel bookings as it is the simplest app. Next, however, our goal is to transform air routes, cruise packages and many other travel activities into RST.”
This is the transformative nature of the Web3 investment model in action. And with such a wide population of potential investors, the amount of investment capital around the world is unbelievable. Think about the travel industry and how the Arakis use case could expand. NFT (as RST) can be minted against any travel-related asset that can generate income: hotels, tours, restaurants, rental cars, airline tickets… the list goes on. It is possible that each of them could decide to issue RST at a price and proportion that will attract investors and micro-investors around the world.
Looking to the future
When you look at the concept of investing in this new light, it becomes clear that we will look back on this period as the beginning of the revolution of the Web3 investment model, where people of all financial resources and from different geographical locations were given the opportunity to invest and earn returns. Unlike TradFi and traditional business investments, there are almost no limits. Potential investors can study a smart contract to find a fair deal and use the power of reputation and satisfied customers to find the right platform to work with. And unlike regular investments, users have control over their investment as NFTs, being able to collect revenue shares and even sell their NFTs in the market of their choice. The travel industry is one of the first to embark on this journey, but soon other industries will adopt this ground-breaking way to level the playing field for the masses while giving industries an untapped way to raise capital.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.
