Tokenizing Real Estate with Scarlet Chen

Robinland provides fixed passive income to retail investors by tokenizing institutional-grade commercial real estate in a legal and decentralized fashion. 

Scarlet Chen is the co-founder and CEO of Robinland and Cytus Protocol (a Robinland incubated project). She holds a PhD in Economics from Stanford, where she specialized in the macroeconomic studies of housing and the real estate market. Upon graduation, she became a Data Scientist at Google. There, she came across Google's internal Crypto group, realized the synergy between crypto and real estate, met with her co-founders, and later started Robinland. Prior to Robinland, she also worked as the Head of Business Development and Investor Relations at Chefus, a Bay Area cloud-kitchen startup, and was an Angel Investor of Rora, a project focused on leveling the pay for underprivileged groups through offer negotiation and career consulting. 

We dive into housing as an investment versus a commodity, making investing easier, and what tokenization has to do with real estate.

Eve #WealthWednesday Highlight 51:Scarlet Chen, CEO and Co-Founder - Robinland

Can you share a bit about yourself?

Thanks for inviting me. I'm Scarlet. I'm the co-founder and CEO of Robinland. We're trying to bridge the gap between traditional finance and web3, especially the real estate industry. We're trying to allow people to invest in real estate with really, small pieces and in a very liquid fashion. 

I grew up in China and I went to Hong Kong for college. I studied housing and real estate for my PhD in economics at Stanford. What got me interested in housing is really that China went through a huge housing boom from 2003 to 2013. It's kind of crazy to watch because prices in first year cities almost quadrupled. It's actually much higher than what we went through in the US from 1996 till 2006.

I was watching a lot of people trying to own a house, but couldn't because people have turned what should be a consumption into an investment product. That made me start thinking about how we can use financial innovation to decouple consumption and investment. In principle, a house should be something that people live in and start a family in. But like it or not, it is also one of the best investments for a lot of people. 

I wrote a paper about creating a derivative of the house price such that people who want to invest can hold on to this small derivative and trade it just like stocks while leaving the occupants alone. People who want to own a house can even short this asset to hedge their price risk. So that's the idea. But I didn't know how to turn it into reality at that time. 

After graduation, I went to Google as a data scientist. And during my time there, I came across an internal crypto group. I realized that crypto is a specific realization in my dissertation, because crypto assets are small pieces and very liquid. They can in principle represent any underlying asset. So if you tokenize a piece of real estate, the resulting tokens are representations of their shares in that assets. People who hold it can get the rental income stream or the interest income stream if it's a debt.

That's what's got me thinking about it, and I was lucky enough to have met my two co-founders. One had worked in real estate for seven years and knows marketing, financing, operations, and legal and has resources that can allow us to bootstrap upwards. Another co-founder was deep in tech. He was at Google for six years, frontend and backend, and had issued his own crypto token before. In order to bridge the two worlds, and we really need people who are native in both of them. We're lucky enough to have that team. That's what got me started with what I'm doing now and the backstory. 

What was your first investment?

When I was a PhD, I downloaded Robinhood. Robinland’s name actually comes from Robinhood for land. We wanted to make something that's as successful as Robinhood to let people invest in anything. 

Before Robinhood, people usually used e-trade or other really complicated tools. But Robinhood makes investing so easy. I invested in the S&P 500 and then starting from there, got into researching other stocks. For example, what about Tesla? What about Apple? What about Facebook, individual stocks like that? So my first investment was through Robinhood, into the usual names that people all know about. Then that got me started to look at more of the fundamentals, like following the news of the company, trying to figure out who will do well and what are some drivers. 

Then I started getting into real estate investments. Last year, I purchased my first house. That was exciting because, growing up in China, watching the housing boom, I've always wanted to be a homeowner. With a F1 visa, a student visa, you couldn't really get a mortgage here. As soon as I graduated, that was the first thing that I wanted to get on my bucket list. That was a townhouse. Three bedrooms, three bathrooms. Close to where I studied, but it's in Sunnyvale.

That was really exciting for both me and my parents, because their idea of being settled in a place is when you start owning a home. They're like, now we can come to the US and visit you, and we wouldn't need to always find an Airbnb. Then I actually rented it out and the rental income is able to cover the mortgage. So from an investment perspective, that was relatively successful. 

I'm going to try to do the BRRR. So buy, renovate, rent out, refinance, and repeat. That's a term that people use to describe how you can get to FIER, which is financial independence and early retirement. If you do it correctly, try to find the right place and the right type of home, and keep your leverage at a reasonable level, you can pretty quickly get to seven or eight houses and then, that's it. That's one of the things that I've always wanted to try. We'll see how that goes over the next few years. 

How/why did you get into your space? 

I want to bring equity into the space and level the playing fields. Traditional finance has been something that I personally was very attracted to when I was an undergrad. Hong Kong is the financial center of Asia. Everyone thinks of being in investment banking as the best career path. I was part of that for a long time, but eventually decided that after I came to the US and as an undergrad exchange student, I wanted to do economics research more. 

I always wanted to figure out how society works and, especially for certain markets, what are some drawbacks and what I can contribute. But while I was in investment banking, I realized this is a game where institutions play a huge role. Even though people are trading through Robinhood and people can participate, all the large institutions play a huge role in making the market. If they want to collectively push a stock, they can, and then they can release information that actually goes in the other direction. So they have too much power. 

In real estate, there are some really high quality assets that generate excellent returns with very low risk. But because they're very large ticket size, say $200 million or even $20 million, most of the people listening to this wouldn't even be able to access that. You should not discriminate against people based on how much wealth they have. People should all have a chance in getting access to all sorts of different investment products. They should feel free to choose. 

I want to use tokenization to level the playing field for people, and crypto does seem to be such a natural next step. Because the blockchain is all about transparency, being permissionless and having things decentralized. That's why the idea of combining real estate with blockchain is so natural. 

We're also trying to allow people to invest in things that they otherwise wouldn't. Say this is a multi-family construction loan in New York with very low loan to value ratio, very low risk, and regular track record for the developer. But usually they would only source from real estate PE firms. But now with us, we'll get that project into a special purpose vehicle and issue on-chain crypto tokens. That's completely legally compliant with SEC rules. Then we’ll burn that contract into that token so that when you hold the token, you have a share of the underlying asset in your wallet. And then every period of time you will get paid. However much the developer's paying us, roughly, 8% to 10% interest every year. 

That's the kind of product that we want to create for people: something that's very easy to access and a very low amount of hassle. As I was talking about the BRRR idea, it involves a lot of sweat and hard work. Managing homes, trying to get the right tenant and trying to pick the right property is not something that's for everyone. We want to make sure that there is a version of that that's available for people to get access to with just a click of the finger. So that's what really motivated me and got me here today.  

How does it work?

The power of blockchain is that it's an open ledger. That's collectively being keeping track of by different nodes held in different places. We will all know that person A transferred it to person B rather than this being a private deal between them, avoiding a lawsuit three years down the line regarding who actually owns the piece. In order for the transfer to happen, they can go to security tokens exchanges. 

Those security token exchanges have ATS licenses, which are alternative trading licenses that allow them to act as a broker dealer that takes 1% share and transfers it to another person. That will all be openly recorded on a blockchain. 

You also need to make sure that there can be at most 2000 non-accredited investors, even after the one-year lock-up. In the past, this was a hassle to keep track of. People used Excel spreadsheets. But now with blockchain, you can just automatically write a smart contract to say when there is another transfer that makes it 1,001, then I'll block that trade. So that's the power of using smart contracts because instead of people violating the law and getting prosecuted or punished. We can just write it in a piece of code to protect people, to make sure that people wouldn't even be able to execute a trade that goes against the SEC laws. So that's something that is really powerful. 

Another aspect of why putting it on chain is to access a pot of liquidity that is otherwise locked in itself because we have $2 trillion crypto in terms of market cap. It's already a systematically important industry. But because of it being stablecoin, it’s completely isolated from our real economy that's denominated new USD. But in principle, there is no reason why the capital in, , USDC shouldn’t flow into the real economy and vice versa. What USDC holder are looking for is also sustainable and high yield. In the past, it's supported by yield farming activities on-chain, but those are not sustainable. It eventually converges to zero, and it has over the past few months with the market collapse. Everyone now is trying to look for the next thing that generates them sustainable yield in the on-chain environment, because they don't want to off-ramp. But it's very hard for them to find those. That's why we are here to provide a crypto bond product for the first time in history that fills in this gap so that people holding USDC can have portfolio that is not only is stablecoin, that doesn't generate revenue or not only in memecoin that have real high upside but potentially very big downside. They have the option to put it in something like us, which is supported by activities in the real world with actual use of the capital that generates them 8% to 10%. So that's another reason why we want to put them on-chain. 

What differentiates Robinland?

To me, there are two things: the team, and the underlying asset we're offering. 

It's hard to come by a team that's both real estate native and crypto native - most of the team I've seen are either real estate native like realT, or crypto native like Centrifuge/Goldfinch/Maple/TrueFi. I was lucky enough to have met Venus, who worked in real estate for 7 years, in capital markets, financing, legal and operations, and is deeply rooted in New York, the center of the real estate industry in the US, with connections with developers and PEs. We also have Zach, who worked at Google for 6 years (three years front end, three years back end), has issued his own token before, and runs an active SocialFi community. Junpu was a hedge fund trader turned 'degen', has been actively trading in DeFi since 'DeFi summer', was an early founding member of the top 3 Mandarin community BujiDAO, and designed our protocol. 

The problem with a lot of the more 'crypto native' products in the space of 'real world asset on-chain' is the adverse selection of asset - because the founders are crypto native, and wanted to build 'permissionless' platforms, they allow anyone to submit an application to supply asset to their platform. And naturally, these tend to be assets that are negatively selected since they had no other sources of financing. 

For us, we handpick our assets based on Venus' extensive industry network. In the US, there are 20-30% of large developers who are so big that they don't need financing, and these are the ones banks love. The 70-80% of smaller players, on the other hand, have to resort to PEs who typically have higher cost of capital and thus charge higher rates. The reason why they couldn't get bank financing is not because they are worse, but simply because banks have high overhead and prefers to invest in projects that are larger - same as why VCs wouldn't invest in a start-up for $5000, because it takes the same amount of due diligence whether it's $5000 or $5M. 

Secondly, we are plugged into a network of non-US developers who are sometimes discriminated against by local banks. They are green card holders who have equally good track record and assets - for example, a lot of land in Long Island City in NY was actually purchased by Chinese developers a few years ago, and are just slowly being built. Real estate is a network based industry, and we play it to our strength. With Venus' connection with Chinese developers in NY, we're able to access some of the best projects - e.g. our first project is a first line senior loan with full recourse right (i.e. personal guarantee) with 40% loan to total cost (which is extremely low), 1-year loan term with 1 half-year extension (with a fee). We were having a monthly check-in with one of our VC investors, Agya, and one of the partners, who was ex-Blackstone, said 'these are amazing terms! I would personally invest in it.' - this is the type of project that differentiates us from the more 'crypto native' type protocols, and is why we are confident enough to say we are a 'fixed passive income' product where you can 'invest and forget' about it. 

What do you believe is the most exciting thing you’ve learned and want others to know?

Try not to be driven by the trend too much, because there was a period of time when we pitched the idea to VCs, especially crypto VCs, and they said blockchain is not built for anything that's off chain because as soon as we go off chain, there is the legal, there's operations. It’s very ugly and we don't know how to deal with things that are not native to a piece of code. This idea has been around for crypto for a long time until recently when there was real demand for use from real assets. All of a sudden, everyone's attitude changed. All of a sudden you were like, "There must be some ways we can solve this. We would love to try some basic version where you have some solution for on-chain verification of the ownership." As soon as there is demand, all of the obstacles, technical or mechanical, all went away. There are ways to solve it. If you believe in a vision, if you believe in the actual need of something, you should try to push for that. Because there will be a time when people will realize. 

It might not be now, it might be in a few months or few years. But it will be around. And we want to make sure that we're the first one there to offer this product when the time has come. 

Our efforts have paid off. We've been pushing this idea for a year, since June last year. And now, there's a lot of pooling from us, wanting this product for a loss. It all paid off eventually. 

Is there a person or a company that’s really inspired you?

I thought what Elon Musk has been doing is pretty cool. Just because sometimes I feel he's living in the future. He's been trying to push for Tesla for a long time when people are like, this is never going to happen because there's just not enough support. You need places for people to charge. You need a whole different environment and also for self-driving. But, as we go along, especially given the gas prices we're seeing today, he was right to some extent. 

And at the beginning, he was losing money. People wouldn't really  buy into that. But  if you have seen the future, as you kind of said, and try to push for that. And for him, it was like a decade long. Right. And finally, his business time has come. 

For us, maybe it's similar, like maybe five years. When crypto really embraces real estate, we will all be here to try to keep pushing that vision forward together with other folks in this field. We actually held a Twitter Space with Balcony DAO, Honey Bricks, and Theopetra Labs, which are all industry leaders in the real assets on chain space and tokenization real estate. And we are talking about how we really should join forces and advocate for this field in general. There are still a lot of challenges that remain like legal, operational, financing, and investment wise. But, that's the reason why we're here. That's why we want to all be here and go through that together. One by one, problems will be solved. There'll be a version of the future world where blockchain is fully integrated with our daily life that actually is beneficial to both worlds. 

What advice would you give to someone getting started?

Real estate is very heterogeneous. There's no one thing called real estate. There is commercial, there's residential. And even among commercial, a hotel is different from garages or from an office building. Then there's different geographic locations that are all different. If you have all three of those cross each other, we now have 50 different categories.

Understanding the fundamental is really important because a lot of those platforms might look very similar to each other, which are all fractional real estate investment, but try to look under the hood. And understand what's the underlying asset that you're dealing with because the token or the shares, it's all just a representation it’s all a veil. What you’re getting access to really is the underlying assets. So try to make sure that you're getting access to a good asset. Understanding that allocation is actually very important. Fractionization or tokenization is good, but it doesn't really replace our own due diligence. You will need to do that in order to get comfortable putting money in. So that's what I would say is very important. 

Do you have any resources you’ve liked or would recommend?

There's a forum called

It’s a forum where people talk about rotating investments in general, also there's a lot of YouTube or Twitter accounts that constantly talking about real estate investment. I follow a few. In general, immerse yourself in the space, get information. The good thing about living in 2022 is that most of the things are all there on the internet somewhere. Just takes time to find those. And constantly trying to educate myself and be comfortable with those. 

Is there anything else we should know?

Follow our progress on our Twitter. The handle is and the website is So it's relatively easy to remember. And on our website, you will also find all of our social, including community. We have Discord and Telegram, and we constantly post updates there to keep you updated on what just happened, what we've accomplished, what are the roadblocks, when should we expect to see our product.

We're all very excited about the launch this fall. It will be a construction loan multi-family in Brooklyn, New York, and it's a very healthy product. 

If you're interested, please let us know by putting your email to claim early access on the website so that we can send you more information. We'd love to keep you in the loop by having you in our community, Discord and Telegram. 

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