Andrew Forson, Empowa’s Head of Quantitative Analytics and Risk, outlines the different sources of revenue that ensure the long-term sustainability of the Empowa project.
For a written summary of the video see below:
Empowa is a unique platform that has been designed to disrupt traditional financing models by leveraging blockchain technology. The platform aims to provide financing solutions for developers and property owners at a lower cost of capital while providing investors with an opportunity to invest in real estate projects without the need for large capital outlays. However, to make this possible, Empowa needs to have a robust revenue model that ensures its sustainability and profitability in the long term.
Empowa’s revenue model can be broken down into five key categories: underwriting, transaction fees, direct broker-dealing fees, market maker fees, and assets under management fees. Let’s examine each of these categories in more detail.
The first and most significant source of revenue for Empowa is underwriting. This process involves Empowa making a decision to interact with a specific developer on a specific project to raise a specified sum of capital using Empowa instruments. These instruments, such as NFTs and SDRIs, can take any form, as the platform has the flexibility to adapt as technology allows. During the underwriting process, Empowa obtains a percentage of the underwritten transaction, and collateralization actions take place where a fiat amount of money is used to purchase Empowa tokens to secure the activity that forms a part of that underwriting engagement.
The second area of revenue generation is transaction fees. Every transaction that takes place through the Empowa platform should necessitate the use of the EMP token. This is done to validate the demand for the EMP token and to create sufficient demand pressure to ensure that the price of the token truly reflects its utility. While individuals may be able to pay for a service or transaction using a combination of fiat money, they will also be required to hold EMP tokens.
The third area of revenue generation for Empowa will come as full token utilization approaches. This will be in the form of direct broker-dealing fees. There will always be a time when the fundamental value of an instrument that exists on the Empowa platform is below or above the market value. In such instances, Empowa’s treasury may take a bolder position to take advantage of that arbitrage opportunity.
The fourth area of income generation is where the Empowa platform invites qualified broker-dealers for a fee to act as market makers. These market makers can either be specialist market makers for a specific instrument or generalist market makers throughout the platform. The liquidity of Empowa’s instruments and the fact that we now have pricing models that adhere to traditional financial standards means that investors will be able to enter a position and exit a position at times of their choosing.
Lastly, Empowa will generate revenue through a standard assets under management fee, which would come in the form of a low basis point to offset administrative costs incurred when accounts are held and trades are made.
Empowa’s revenue model is quite simple but effective. Its sustainability and profitability depend on the success of its revenue model. The EMP token plays a vital role in generating revenue, acting as the gas fee of the Empowa platform. The flexibility of the Empowa ecosystem to adapt to changing technologies means that the platform will continue to generate revenue from its five revenue sources, making it a sustainable and profitable venture in the long term.
If you would like to find out more about the Empowa approach to raising capital for affordable housing check out the full video series explaining the Empowa Blackpaper here or visit the Empowa website at Empowa.io/blackpaper.