A place in the Bahamas for degens? The birth of Land-as-NFT (LaN)
We degens in the crypto world often use phrases like ‘wen lambo’ to signify real world wealth. What Blue Terra seeks to do is to give holders a place in the Caribbean islands. Wait a minute, don’t pack your sandals and shades just yet. Let’s take a deep dive into Blue Terra.
What are you talking about?
Blue Terra is an NFT project with a core 12-member team that seeks to create in their words “one of the first Land-as-NFT (LaN) projects” on the blockchain. They are launching on Solana and will aim to offer 5,000 NFTs for minting, each relating to 5,000 corresponding plots of land (ranging from 1500–2000 sq. feet) in The Bahamas. Whilst we’ve seen some instances of projects tying their NFTs to real world tangible items, such as Tungsten cubes and we’ve seen property listings on NFT secondary markets, it’s interesting to see an NFT project that is going to sell more than 100 acres of land through NFT tethered ownership.
How?
According to the Blue Terra Discord and the information set out in their Whitepaper, they believe it is legally possible to entitle NFT holders to ownership of land in the Bahamas, and they’ve consulted with a leading local law firm, Cotsfield, and Graham, Thompson & Co for good order. The team even has a “legal questions” sub-channel in their Discord, which I think is a first in my time in the NFT world.
This is how they’ll do it:
- A single Bahamian incorporated holding company (the Holding Company) will be set up and will have a freehold ownership of the land.
- The Holding Company will then create 5,000 perpetual leases that will correspond to 5,000 plots of land (according to their Whitepaper, Blue Terra indirectly suggest the perpetual lease will expire in 150 years and will then enable the tenant to either renew the lease or it will return back to the Holding Company).
- The ownership of a holders’ piece of land will be therefore be backed by the perpetual lease, linked to the NFT’s metadata.
This model, according to their Whitepaper was more favourable than other potential models the team had considered which would have otherwise incurred more tax liabilities and prevented speedy secondary sales.
What about post-mint?
Development: Post-mint, you’ll have your land (which will be cleared by the Blue Terra team, and therefore undeveloped). Holders will be able to develop on the land as they wish, however construction charges will be subject to a 10% VAT. There will be an electricity grid and power lines on all properties the Blue Terra team is considering and they will partner with local companies so that holders can get certain installation services at a discount. Alternatively you could leave it undeveloped.
Resale: It appears the Blue Terra team will create the Terra Bazaar, which will act as a marketplace for trading the NFTs. The Terra Bazaar will take a 2% exchange fee, whilst a fee not exceeding 5% will be due to real estate agents for verifying the properties. 7% isn’t half bad given some of the combined fees you see on ME. I haven’t seen anything on artist royalties, so I’m going to assume that’s all there is. 20% of the 2% exchange fee will go to the Blue Terra DAO.
DAO, HOA and community: A DAO will be formed out of holders who will be able to verify ownership on Discord through Grape Protocol. The DAO will be able to contribute to the future of the project and will elect officers for the Homeowner’s Association (HOA), whose role will be to look after the maintenance, fees and other responsibilities of the property. The HOA members will need to be holders that are KYC verified and appropriately experienced for the role. Among the HOA, there will be ten board of directors who will be responsible for: general maintenance, setting up systems for holders’ needs, dealing with complaints, community finances and making payments such as taxes.
Analysis — the positives
- The idea of owning your own piece of land sounds amazing and comes across as both secure and innovative in the NFT space. A 5,000 supply is quite scarce for what is becoming a growing NFT community. I can see this gaining popularity and it is the biggest strength.
- The Whitepaper is well written and researched, and if having lawyers on board is any indication of their due diligence, the team come across as confident.
- The artists on the team, Matthieu Bouef and Jonah Waterous have a good background, with some experience working for corporate clients, and Jonah has a connection to The Bahamas.
- The community seems strong and the artwork used by the team create a sense of togetherness and conjure up ideas that the SOL community are going on a holiday. The Discord is active too, with 20,000 members (though with an invite component to the WL, this may be a factor).
Points to think about
- There doesn’t appear to be an indication that the NFTs will list on Magic Eden or another popular existing secondary NFT market, due to the additional checks and detail that needs to be conducted which would better facilitate the ‘Terra Bazaar’ marketplace model that will be adopted. This may impact liquidity, but given the in-house marketplace model has worked for other projects such as Solana Monkey Business, it may not be something to immediately worry about.
- The cost of development cannot be avoided for those that want to build on their land, so unless holders want to leave the land undeveloped, they will need sufficient capital to cover the costs including VAT.
- KYC can be a put off for folks but doesn’t appear to be a requirement to simply be a DAO member (just for HOA officers).
- Whilst emphasis is placed on the DAO for proposals and HOA to carry out their duties under board of directors oversight, this may limit growth or direction from the project founders. I do assume however they will have a significant role in the day-to-day running of the project, and the board of directors will be paid 1 SOL weekly and will be monitored in their completion of tasks.
Conclusion
- On balance, I will personally be looking to mint one and could see a return providing the launch is smooth and the team is able to find the land and allocate it in good timing post-mint.
Blue Terra Socials
- Twitter: https://twitter.com/BlueTerraNFT
- Webiste: https://blueterra.land/
- Discord (invite link): https://discord.gg/7cyPpzts
As always, this is not financial advice and please do your own research too!
