Why Tokenized Real Estate May Not Be the Future of DeFi

Tokenized real estate faces challenges that prevent it from becoming a major component of decentralized finance (DeFi). Regulatory hurdles make it difficult to tokenize physical properties, as real estate laws vary widely across jurisdictions. Token holders lack direct claims on the physical assets, which complicates enforcement of property rights. Ensuring liquidity in a market that combines real estate and blockchain technology poses significant issues. Smart contracts, which automate transactions, struggle with complexities related to maintenance, tenant laws, and ownership disputes. Traditional real estate transactions already possess well-established legal frameworks that protect stakeholders. The costs and complexities of integrating real estate into DeFi outweigh the potential benefits at present, making widespread adoption unlikely.

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