Could tokenized RWAs help cover your next vacation?

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The cost of living crisis has lasted much longer than initially expected. Even as global inflation approaches typical levels, wages are lagging behind as individuals continue to struggle with rising costs not seen in decades. So how can people get creative to earn extra income during challenging times?

For years, Airbnb has provided individuals with another way to increase their earnings by offering them an alternative way to earn extra income by renting out their home or spare room. The fact that it was founded after the 2008 financial crisis certainly contributed to the future.

Airbnb has grown exponentially since its founding, expanding its presence to more than 100,000 cities worldwide and hosting millions of guests each year. But amid this success, many cities face the challenge of effectively regulating the short-term rental industry.

Fearing the displacement of long-term rental housing and the preservation of housing integrity in favor of the tourist market, governments have attempted a number of regulations to strike a balance.

Dallas, for example, restricts vacation properties in certain residential areas, while cities like San Francisco and Seattle have placed limits on the number of properties a homeowner can manage. Some locales limit the number of nights a property can be rented annually, while others, such as New York and Tokyo, require landlords to reside in the rental property.

Despite regulatory challenges, the flexibility offered by platforms like Airbnb remains attractive to property owners. From a financial standpoint, hosting such platforms offers potential additional income without the commitment of long-term leases. In 2022 alone, hosts in the US collectively earned $22 billion by hosting travelers into their homes.

So what happens if plans are disrupted by regulatory requirements and this results in the loss of investment opportunity?

As Airbnb continues to face tightening regulations, investors may explore alternative avenues for investment opportunities. For example, tokenized real-world assets (RWAs) have emerged as a potentially transformative force, attracting the attention of even traditional institutional players. Tokenization of real estate, in particular, has reshaped the public’s perception and interactions with digital assets, unlocking new opportunities for potential investors.

FreeBnk, for example, is a fintech application founded by a group of entrepreneurs to help combine web2 and web3 banking into a single platform. Part of the mission to make crypto more accessible to everyone is to allow users to invest in fractional RWAs, allowing retail investors to access a wide range of properties with smaller capital commitments and easing traditional barriers to entry in real estate investing.

Instead of spending money on a new home appliance, FreeBnk can help users allocate those funds to browsing and potentially investing in a property. The interface works similarly to Airbnb; However, instead of booking a holiday, users can evaluate a potential investment property based on its alignment with their financial goals and then allocate funds for partial ownership. Finally, the user will earn rental income as FreeBnk takes over the management of the properties, collects the rent, and deposits the money directly into the user’s account.

Making real estate more accessible allows a new class of investors to diversify their portfolios. As the real estate market expands, investors from all walks of life should benefit from long-term valuation of tangible assets. RWAs offer the opportunity to create an inclusive marketplace where the potential for financial growth is shared and economic prosperity is driven by many participants rather than a select few.