Parcl Finally Launches Its Real Estate Derivative Platform

Back in May 2022, Parcl — a company in a category that seems like a cross between proptech and fintech.— announced a $7.5 million funding round with participation from the likes of Archetype, Dragonfly Capital, Shima Capital, Solana Ventures, Not Boring Capital, and FJ Labs.

At the time, Parcl called itself “a digital real estate protocol built on Solana, a blockchain specifically designed to host decentralized and scalable applications,” that “allows users to invest in and trade-specific geographical markets” and which “requires no minimum investment, offers immediate liquidity, and carries low transaction fees,” according to information sent to by its PR firm.

Parcl announced that it has finally launched its product, Parcl Protocol, built on Solana, a blockchain specifically designed to host decentralized and scalable applications. “Providing exposure to the most desirable cities in the United States including New York City, Miami, Phoenix, and Los Angeles, and with global cities such as Paris, London and Singapore coming later this year,” said its press release.

However, as noted last year, there is a hitch. There are a number of companies working to allow more people to invest in real estate at varying levels of entry. Similarly, REITs and ETFs can allow investors of all sizes to own a portion of real estate properties.

That’s not the case for Parcl, which is technically a “synthetic protocol,” or the crypto equivalent of a derivative. As other information previously sent by the company’s press representatives said, “The protocol allows for the creation of synthetic ‘Parcls’ which are tied to a valuation index that is representative of the average price per square foot within a given neighborhood.”

That apparently hasn’t changed.

“Given the current volatility across asset classes, including real estate, Parcl can provide potential stability,” a release quoted Parcl CEO and co-founder Trevor Bacon. “The Parcl Protocol brings tangible asset prices on-chain through a price feed rather than by fully collateralizing the underlying assets, providing both greater liquidity and scalability. This amplifies the stability of real estate as an investment class.”

But it doesn’t deliver actual ownership, and volatility, which can be a challenge for investors, is also in some degree necessary to buy low and sell high. The “opportunity to either buy or short real estate markets based on whether they think the real world property values will increase or decrease” is speculation, not investing, because there is no tangible value a person would retain.