> For the complete documentation index, see [llms.txt](https://propblock-ai.gitbook.io/propblock-ai/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://propblock-ai.gitbook.io/propblock-ai/rwa-protocol-overview/tokenization-process.md).

# Tokenization Process

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**Asset Due Diligence**

A rigorous verification process to ensure the property meets PropBlock’s investment standards:

* **Title Verification**: Confirm legal ownership and absence of liens/disputes via blockchain-recorded land registries.
* **Physical Audit**: On-site inspection (via partnered agencies) to assess structural integrity, maintenance, and compliance.
* **Market Viability**: Historical rental yields, occupancy rates, and zoning regulations analyzed by AI tools.
* **Risk Scoring**: AI flags red flags (e.g., flood zones, pending litigation) using geospatial and legal databases.
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**Legal Structuring**

Compliance-first framework to bridge real-world assets (RWA) and blockchain:

* **SPV Creation**: The property is legally wrapped into a Special Purpose Vehicle (SPV) to isolate financial/legal risks.
* **Token Rights**: Smart contracts codify ownership splits, revenue distribution, and voting rights (e.g., 1 token = 0.01% equity).
* **Jurisdictional Compliance**: Adapters for local regulations (e.g., U.S. SEC exemptions, EU MiCA compliance) are integrated into minting contracts.
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**AI Valuation**

Dynamic pricing powered by PropBlock’s **Predictive Valuation Engine (PVE)**:

* **Data Synthesis**: Aggregates 50+ live data streams (mortgage rates, foot traffic analytics, infrastructure projects).
* **Scenario Modeling**: Projects 3 valuation tiers (bull/base/bear) using Monte Carlo simulations.
* **NFT Metadata**: Immutable appraisal reports and risk metrics are embedded into the NFT’s on-chain metadata.
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**RWA NFT Minting**

Deploying the property as a compliant ERC-721R (RWA-standard NFT):

* **Fractionalization**: The SPV ownership is split into 10,000–100,000 fungible sub-tokens (ERC-20).
* **Royalty Module**: Auto-distributes rental income/profit shares to token holders via Base’s native account abstraction.
* **Legal Anchors**: NFTs include cryptographic proof of insurance, audit reports, and SPV registration documents.
  {% endstep %}

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**Liquidity Pool Creation**

Enabling seamless trading via decentralized markets:

* **Bonding Curves**: Initial liquidity pools use time-weighted AI pricing to prevent front-running.
* **LP Incentives**: Stakers of $PROP tokens earn fees from secondary trades (0.3% of volume).
* **Oracle Integration**: PropBlock’s AI oracles continuously adjust pool pricing based on real-world valuation changes.
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## **Why This Matters**:

* **Transparency**: Every step is recorded on Base’s blockchain for immutable auditing.
* **Automation**: AI handles 90% of due diligence/valuation workloads, reducing tokenization costs by 70% vs. traditional REITs.
* **Liquidity**: Sub-tokens can be traded 24/7, unlocking real estate’s traditionally illiquid value.


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