# What is UKRE The UKRE token from Tangible is the backbone of the application and represents tokenized real estate. More specifically, properties located in the United Kingdom, hence the name UKRE for **U**nited **K**ingdom **R**eal **E**state. This page will present what are the advantages of the token, how you can get it, and what you can do with it. If you ever want more details on how Tangible is managing real estate and basket tokens, feel free to take a deep dive in [the official documentation](https://docs.tangible.store/). ## UKRE in a nutshell ### Tokenized Real Estate 100% backed by RE properties UKRE, and all basket tokens in general, are 100% backed by Real Estate. All the properties are represented by TNFTs (**T**angible **N**on **F**ungible **T**oken) which value equals the price of the underlying property. TNFTs are then added to the UKRE vault, which really is a simple collection of TNFTs, and this locked TNFTs in the vault are used to mint UKRE tokens. The price of the UKRE token, when minted this way, is arbitrary set, and independent from the market price of the UKRE token. However, the price should be softly pegged to the TPV (**T**rue **P**roperty **V**alue) of the underlying TNFT. As an example, as of writing this document, there's a single TNFT in the UKRE vault, so the UKRE basket currently looks like this:
* The property offchain value is $92,833.04 and that's the value backing the circulating supply of UKRE tokens onchain * The UKRE token value is arbitrary set to $100.50, meaning that the total number of UKRE tokens in circulation is 92,833.04 / 100.50 = 923.71 tokens {% hint style="info" %} Other informations from the screenshot taken above will be explained in the rest of this document. But as a quick TL;DR, the Total annual rent is the expected rental yield generated by the property, giving the net rental yield APR. The Projected annual net yield is the sum of the rental yield and the estimated property price appreciation. {% endhint %} If you check the [UKRE token contract in the re.al explorer](https://explorer.re.al/token/0x835d3E1C0aA079C6164AAd21DCb23E60eb71AF48), we can see the max. total supply for the token:
So we can notice a small difference between the expected number (923.71 tokens) and the actual number of circulating tokens (928.482 tokens). This difference is explained by the fact that the UKRE tokens (and all basket tokens) are rebasing as they accrue yields from the real world, and that's a perfect segue to the next section. ### Rental yields distribution Real estate properties in the real world are actually rented, which generates a revenue. A small portion of the revenue is kept for the operations, but the majority of it is redistributed to token holders. What happens is as follows * rental revenue is accumulating into a separate vault * new basket tokens are minted based on the revenue that's added to that vault, with the value of the new tokens being 100% backed by the value of the vault * the new tokens are distributed to UKRE token holders via a rebase * once the value of the rental revenue in this vault is enough to buy an additional property, some new real estate is acquired and tokenized in the form of a new TNFT that is added to the basket vault without new tokens being minted In other words, the backing composition of UKRE would go from this
to this
As for the rebase itself, UKRE holders have absolutely nothing to do to benefit from it. As an example, the current APR of the UKRE is 12.14% APR (which once again include 7.15% APR from rental revenue, and 5% price appreciation annually). This means that if you hold 1 UKRE token in your wallet and do not touch it for a complete year, you will have in your wallet 1.1214 tokens at the end of the year. This explains exactly why the number of circulating UKRE is higher than the expected amount of tokens we calculated in the previous section. ## Token price, risks and volatility ### Keeping the price from going up The price of the basket tokens are set arbitrarily at the vault level, meaning that for the vault, the price is fixed and 1 UKRE = $100.50 USD, whatever the market price is. However, the market price can eventually vary based on offer and demand. Currently, you can buy and sell UKRE on Pearl DEX on re.al. As UKRE is slowly ramping up and demand increases, the price may go higher than the target price of $100.50. When that is the case, Tangible (which holds a lot of TNFTs) can actually sell tokens owned by the protocol into that pool to lower the price closer to the target, which is currently a good mechanism to control the price and make sure it does not sky rockets in moments of high demand. If they have the possibility to do it, Tangible can also add a new TNFT (from their tokenized real estate reserve) to the basket vault and mint additional tokens that will be sold into the Pearl liquidity pool. {% hint style="success" %} This is actually the main component of the plan aiming at liquidating the Real Estate that's backing the USDR token, a previous token that Tangible launched in 2022. {% endhint %} However, once Tangible runs out of TNFTs and UKRE token to sell, there will be no more mechanism preventing price going up. ### Keeping the price from going down On the other side, there is little to no mechanism to prevent price going down except arbitrage opportunity. In facts, you can actually redeem your UKRE and claim the underlying TNFTs. Right now, we know that * 1 UKRE = $100.50 at the TNFT vault level * there is a number of circulating tokens that matches the property value * this means that we can actually get a TNFT:UKRE ratio, which we did in the first section, and we know that for the current Real Estate Property, 1 TNFT = 923.71 UKRE Now imagine that the price of UKRE falls to $1 on Pearl (very unlikely). You could theoretically purchase 923.71 UKRE with $923.71 worth of other tokens, go to the Tangible store, claim the TNFT with your UKRE tokens, as can be seen in the screenshot below.
Once you own the TNFT, the rental revenue will no longer go to the vault backing UKRE but instead it will accumulate in the TNFT in the form of USTB that you will be able to claim whenever it become available (probably once a month). You can also add your property TNFTs to the basket vault, in which case you will receive an equivalent number of tokens that you can then sell on Pearl, or hold to benefit from the token rebase. {% hint style="danger" %} In other words, investing in UKRE present a decent risk as the price can go down if there is not enough demand to absorb a lot of sell pressure. Make sure you understand this risk before investing in it. {% endhint %} As a quick side note, once you become the owner of a TNFT, you can eventually acquire the ownership of the real estate property and sell it in the real world. Even if that's a long process, that's still an option that sort of guarantees that the price will never go much lower than the price at which the property can be sold offchain. {% hint style="info" %} The Tangible team is working with auditors and price oracle providers in order to get a proper proof of reserve backing UKRE, and an audited source for the real world price of all the properties in the basket vault. {% endhint %} ## Disclaimer The Tangible website where you can mint and redeem UKRE for Real Estate TNFTs is geo-blocked and not available in certain regions of the world, including the United States. This guide does take any responsibility if you are using the application from a geo-blocked location. The goal of this site is solely to inform people of what they can do, and how they can do it, as long as they are legally allowed to do it. Also, this guide isn't an endorsement of the UKRE token or the tokenized Real World Assets offered on the Tangible store. The goal is to inform users of possible opportunities, and also highlights some of the risks when you buy and sell UKRE, or any basket tokens. This is not financial advice, and it's always recommended that you perform your own research before investing, especially in crypto. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://real-community.gitbook.io/re.al-community/tangible/what-is-ukre.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.