The Real Estate Coin

GromaCoin: a currency for the world, backed by the world.

01 | Introduction

An Ode To Money: Money is mankind’s best invention. With it, societies can efficiently allocate resources to better the overall human condition. And it works. Ecosystems in which money, prices, and markets play a central role have thrived.

And Yet: Like all inventions, money can be improved. And the concept of money has never been static – it's a constantly evolving technology. The ancient Sumerian shekel was denominated in weight units redeemable for grain, a key input to their agrarian economy. Metal currencies held value through rarity. Fiat currency and its central institutions have enabled unprecedented monetary flexibility and responsiveness. And today, the first widely used digital currency, Bitcoin, runs on a globally distributed blockchain and is held as a reserve asset by people, corporations, and states. 

Despite this progress, the majority of individuals today use fiat currency and suffer from painful second-order effects embedded into fiat currency design. These include obvious negative impacts, like inflation quietly eroding savings, and less obvious ones, like the expanded money supply weakening price signals, hampering long-term economic growth, and widening societal gaps. Bitcoin and other purely digital currencies offer an alternative but fall short in ways that make them impractical as a fully featured currency.

A Proposal: We propose a new form of money: a currency backed by land and the structures built upon it. With an ever-growing pool of properties, each unit of GromaCoin would represent an ownership share of not just a single asset, but of an entire real estate ecosystem. Denoted on a public blockchain, a real estate coin would function as a currency for the world, backed by the world.

Why? A currency backed by real estate has a number of positive attributes that we believe will earn it a place in the pantheon of currencies alongside gold, Bitcoin, and the dollar.

To present the argument for why a real estate coin will be a good currency, we must first examine what makes a currency good. A good currency must serve three functions:
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  • Store of Value
  • Medium of Exchange
  • Unit of Account

Gold and Bitcoin do 1 and 2 well, with supply inflexibility driving price volatility that makes it difficult to use as a reliable unit of account. Bitcoin’s transaction costs also impede its use for most small purchases. The dollar does 2 and 3 excellently, while inflation, driven in large part by persistent money-printing, harms its performance on 1. Currently, there are no currencies that are directly backed by productive assets, which fundamentally delinks them from the economies in which they are used. We see fixing this problem as a key element to achieving all of 1, 2, and 3 above simultaneously.

A currency backed by real estate and denoted on a public blockchain presents a shot at that trifecta:

  1. Store of Value:  Land is a core input to nearly all economic activity. As such, it has historically been a source of durable value. It is naturally limited, globally distributed, and can be made more valuable with effort. Land has retained value through every technological revolution thus far, and we expect this pattern to continue through the AI era and beyond.
  2. Medium of Exchange: While land itself is not easily transferable, representing real estate on a public blockchain blends the durability of this productive asset with the composability of a global network, enabling fast and frictionless exchange.
  3. Unit of Account:  Real estate’s relative stability and strong correlation to broader economic activity makes it a reliable yardstick by which to measure the value of other goods and services in the economy. However, real estate cannot, by itself, be a unit of account, as most real estate is not equivalent to most other real estate. This is solvable. Financial structures have long existed to create fungible units out of baskets of disparate assets. Shares representing ownership of a trust of real estate assets, exchangeable on chain, could underpin a real estate coin.

There are other reasons to like a real estate coin:

  • Real estate is the largest asset class in the world.  $500T by some estimates, a small fraction of which would be sufficient to back the global money supply. Real estate’s relative illiquidity further enhances the opportunity.
  • The second-order effects of a real estate currency are positive.  More people will own more of the world around them and be motivated to increase its value. Social alignment will increase, cities will prosper, people will engage in neighborly behavior more readily. Where a gold-backed currency motivates more mining, and a fiat currency motivates more government, a real-estate-backed currency motivates more investment into real estate, e.g. housing, industry, agriculture – all things that benefit humanity.
  • Real estate is hard to debase. Debasement of fiat currency is the terminal state of all democracies. Tax hikes and spending cuts are felt immediately and are unpopular amongst the voting public, while the inflation that results from unbounded money printing is gradual and difficult to pin on a given elected official. A non-debasable currency incentivizes good governmental behavior, protects holders, and therefore supports stable societal progress.

Land is a core input to almost all economic activity. Making it the currency also is therefore a natural next step. We believe a currency backed by real estate is the next iteration of money. We believe it will further enhance the efficient allocation of humanity’s collective energy. And we have been hard at work for years to make it happen.
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In this whitepaper, we outline our concept, our progress thus far, and our plans for the future. We hope you will continue to read, and join us on our journey to bring the real estate coin to the world.

  • What is GromaCoin?
  • Act I - The Real Estate
  • Act II - The People
  • Act III - The Currency
But first, a quick interlude on the name. What is a Groma?

When selecting a name for this project, we wanted to pay homage to the invention of money, a “simple” invention that has played a crucial role in the development of humanity. The groma was a rudimentary surveying tool invented in Ancient Rome consisting of two pieces of wood secured together at a right angle, four equal lengths of string, and four equally weighted pieces of metal. This tool assists in finding level and right angles, both of which are critical for building roads, aqueducts, and empires. Simple, extensible, crucial to the progress of a great civilization. Also, the .com was available. And thus, Groma, and the GromaCoin.

02 | What is GromaCoin?

GromaCoin is a currency backed by real estate. More technically, GromaCoin is an on-chain security represented by a fungible ERC-20 compatible token, enhanced with smart contract logic that enables it to meet securities requirements. Each GromaCoin represents an ownership share of the Groma Real Estate Trust, a legal entity that owns a diversified portfolio of real estate. Our model intentionally mirrors traditional, regulated, well-trodden real estate investment trust structures, but brings them on-chain. This unlocks new functionality while operating within a clear regulatory framework.

GromaCoin will be built on a public blockchain, leveraging the unique capabilities available in those ecosystems.

  • Interoperability. Units of GromaCoin will be denoted as smart contract tokens that can be self-custodied or held custodially by Groma, with appropriate controls embedded to comply with applicable securities laws. Our goal with this infrastructure is to allow holders to easily take actions such as spending, swapping, lending, and borrowing, all while maintaining regulatory compliance. Each of these tools unlocks a core currency function while maintaining the core hard asset backing for the GromaCoin ecosystem.
  • Transparency. GromaCoin’s share register as well as new token issuances will be recorded on chain. Assets held, including deed registration and property valuations, will be encoded via publicly verifiable smart contracts for anyone to see. Wherever possible, we will strive to build immutability into these contracts and bring more of the real estate ecosystem’s internal financial operations on chain, increasing trust in the currency framework.
  • Availability. Given the large number of hosts that participate in running a blockchain network, systems built upon them are capable of providing an extremely high level of availability–a key feature for a global currency.

While key parts of the Groma ecosystem begin relatively centralized (e.g. what assets to buy, management of those assets, what markets to enter), we intend to pursue a path of progressive decentralization and to evolve the ecosystem to incorporate community governance as it gains scale and stability. This progressive decentralization is important and mirrors the evolution we expect from the GromaCoin ecosystem: GromaCoin is designed to begin life as an asset worth holding and to evolve, step-by-step, into a currency worth using across the globe.

What is a GromaCoin worth?

One of the most important components of a currency is that it must be valuable, both in the sense that it should be worth something and in the sense that it is capable of being predictably valued.

GromaCoin’s value is derived straightforwardly from the value of the assets held by the Groma Real Estate Trust. At a given point in time, the Groma Real Estate Trust might hold, for example, the following asset mix, viewed on a dollarized basis:

  • $80M real estate
  • $20M cash and equivalents

This results in a total value of the Groma Real Estate Trust of $100M. If there are 100M GromaCoins outstanding, GromaCoin’s price is therefore $1.

If the value of the real estate in the Groma Real Estate Trust appreciates by 10%, the total value in dollar terms1 increases to $108M. GromaCoin’s price is now $1.08. If investors buy $10M of GromaCoin directly, $10M of GromaCoin will be issued at current price, i.e. ~9.2M coins. The Groma Real Estate Trust’s cash balance increases by $10M. This purchase of new assets grows the ecosystem but is not dilutive to the per coin price because the new coins are minted at the current fair market value. The Groma Real Estate Trust will then deploy the new $10M to acquire suitable properties, increasing real estate holdings but not changing total value: $10M of cash is converted into $10M of properties. 

To recap, GromaCoin’s price is the value of the assets in the ecosystem divided by the number of GromaCoins outstanding. The next question to resolve is how the value of the underlying assets is determined and what governance mechanisms exist to ensure long-term accuracy of those valuations.

The Market Enforces Accuracy, Defining Monetary Policy

There are many mechanisms of valuing real estate, and Groma follows a credible valuation policy, but that is less important than the fact that the data is available and that the ecosystem is constantly “voting” with its wallets.

Groma states a primary value for GromaCoins based on the appraised value of properties, and market actors can buy GromaCoins directly at that price (primary purchase), or sell them back to the Groma Real Estate Trust at that price (primary sellback). Alongside this direct path, it is expected that GromaCoins will trade on secondary markets with buy/sell prices set by actors in those venues.

The interaction between prices on the primary and secondary markets provides an organic mechanism for controlling the price and supply of GromaCoins, providing what we believe is a first-of-its-kind market-driven monetary policy. Here’s how it functions:

  • If secondary market value is greater than primary value, market participants will buy GromaCoin directly, enabling more real estate purchases and increasing issuance, some of which will find its way to the secondary market, arbitraging the price gap and bringing the two in line.
  • If secondary market value is less than primary value, market participants will not purchase GromaCoin directly. Instead, they will buy it on the secondary market more cheaply or sell it back at the primary price, slowing or stopping ecosystem growth.

Disagreement over real estate values, or the potential for it, thereby imposes discipline on investment decisions and ecosystem growth. The delta between direct and secondary pricing allows the market, not unelected bureaucrats in closed-door meetings, to define the Groma ecosystem’s monetary policy. This mechanism of market-governed monetary policy also allows for greater money supply responsiveness than a fully fixed system such as Bitcoin or a mostly-fixed one such as gold. In our proposed structure, every single market participant has a proportional vote on whether monetary policy is expansionary or restrictive. This is yet another place where the market knows better than any centralized policy.

To make GromaCoin a reality requires three phases to occur in succession. While each phase never really ends and simply grows in scale to support the phases beyond it, we nevertheless refer to them as “Acts” given the distinct phases they represent in the overall creation of the Groma ecosystem.

Act 1: The Real Estate
Act 2: The People
Act 3: The Currency

1 At the time of writing, the Groma Real Estate Trust holds property exclusively in the United States, and most GromaCoin holders are U.S.-domiciled. Both of those facts will change over time, but for now viewing a GromaCoin on a dollarized basis makes the most sense. However, the analysis above could be done from any other basis–Euro, Bitcoin, gold–and the principles would hold.

03 | Act I: The Real Estate  

GromaCoin’s value is derived from that of the real world assets held by the Groma Real Estate Trust. These assets can be categorized as follows:

We propose two mechanisms of real estate asset acquisition and management: direct (for control and return premium) and indirect (for scale and diversification).

Today, the Groma Real Estate Trust portfolio is valued at roughly $100M and composed primarily of residential real estate in the United States; however, that asset class and geographic concentration is not a requirement of the concept and will evolve over time. You can see our current real estate holdings online, on chain, and in the real world here.

Direct Real Estate

The bulk of the Groma Real Estate Trust’s asset base is always likely to be its direct real estate holdings. We view the stability of our coin as intrinsically linked to the stability of our real estate holdings, and thus direct ownership, management, improvement, and engagement with that land is critical to the long term vision. To that end, Groma is executing a strategy that utilizes our technology platform and logistics know-how to optimize the process of buying, renovating, and operating small and midsized multifamily buildings. This asset class, consisting of properties with 2-75 units, has been historically overlooked by institutional investors, but exists in most major metro areas across the U.S. Done right, it offers advantaged returns and direct consumer access. With over two million of these properties and total asset value in excess of $5T, this “narrow” asset class focus provides enough scale by itself to support a currency. Groma’s real estate technology and expertise give it a durable, profitable base from which to execute the broader vision.2

The success of this direct real estate strategy has already enabled Groma to scale its property ecosystem to hundreds of millions of dollars of assets, appealing to investors excited about our long-term vision and also more traditional real estate investors simply seeking advantaged risk-adjusted returns. Groma operates the Groma Real Estate Trust for investors interested in the GromaCoin vision and traditional closed-end real estate funds for traditional real estate investors focused more purely on its real estate strategy. The Groma Real Estate Trust co-invests in each closed-end fund, allowing for greater diversification, more scale, and higher returns than would be feasible without this dual model. Additionally, the Groma Real Estate Trust’s demand for stabilized real estate assets will continue to grow, creating an exit opportunity for our traditional real estate funds. This is a symbiotic relationship, creating a demand premium and more assets ready to be wholly owned by the Groma Real Estate Trust. For those looking for real estate as asset-meets-currency, we believe GromaCoin is the correct solution. For those looking for region-/strategy-specific exposure, likely higher growth rates, and also higher risk/lower liquidity, the growth funds are the right answer. But both benefit meaningfully from the existence of the other.

Indirect Real Estate

Groma is able to deploy capital raised into indirectly managed real estate, including public REITs, offering quick scaling, flexibility, and diversification beyond our direct competencies. The downsides of this secondary strategy are self-evident: loss of control and potentially lower returns. A real estate coin could theoretically be launched with only indirect real estate holdings, but, for the reasons described above, we use this strategy as a release valve for excess capital, not a core strategy. At scale, Groma may seek to acquire other REITs or closed-end real estate funds outright, economizing on fees, providing better operations, and gaining a more direct connection to renters in the properties owned by those investment vehicles.

Cash and Equivalents

Groma keeps funds that have not yet been deployed in short-term, highly liquid assets until they can be deployed into real estate. These may be held in fiat (USD, EUR), yield-bearing fiat (treasuries, money markets), or direct crypto assets (BTC, ETH).

Current Status and Growth Trajectory

Over the long run, the Groma Real Estate Trust’s holdings will diversify along geographic and segment vectors. A currency for the world, backed by the world, with all its variety. However, the global real estate market is vastly larger than the scale needed to support a currency, and it is not possible at an early stage for us to be an expert in all classes of real estate. Specialization and focus provide an opportunity for a stable and performant currency out of the gate, which is why our direct real estate mandate is far narrower than just “real estate”, though we expect it to expand over time. In the interim, indirect holdings allow for scale, diversification, and flexibility where required.

2 A meaningful secondary effect of this investment strategy, core to our vision for why a real-estate-backed-currency is desirable, is the rehabilitation of underinvested rental units in high-demand cities, increasing the supply of an undersupplied resource.

04 | Act II: The People

In our early phases, most GromaCoin has been held by family offices and high-net-worth investors. These early supporters, and participants like them, continue to be key participants in our ecosystem. However, achieving currency status requires putting GromaCoin into the hands of hundreds of millions of people worldwide. A greater holder base benefits all of our investors and pushes forward our efforts towards creating a real-estate-backed-currency. The second phase of our strategy is geared towards achieving this shift in community scale. 

Early On-Chain Applications

In recent years, the blockchain industry has devoted an increasing portion of its attention to the task of bringing real world assets on chain. Fiat stablecoins are now used in a supermajority of blockchain transactions, and efforts are underway to tokenize an ever-broader array of traditional assets–stocks, bonds, derivatives–in order to combine the composability of blockchain with claims on real-world productivity.

No real world asset presents a larger opportunity in this domain than real estate. It is the world’s largest asset class. It exhibits lower volatility than stocks, has more growth potential than bonds, generates steady income, and can offer a variety of tax advantages. It is also currently highly illiquid, with only a small portion of its total value held in publicly traded shares, promising a larger value-add from tokenization than already-liquid stocks and bonds.

These characteristics make GromaCoin ideally suited to plug into a wide range of existing on-chain applications. Its relative price stability makes it an appealing option for use as collateral in various decentralized finance applications. Lower volatility means lower collateralization ratios are required, allowing for more efficient use of capital. Additionally, GromaCoin’s backing by real estate makes it significantly more inflation-resistant than other “stable” assets with fixed dollar-denominated backings. Holding GromaCoin as a “reserve” asset between uses therefore preserves value better than dollar stablecoins. In many ways, GromaCoin can be thought of as another type of stablecoin, but backed by real estate, not dollars.

Rentvesting

Perhaps the most relevant early application of GromaCoin will be its use in rentvesting, a new financial tool designed to enable renters to convert their rent payments into real estate equity.

There are currently 100M renters in the US, collectively spending roughly $650B on rent each year and building no wealth by default. Rentvesting is designed to leverage this large, predictable payment stream with a financial tool that benefits renters and simultaneously accelerates GromaCoin holder adoption.

A renter renting with Groma (or anywhere else) can choose to pay rent normally or to rentvest. If they choose to rentvest, it works as follows:

  1. Each month, the rentvestor invests their monthly rent amount into the Groma Real Estate Trust before paying rent.
  2. Groma then covers that month’s rent and is paid back whenever the rentvestor sells their shares. The rentvestor can hold those shares for as long as they want.
  3. To minimize risk for the renter, Groma makes a guarantee: when they sell their shares, if there is any shortfall, Groma covers it. Any appreciation is 100% the rentvestor’s to keep.
  4. In exchange for this upside-only exposure, Groma retains the dividends on those shares, which are used to cover the interest costs of borrowing capital for the covered rent.

Rentvesting is intentionally designed to be simple and low-risk for renters to encourage adoption and to appropriately shift the risk to Groma, the large and sophisticated party. The goal is to provide financial leverage to renters for the first time, enabling them to pay their rent and participate in the upside of real estate asset growth. In addition, each new rentvestor has taken the meaningful step of registering with Groma, linking a bank account, and engaging in a structured form of investment with Groma. This smooths the path for further engagement (investing, lending, spending, borrowing) with the GromaCoin ecosystem in the future.

This program is also profitable, at scale, for Groma, in addition to accelerating user adoption. Groma Real Estate Trust shares pay dividends. As part of the rentvesting program, while the rentvestor retains all appreciation upside, Groma retains the dividends on those shares and uses those to cover the costs of running the program, primarily the borrowing of funds for the covered rent.

This program benefits all involved parties: renters, lenders, and Groma.

Renters build an equity stake in the real estate around them without spending more each month. This is a game-changer for the tens of millions of renters across the US who struggle to achieve homeownership or otherwise build up a significant portfolio of financial assets.

Lenders gain access to an entirely new market on a scale comparable to the mortgage, earning competitive interest with scoped risk. We also expect that rentvesting lending will be an attractive source of yield for on-chain lenders.

Groma benefits from rentvesting in four key ways:

  1. Demand Premium: Rentvesting creates a demand premium for living in its properties. While we will soon offer rentvesting to all renters, the capital constraints of running the program mean that we will offer it first to Groma renters and then enable those renters to offer it to a set number of invitees. Renters at other properties are welcome to rentvest but will have to join a waitlist. In this way, we also intend to create a demand premium for living at Groma properties via the promise of guaranteed rentvesting access.
  2. Capital Formation: Rentvesting scales our investable capital and associated revenues. Annual residential rent in the US is ~$650BN per year. The total annual investment into multifamily real estate in the United States is roughly $150B/year. Given that rentvesting is straightforwardly a better deal than renting, we believe that it could supplant traditional renting as the norm. Transmuting even a small portion of renters into rentvestors opens up an annual capital formation stream comparable in size to the entire existing multifamily investment ecosystem.
  3. Additional Revenue: Groma also directly benefits from the delta between the dividends on rentvested shares, and the interest costs of borrowing the money needed to cover the rentvestor’s rent for that month. While we expect that to be close to breakeven in early years, it could be materially profitable to the ecosystem over time.
  4. User Acquisition: Most importantly, we expect rentvesting to create a large base of individual GromaCoin holders–a critical step towards establishing a functioning currency.

Most importantly, we expect rentvesting to create a large base of individual GromaCoin holders–a critical step towards establishing a functioning currency. As we as we’ll explore in Act III.

05 | Act III: The Currency

Enabling Currency Functionality

At a scale of millions of holders and tens of billions of assets, GromaCoin can begin to function as a currency. This network of holders/users will be able to spend GromaCoin in exchange for goods and services, making it a genuine medium of exchange rather than simply a store of value and unit of account.

Getting to this state will require investment in payment/transfer infrastructure to enable the full range of functionality expected from a currency, with appropriate features for on-chain functionality and securities-law compliance. That functionality can be segmented into three broad categories: 

Peer-to-peer

Transactions between individual GromaCoin holders will be fairly straightforward–a major benefit of building on blockchain infrastructure. Holders of GromaCoin will be able to leverage a set of basic smart contracts to easily transfer GromaCoin to each other. We do not have to bootstrap this network and can instead simply leverage the global transaction framework already in place for blockchain ecosystems. GromaCoin is a new asset, and a new currency, but built on an existing vibrant network.

Point of sale

Direct merchant acceptance of GromaCoin as a means of payment will be more difficult to realize than peer-to-peer adoption. In the meantime, leveraging credit card networks can serve as a convenient bridge to our desired end state, enabling users to spend dollars off of their GromaCoin (or other cryptocurrency) balances, leaving merchants with the dollars they want and users without exposure to inflationary assets. Direct acceptance of non-dollar assets is a heavy lift; fortunately, dollar stablecoin issuers are laying the groundwork to build out an ecosystem of stablecoin-compatible payment systems. This pathway is already growing quickly, with PayPal, Stripe, Shopify, and multiple major banks building out the requisite infrastructure. Over time, we anticipate point of sale devices allowing for true stablecoin payments, receiving stablecoins over blockchain rails, rather than receiving dollars over Visa/Mastercard rails. GromaCoin will probably not be the primary motivator of that adoption, but we will ride on the infrastructure as it is built out for stablecoins and other on-chain assets.

As this system is developed over the coming decade, the dollar’s growing instability will incentivize both merchants and buyers to look for non-dollar-denominated payment options, positioning GromaCoin favorably relative to dollar stablecoins as a medium of exchange. When the dollar is losing 2.5% a year in value, adjusting merchant prices to compensate infrequently is manageable, and the fact that your prices at year end are lower in real terms than at the beginning of the year represents only a modest loss. But at 10% inflation, merchants will be forced to choose between more frequent price updates, more complex transaction structure, and meaningful economic losses–a well-known problem in more inflationary societies. If you believe inflation will trend up in the coming years3, more stable solutions will become more desirable for commerce.

Lending/borrowing

Lending and borrowing is the third major usage category for a currency. GromaCoin’s relative stability and dividend yields will make it a natural fit for use in various decentralized finance applications. By building on blockchain, we again benefit from being able to integrate smoothly with existing infrastructure and applications, while still bringing a new asset to the table. We expect these uses to spread into mainstream financial applications for the same reasons.

An initial use case for lending and borrowing will be driven by Groma itself. Rentvesting requires borrowing dollars to cover a renter’s monthly rent, using GromaCoin as collateral. While we are bootstrapping this with traditional lending facilities, our goal in the medium term is to fund that borrowing by depositing GromaCoin into a DeFi lending platform as collateral and borrowing against it at a reasonable rate. This provides capital for rentvesting programs and a source of yield for stablecoin holders.

A Currency With Positive Externalities

We expect GromaCoin, as a real-estate-backed currency, to have a variety of positive effects relative to the status quo. The inflationary tendencies of fiat currencies generate undesirable outcomes; substituting an inflation-resistant currency backed by real estate will lessen or eliminate these tendencies, improving outcomes for society.

Promoting Long-Term Efficiency and Growth

Perhaps the most damaging effect of inflation is its impact on long-term economic growth and efficiency. Inflation incentivizes spending dollars on hand, reducing the rate of savings and therefore of investment. The decrease in long-term growth that results from biasing towards short-term consumption and away from investment is, by definition, not noticeable in the short run, but has an outsized impact on long-term outcomes. Over 50 years, a society with 3% annual GDP growth will have 63% higher GDP than one with 2% annual growth–holding other factors constant, this translates to a gap in household income as large as that between France and the Dominican Republic.

Additionally, when the government engages in expansionary monetary policy, it distorts both the general price level and the cost of borrowing. This distortion, combined with the federal government’s increased spending latitude, suppresses the ability of market forces to direct capital to its most efficient uses. Wasteful spending and investment, lacking tight market-based feedback, can continue unabated. Inflation therefore reduces both long-term growth and the degree of allocative efficiency for a given level of GDP.

Eliminating Distributional Unfairness

Inflation is a tax on holders of the dollar and dollar-denominated debts. When inflation is low and stable, this is only minorly problematic, if at all. When inflation is higher and when the money supply increases rapidly, distributional effects become more severe. Households in the lowest wealth brackets tend to hold a significant percentage of their assets in cash in order to be able to cover both routine and unexpected expenses, while those in the highest wealth brackets tend to hold a negligible percentage in cash, instead favoring real estate, equities, and other non-cash assets.

Increasing the money supply boosts the nominal value (and sometimes the real value) of these non-cash assets and decreases the real value of dollars, creating a wealth transfer from poorer to wealthier people and contributing to political and societal instability. GromaCoin’s natural inflation resistance immunizes its holders against this effect, disproportionately benefiting those who are most reliant on holding cash.

Improving Economic Alignment

Ownership of real estate is a foundational pillar of social stability and incentive alignment. Those who have it benefit from economic growth taking place around them, making them more invested in the long-term economic health of society. Those who don’t own real estate still have to consume it by renting, meaning that they effectively have a short position on the economy as a whole–a recipe for myopic attitudes towards government policy and private enterprise alike.Inflation is a tax on holders of the dollar and dollar-denominated debts. When inflation is low and stable, this is only minorly problematic, if at all. When inflation is higher and when the money supply increases rapidly, distributional effects become more severe. Households in the lowest wealth brackets tend to hold a significant percentage of their assets in cash in order to be able to cover both routine and unexpected expenses, while those in the highest wealth brackets tend to hold a negligible percentage in cash, instead favoring real estate, equities, and other non-cash assets.

Since housing costs in top metros have increased considerably relative to incomes, the jump from renting to homeownership has become more difficult. The widespread availability of GromaCoin and tools like rentvesting will help turn this daunting step into a gradual ramp, allowing renters to build real estate wealth incrementally at their own pace. The advantaged terms of rentvesting can accelerate this process, especially for the lowest-income renters who lack disposable income to invest. We expect that giving renters more of a stake in broader economic growth will lead to more broadly pro-growth governance.

Conversely, many homeowners are arguably overinvested in real estate and insufficiently diversified in their holdings of it. Taking out six figures of leverage attached to a single asset understandably makes many homeowners extremely risk-averse regarding the value of that asset, leading to a different set of anti-growth policy preferences (i.e. NIMBYism). Owning a home in the same area as one works also creates double exposure to the economic health of the region–if one is laid off as a result of a downturn in the region’s primary industry, it’s preferable to have real estate holdings that are not also exclusively in that region.

More people holding more interest in broader swathes of the world around them is not only beneficial to them from a diversification standpoint, but also to society by aligning interests on a more global scale.

3 Will US dollar inflation increase significantly and/or become less predictable? We believe so. There are many drivers of this prediction, but the most important one is the impending insolvency of Social Security and Medicare. Currently expected in the early 2030s, these events–defined as the points at which these programs’ respective trust funds are depleted and incoming payroll tax revenues fail to meet benefit obligations–are projected to create a multi-trillion-dollar budgetary shortfall annually on top of the existing federal deficit, absent any significant policy trend-break between now and then. 

Spending cuts or tax hikes on the scale necessary to address this gap would be politically suicidal for the elected officials enacting them and are unlikely to materialize. Accelerated borrowing would therefore be necessary in the short run, but this option quickly runs up against increased real and perceived default risk, higher borrowing costs, and crowding out of both private investment and other government priorities. At this point, pressure would be immense to solve the debt problem with inflation, likely achieved by appointing compliant officers to the Fed and/or changing the central bank’s mandate or level of independence.

06 | Making GromaCoin a Reality

Groma’s long-term goal – establishing a real-estate-backed token as a global reserve currency – is ambitious, and will take time to achieve the requisite scale. Our launch plan is therefore geared towards making each step towards that goal sustainable in its own right, providing value to investors/users as we make incremental progress, rather than relying on one big moonshot. In the short run, our real estate token provides compliant, trustable access to an untapped, performant asset class on chain, filling an important market niche. In the medium term, rentvesting will supercharge demand and access for this asset, allowing our base to grow rapidly while helping renters overcome a key economic barrier. And at scale, the emergent properties of GromaCoin as a currency will address the fundamental shortcomings of the status quo for both money and housing.

We have a unique opportunity to participate in the next evolutionary phase of money. We recognize the scale, obligations, and requirements of embarking on such an enterprise. We believe a currency for the world, backed by the world, is right for the world. We hope you will join us on this journey.

If you’d like to follow along, you can follow us on X or Substack, or reach out to us directly at whitepaper@groma.com. We hope to be able to welcome you into the Groma ecosystem soon.