First Crypto Company in the World to Purchase a Farm
As far as we know we're first. We may have made that up entirely. It doesn't matter.
After several delays, we finally “closed” on the farm on December 5, 2022 (though we weren’t notified until the next day). CougarDAO LLC became the first crypto company in the world to purchase and take possession of an income generating farm. We’re very excited for the future of the company!
However, we feel like we need to share some of the obstacles and delays we experienced. Most of which originated from the off-chain world.
Real World Banking Delays:
As you may recall, we received our earnest money in $USDC and those funds remain in our treasury on Kali.gg. Doing so was rapid and the committed funds were in our treasury within a couple of hours.
For the actual real-world purchase of the property, we decided to wire remaining funds, to our Mercury.com account. Receiving bank wires from our members, was easy enough.
Then came the closing date. Or, in standard real-world fashion, closing week. We quickly discovered our Mercury.com account had a $25,000 maximum daily wire amount. As such, we had to make several separate wires to the title company to complete the purchase. This results in added complication and 4X the wire fees.
It took some time to confirm the wire, almost a full day. There was no easy way to trace the wire and had us longing for a simple ability to trace using a block explorer like etherscan. Then she received the first wire and had to await the additional transactions for the full purchase price. There did seem to be a delay of about 12-18 hours for the title company to receive the first wire, because we sent the transfer after bank hours. Trying to transact across time zones with very limited banking hours is unnecessarily complicated.
In the end, it took us approximately 3 days to send all funds to the title company. All of the funds were provided to the title agent by Friday, December 2nd, 2022.
If you are considering using Mercury.com, they were sufficient for our needs. For future CougarDAO LLC purchases, which are already being discussed, we’ll be drastically increasing our daily wire limit or will need to make sure we get preapproved for larger wire amounts. This often requires facetime with a banker or relationship manager and I am sure they run through their AML/KYC risk assessment.
Real World Title Company Delays:
Our title company was great. We’re just having fun with the facts below for the crypto community.
Our title agent, who we lovingly joked was out smoking a bowl (the farm is in Colorado after all) did not get back to us by close of business on December, 2nd. She said she was going to the recorders’ office to file the necessary paperwork and would send us a recorded copy of our deed, so we expected to have the paperwork that day. There is often a lag between receipt of funds and same day recording. This highlights another area where we trust the intermediary to make sure that everything gets handled.
Monday, December 5th, also passed without confirmation by way of the recorded deed that we owned the property. At this point we joked the title agent rolled a fatty using the deed as the rolling papers and was playing puff-puff, give.
On December 6th, we received a copy of our deed. It had, in fact, been recorded on the 5th of December.
As of December 6th, we became the only crypto company, in the world, to purchase and manage a farm on-chain, but this does highlight the benefits of using blockchain transactions, with finality, traceability of funds, and atomic transactions. In other words, the NFT sale and funds exchange hands in the same block.
What has happened since the purchase?
We have been in discussions with at least two potential tenants who are interested in farming the land. As previously discussed, our focus is on managing income property on-chain. Agricultural property provided us with a cost-efficient way to prove this concept. We will likely not actually be tilling the land ourselves, though I’ll claim to have everything in common with family-farmers all over the US. Also, going to join dating site FarmersOnly.com. I digress.
We have 160 acres of land. We will hopefully be renting the entire amount to one tenant.
Our goal is to get a tenant in place, hopefully with a 3-5 year lease. Leasing the property works into our roadmap. CougarDAO LLC wants to manage multiple different real property interests on Blockchain.
The next item on our roadmap is a short-term rental from Exchange 901 as the second iteration of real world assets managed on-chain.
So, hopefully, by the next post, will be both a lessor and a lessee and continuing to operate real world assets with crypto tools.
How are we managing the ownership interests?
The Kali DAO launcher is how we’re managing ownership interests in the LLC with crypto tools.
Initially, we wanted to bring all funds into the treasury. When funds are deposited into the treasury, the depositor receives COUG tokens in return. COUG tokens (non-transferrable), represent the ownership interest in CougarDAO LLC.
We were not able to accomplish this in our first venture. It would have required too many transactions and transaction costs for our members. As that process is not yet refined, we opted to receive earnest money in the treasury. $USDC was transferred 1-to-1 for COUG tokens. Thereafter, we utilized standard banking transfers. Where RWA touch banking rails is a huge friction point that we hope will get resolved soon.
Now, we are going back, using an Excel spreadsheet of the funds contributed by our members, and minting COUG tokens to match their investment and ownership interest in CougarDAO LLC.
So, for those of you who think this could all be managed entirely with Web3 tools, we haven’t achieved it yet. Especially when dealing with real world assets. Likely, CougarDAO LLC is going to need some sort of a Coinbase company account, allowing us to transfer fiat to crypto and crypto to fiat more efficiently.
Fingers crossed, we’ll continue to improve this process in future iterations and purchases.
The fun stuff:
Check out this masterpiece from Jesse Lawrence:
We have also minted a TATR of the Phillips County, CO farm on TaterDAO.com. We will likely be using this to represent our farm as a digital token for purposes of some future transactions, leases, perhaps a lease with an option. Stay tuned.
