09 Mar 2023
Empowa Launches Their Staking Vault on Cardano
Empowa, a RealFi affordable housing project built on Cardano, offers a significant update to their project with the launch of both their blackpaper and Vault.
Full disclosure: When I am not writing for Flagship, I am currently employed at and a founding member of the Empowa team.
Empowa is a project looking to unlock the $1 trillion affordable housing backlog in Africa.
Last year at the Cardano Summit, the project signed an MOU with Conselho Municipal da Beira, Mozambique, in collaboration with Casa Real and Sociedade de Desenvolvimento Urbano da Beira, backed by the Dutch government. This partnership allows Empowa to finance lease-to-own contracts for 25,000 homes in Maraza, a new development. This institutional buy-in was a significant milestone for the project and has sparked interest from traditional investors, such as DFIs, which will help Empowa scale its ecosystem and tackle the backlog of 50 million homes in Africa. More recently they also announced a launch in Nigeria.
As part of this next phase of Empowa, the team has released their blackpaper which outlines the mathematics, financials, and risk engineering underpinning the Empowa ecosystem. As part of the blackpaper launch, Empowa also announced their Vault, which will allow token holders to lock their $EMP token and earn a return.
The news was well received, with the token raising over 45% against ADA for the week.
The blackpaper, which is explained by Andrew Forson (Head of Quantitative Analytics and Risk) in the below video, represents a novel approach to avoid the legal complexities, delays, and costs associated with using the property itself as security for a loan.
Empowa's Quantitative Team has created a model that sets a price index for housing units measured in EMP, embeds physical characteristics of the houses being collateralized, and enables housing developers to calculate the baseline amount of EMP required to collateralize their project's property types. This model provides a new opportunity for EMP token holders to support housing developers to meet their collateral obligations.
Empowa is exploring different ways to enable this support, including locking some of the token supply to capitalize its platform, introducing an ecosystem-wide collateral pool, and creating instruments that allow non-developer participation in the provision of collateral.
The first mechanism to be introduced will be the Collateral Support Vault, which will lock up supply and support the value of EMP used for collateral. EMP holders will be invited to lock their tokens in the smart contract, and returns will be paid using a percentage of net income generated through the Empowa platform. The Vault returns will be shared across everyone participating in the EMP pool, and the size of individual returns will depend on the total amount of EMP locked for a particular period.
The introduction of The Vault is an exciting development for Empowa, allowing its community to support on-the-ground developments in EMP and earn returns while holding their EMP. As more projects are funded, and other collateral support mechanisms are introduced, returns will be generated through platform net income, reducing and eventually eliminating the need to use the protocol-owned risk allocation to contribute to Vault returns. Empowa will provide updates on the mechanisms by which these collateral support features will be introduced to its ecosystem as they progress.
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