Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned or any future Parcl token.
On February 2023, Parcl introduced a new Solana-based DeFi protocol for democratizing access to real estate markets. Parcl brings DeFi the long awaited access to real estate market returns on-chain. Anyone with a Solana wallet can invest as little as 1 USDC into perpetuals markets which represent long or short positions in high demand residential real estate markets, such as New York, Miami Beach, Boston, Chicago, San Francisco, and Los Angeles.
Parcl indexes are real-world asset indexes that represent the median price per square foot in a given real estate market (or geographical location).
For DeFi pros, you’ll recognize Parcl is a decentralized perpetuals AMM designed for real estate synthetics. Trading is made possible by AMM pools that isolate risk. Liquidity providers (LPs) in Parcl provide USDC to isolated market pools, and similar to LPs in perps markets like gTrade by Gains Network, they get exposure to net trader profit and loss, trading fees, and skew impact fees. Trading fees are reinvested into the pool and auto-compound. LPs realize gains and losses by redeeming part or all of their liquidity tokens for USDC. LPs can lose a pro-rata share of their USDC deposits when funds are used to pay out positive trader PnL vs when they take on the reward for traders having a neutral or negative PnL.
Parcl markets each use price feeds created by Parcl Labs, given Parcl Protocol’s dev team operates Pyth oracles to get real estate prices on-chain once every 24 hours. Parcl Labs created the Parcl Labs Price Feed (PLPF), which tracks real-time changes in the value of residential real estate across multiple geographies and property types. We can assume a protocol such as this will require additional oracle systems for reliable price data in the future. This is one of the more notable risks to using Parcl and an area for immense improvement in the future.
Given how inaccessible and illiquid residential real estate is as an asset class, Parcl represents a radical solution using familiar DeFi primitives to bring accessibility and liquidity to these markets. Parcl offers countless advantages over traditional real estate markets including:
- Eliminates the requirement for countless middlemen and stakeholders
- Lowers timelines to open or close a position to the click of a button
- Eliminates the risks of owning real estate in a specific region
- Offers instant access to liquidity in real estate to long or short
- Flexibility to short real estate markets, and hedge against macro factors like rising interest rates or any future decline in real estate markets
Today, I’ll show how I might long or short a Parcl real estate market with leverage on Solana!
How to Long or Short Real Estate Markets with Parcl
Before we get started, please be aware of these risks.
- Smart contract risk in Parcl
- Front-end spoof attack on the Parcl app
- An economic design exploit in the design of Parcl
- Manipulation or an exploit in the Pyth oracles run by Parcl Protocol
- A stablecoin like USDC can de-peg
- A colluding group of signers on the multisig
- An LP can lose all of their deposited USDC to positive trader PnL
- Any trader can lose 100% if the market moves against their…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
