Matthew A. Schneider Interviewed by APRAEMIO: RWA Tokenization

Following a live X (formerly Twitter) Space hosted by Chinonso PeakMan of APRAEMIO, the company conducted a written interview with Matthew Schneider, the CEO of Building, Inc.

This interview is not an endorsement of any platforms or investment products.

As CEO of Building Inc, you’re helping bridge the gap between real estate and blockchain. What were your first impressions of APRAEMIO and its approach to tokenizing gold within the Web3 space?

I’m a fan of asset-backed tokens in the first place; generally speaking, gold and real estate have been steadily appreciating for as long as their prices have been recorded. This isn’t surprising, given that land and rare minerals are finite and are cornerstones of both local and global economies. In the process of tokenizing real world assets, gold has to be included, and so this appears to be a promising step forward.

Both Building Inc and APRAEMIO are tackling the tokenization of traditionally illiquid or restricted real-world assets. From your perspective, what are the key ingredients for making tokenized RWA projects successful and trustworthy at scale?

The tokenization of real-world assets must have a clear objective, and the results need to be measurable — not just a promise that’s indefinitely out of reach. The largest opportunities for tokenized RWA fall on three pillars: programmability, distribution, and dynamism.

Programmability is our ability to offload traditionally manual processes — like auctions, contracts, and compliance — to software. The reason this is not currently performed at scale is that most financial software is fragmented and asymmetrical, creating friction and arbitrage. Blockchain — trustless and distributed — helps resolve this by running programs, called smart contracts, in the same place where value and high-level data are recorded.

Distribution enables increased trading volume, which is a precursor to liquidity. Markets are an auction, meaning buyers and sellers are creating offers in the form of bids and asks — or buys and sells, respectively. Once an asset has been tokenized, there must be buyers. This is true for both primary and secondary markets. Without the presence of buyers, there are no transactions. Therefore, theoretically, if we can create more buyers by onboarding more people to these marketplaces, then there may be more transactions — but the third pillar plays a big role in making this happen.

Dynamism — the characteristic of being dynamic — is not unique to tokenization, but has the opportunity to be more accurate, auditable, and compliant than existing trading systems, especially in private markets. In order for an auction to be successful, buyers and sellers have to agree on price, or else orders will sit unfilled. In order to push one party to say, “Yes, I will buy/sell at the price you’re asking,” they must perceive price to be not only accurate, but a bargain. To inform this decision, data is gold, pun intended. When traders believe the risk (or opportunity cost) is low enough and the reward is high enough, they will execute a trade. Therefore, data needs to be pulled that demonstrates risk and reward in the current state, historically, and potentially even projected into the future.

Real estate and gold have long been seen as stores of value. How do you see tokenization reshaping access to these assets — especially for retail investors and global communities historically excluded from such markets?

Most countries have a bureaucratic body that allows domestic and foreign capital to purchase land (deeds) or securities (financial instruments like equity or debt). It’s actually fairly common to have some exemptions or guidelines for retail participation, especially in public markets; nearly anyone can purchase shares of a REIT or ETF. The issue is that some of the greatest returns are in private markets, where there is no proper pricing, reporting, or distribution. To get access to these deals, you likely need to be an insider — which means you are affluent or well-connected.

Socioeconomics aside, this barrier to entry is respected by regulators because it’s assumed that those with large amounts of liquidity can afford losses — which are substantially greater in markets that do not have fiduciary duty or fair market value reporting. Managers whose assets sit in private markets are okay with this tradeoff: only take money from the wealthy if it means fewer requirements.

Therefore, if we want to unlock private markets for retail and global investors, we need to ask how we can build information infrastructure that makes it easier to price and trade assets while protecting consumers. Tokenization is one step in the right direction (see the pillars in the second question).

With real-world asset projects gaining momentum, how do you see Building Inc contributing to the broader RWA ecosystem — and where might you see alignment or collaboration with projects like APRAEMIO?

I don’t think tokenization can succeed without the three pillars being respected. To successfully program, distribute, and price assets, you need considerable information infrastructure, as well as an extensive understanding of capital markets, regulatory compliance, the individual industries in which these assets sit (e.g., real estate is really an umbrella term for a product that exists across procurement, construction, management, urban development, et cetera), and technology.

Building is a conglomerate of domain expertise, technology, and financialization. Any company that wants to succeed must be designed this way: not as a siloed solution, but a system — and hopefully a participant in a broader ecosystem. Every tokenized asset will need to be an alliance of asset originators, appraisers, platforms, market makers, and auditors. When everyone works together, assets are not only tokenized but cared for throughout their entire physical and digital lifecycles.

What are some of the biggest challenges and misconceptions you’ve encountered in bringing real estate on-chain, and how do you think those lessons might apply to teams working on tokenized commodities like APRAEMIO?

Tokenization is exciting, but it’s the last step in a very long process of curating an asset (i.e., creating and caring for the physical asset, at least in the case of RWA), producing a financial asset (something with measurable value, assessable risk, and performance potential), digitizing the physical asset and its financial instruments (e.g., creating a digital twin of a property or a digitally native smart contract of asset equity), putting together a plan for distribution — regulations, platforms, marketing plans — and then finally casting this sophisticated wrapper into Web3.

Tokens alone have no value and, quite frankly, can be a liability if not handled properly. This comes as a shock to most people who have heard that tokenization is a silver bullet for illiquidity and opaque markets. The reality is that considerable infrastructure has to be present before the token has value — and even then, there’s a looming question of how and when that value was derived.

I highly suggest anyone stepping into real-world asset tokenization have a game plan for completely digitizing the asset they’re working with and working adamantly to close the gap that inevitably exists between the real world and the world of Web3. My answer: data. A good place to start is the “Five V’s of Big Data,” which include volume, velocity, variety, veracity, and value. If you have a process to manage these as it pertains to your digital asset, you have created something truly innovative.

Looking ahead, what excites you most about the future of tokenized real-world assets — and how do you envision leaders like yourself shaping the next phase of growth in this space?

We are living in an industrial revolution, where new technologies like blockchain and artificial intelligence have been let loose. Combined with societal and workforce changes, globalization, capital markets moving at the speed of the internet, wealth transfers, and the potential for consumer autonomy, civilization could become unrecognizable in the next fifty years.

It’s a bit intimidating, isn’t it? But I say all of this in an optimistic tone and think that there is an opportunity for virtuous and innovative leaders to step up and guide these changes in the right direction.

My suggestion is to forget the future of tokenization and think about the future of transactions: how will people exchange information and value? How should we navigate the physical world, the virtual world, and capital markets — which will persist whether you like capitalism or not?

What does it mean for society to be equitable and efficient, and what are the tradeoffs? A bit philosophical, but when you make up your mind, you’ll know what to build.