Why Air Rights are Trading on Crypto Rails | Jonathan Dockrell, SkyTrade

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Yeah. Hey, good to be here, guys. Thanks for having me.

Good to have you here. Yeah. So the context of the show is, you know, Santi and I are both investors, invested in the pre-seed round of SkyTrade, and we made— so SkyTrade announced the round maybe a week or two ago, and I messaged Santi and said, or we were talking about this live on The Roundup the other week, we said we've never, never— we've never had so much inbound investor interest from like an angel investment that we've made going live on Twitter. So as soon as I posted it, I got a dozen or so investors reaching out saying, can I talk to Jonathan? Santi, I'm sure, got even more than I did. But also on Twitter, the contrast was really interesting because my comments were filled with people saying, this is one of the dumbest ideas I've ever seen. This reminds me of putting Uber on the blockchain in 2017. I've done my research. Air Rights is a— I don't like— Air Rights is barely even a marketplace off-chain. Why would you bring it on-chain? And so even though you guys are really early, I wanted to have this episode to kind of explore like what I'd call the frontier of what could happen on-chain. And yeah, so just excited to have you, Jonathan. So I think the first— I hate asking this question because it usually leads to some winding answer about how you got into crypto, but I think it's actually relevant for this episode. So I'll ask it here. What is your backstory and how did you get into this air rights weird market that you've got going right now?

Yeah, yeah, it's a good question. I get asked it a lot. So my background, I guess, is entrepreneurial, really. Like, I've had a bunch of stuff in very traditional businesses, everything from bagel factories right through to startups and property stuff. And I also was kind of within marketplaces. So with Deliveroo in the UK and FreeNow, that was rideshare. So kind of Web2 marketplaces, kind of growth side, operations, supply side. So marketplaces, I love marketplaces. So I really kind of like that kind of way a market works. I like the supply and demand side. So that's kind of my background of what I did. And I was kind of going through YC Startup School with a different idea. I'll tell you about that sometime, another crazy idea, but didn't work. And I met my co-founder there, and he's been in blockchain for like 12, 13 years. And I was kicking this idea around about drones and air rights. That was kind of the initial little kind of thing in my head, and I was trying to figure it out. And I mentioned it to him, and he was like, smart contracts, you got to write smart contracts for that. That's how that will work. And I went, okay. So we kind of started digging in. We spent some time kind of researching it, looking into it a bit more. I started really going deep into air rights marketplaces. Had this been looked at before? And I came across a lot of stuff from a crowd called the Mercatus Center. It's at George Mason University. They've written about this and started talking to them, started reading their papers. And I was like, hey, yeah, this really is a market. If we could get this moving, this could be actually really valuable, but really valuable to people who don't realize that they have this value almost sitting above their heads. And that kind of was really quite interesting. I knew in my mind there was stuff in New York and air rights, so we had to kind of dig around on that and we had to kind of find out a lot about it. Um, and through that we kind of met a bunch of people who've kind of done air rights before in kind of small sections in New York and some in Chicago. Um, started talking to people in London as well because air rights have been traded there, um, in quite an opaque way, but they have been. Um, and yeah, that, that's kind of where the nugget of it came in. Originally we were looking at kind of the drone angle, but that then quickly morphed into the property side. When we started, um, talking to real estate guys, they were like, hey, actually we got inbound stuff. I, I write a Substack and we got inbound stuff from real estate guys who were going, I know how valuable air rights are. We're like, oh, okay, all right. And we started talking to them and they kind of really directed us down that kind of like, like, look deeply in the real estate side, look deeply at that, how that can work. Um, and yeah, that's kind of how I got into it. Um, and so yeah, it kind of The blockchain piece of it was put together by Marcin, my co-founder. He was like, yeah. And as we kind of worked through that, kind of how that would work and why it would be better than doing it, let's say, in a traditional way, it kind of just kind of the light bulb kind of went off. So yeah, that's kind of— that was a rambling answer, Jano, by the way. You were right.

We love to ramble here. Stick with me. How do you think about— so I'd like to double-click on this idea of like, why does it need to be on a blockchain? And like maybe some context for people, like, why has this market not taken off? Because it strikes me as there have been large transactions, particularly in places like New York. You know, like we talk about, like, uh, you know, Ken Griffin, I think, bought St. Patrick's Cathedral, and then JP Morgan bought, like, Madison Square Garden. But, like, these are hallmark locations. Um, why does this market not, uh, matured in a way as others perhaps?

Can, can you also just tee up before we go into, like, why it's not on a— why, why on a blockchain? Like, can you just really expand on the air rights market? Because I think Santi knows more about it than I do, like, and we've had our calls and stuff like that, but I would just love to go deep into the air rights market for a second, like, even just SkyTrade aside.

Yeah, sure, sure. So yeah, I mean, the, the air rights market, um, it's been around for a long time, like an awful long time, um, and it kind of stems from common law jurisdictions. So, um, thanks to the British, I suppose, really. Um, so in common law, you own the airspace above your, your land, effectively. Um, in the olden days, it used to be to heaven and to hell. That was kind of how it was termed, but they kind of, uh, watered that down a bit. And so in different jurisdictions, it can be different, but fundamentally, in the, in the US, it's up to 500 feet above the highest point of the building is owned by the landowner beneath. So if you think about that, every piece of land is owned by someone, and therefore every piece of air is owned by someone. Um, and then the value of that air is very dependent on numerous factors, a little bit like real estate. So, you know, somewhere in rural Arkansas is going to be different than somewhere in downtown Manhattan, just in the real estate as well. But therefore the air rights become different value levels as well. And as air starts to be used for different things, so one, you can use it for construction. So yeah, let's say, let's say I have a building with 2 stories and I say, okay, I don't have any money left or whatever, but I can build 5 more stories and I sell that to you, Santi. And you go, okay, I'm going to go and build, and then I'll sell it or rent it or whatever. So that's utilization of that airspace, and that's kind of like a development play. Um, but you can also use it to protect your views. So you— if you had a building and you had a nice view of a beach, or you had a view of what's happened in the, in the US, if you're the Empire State and you wanted to protect it because that's valuable to your property, you can actually buy the airspace to protect that so no one builds into it. So you can do that as well. Um, then other uses— people actually just buy them and hold it, um, because it can be valuable. It or they may intend to use it at some point in time. And then the other one is transit. So this is kind of where we kind of originally started, which was like drones, um, which was like, hey, you know, why haven't drones scaled? Okay, regulation might be one thing, but to permission to be in private airspace, you know, permission to be in private airspace, you shouldn't be there. How do you get permission? And that's how we kind of brought it together. So yeah, that's kind of the air rights marketplace. Now it's super opaque right now, so As you mentioned, Sandy, like Ken Griffin, sure. I mean, who couldn't he talk to if he picked up the phone, right? I mean, you know, it's kind of pretty easy. But for normal people or regular people who want to be involved in this, um, very difficult, really hard. You might need a broker, you need a real estate guy, you need all this kind of stuff. Um, so that makes it really, really difficult. So that's kind of the current, the current state of air rights.

Um, yeah, you mentioned the, the Ken Griffin deal. Can you just expand on that for, for people who have not read, read about the Ken Griffin deal?

Yeah, sure. Yeah. So yeah, as Santi mentioned, so St. Patrick's in Manhattan Church, they didn't want to build above it because it would ruin it. It would kind of make it look terrible. And obviously, I think it's the Archdiocese of New York owned it and they sold the air rights above it to Ken Griffin, who could then transfer it to his building. So effectively, they had the rights to build X stories. They weren't going to use it. They could sell that, and that right got transferred. I think it was about $164 million, so it's about approximately $350 a square foot is how they kind of look at it. And then if you think about Manhattan real estate prices, that's an immediate kind of like 3, 4x when he does actually build into it on the lot. So yeah, that's how that was done. And actually, there's a couple other churches that have done the same. You know, the church are clever at making money.

And not only churches, but for any sandwich fans, there's a Jewish deli called Katz's. So I— the first time I learned about air rights was not around Ken Griffin or anything like that. There was this deal which I'm sharing. If anyone's watching on YouTube, Katz's cuts a $17 million deal with luxury developers to stay in the Lower East Side. The business sold its air rights in neighboring lots. So Katz's, they actually, even though they're a booming— like everyone goes to Katz's, they're— they were not making enough money to afford the the high rent in the Lower East Side. So what they did was there was a luxury hotel that was getting built next door, and Katz's didn't want to move their location from the Lower East Side, so they made $17 million selling their air rights. So that was actually the first time I heard about this. Jonathan, where does this market trade right now? It just— it, it sounds like it doesn't trade right now, right? It just goes— if you're wealthy or you're a big hotel, you can call a broker.

Yeah, yeah. So yeah, it, it trades like there's no Web2 version, if you like. So you can't go to, uh, you know, you can't just go to a portal and you get a bunch of air rights there and you can pick one and trade it. So you don't, you can't do that right now. Um, so yeah, you need to be somebody who knows somebody who knows somebody. Um, you know, all that kind of stuff. Um, now granted, property works that way a lot of the time, but at the same time, property also doesn't work that way. So you can go on to Zillow and you can find a home if you want to buy it, and then you can and kind of go through that kind of process. So at the moment, it's not there. And again, that kind of, that's really one of the big reasons why we're looking at this on-chain as well. So when you think about it, there's no Web2 version and that means we have no comparable. So if you were bringing something on our contention, if you're bringing something on-chain that's already Web2, that's kind of going from 1 to N, you know, you're kind of optimizing. Yes, you're potentially, making transactions cheaper, price discovery, et cetera. But moving it from where it effectively is now, non-digitized, on-chain, and bringing all of the positive aspects of on-chain, the immutability, the quick transactions, the low transaction costs, is a zero-to-one move. And that's where we see it. So we see kind of you're leapfrogging this Web2. You don't need to go to Web2. It's almost like cellular networks in like the Caribbean, right? Why do you build stationary lines when you can go straight to mobile? And that's the way we view it. And that's our contention that we're leapfrogging. We're going there because it's the best place to go. Insofar as the same way you wouldn't, you would now only put stuff on a cloud server. Like, why would you go old school generally? It's the same kind of idea we're looking at here. So yeah, you can't kind of in Web2. Yeah, you can. If you're a property guy, you might know a few things and a few things, but there's no real place for you to go. If I want to buy it or trade it now, It's, it's not impossible, but it's very, very difficult. Yeah, either.

So yeah, yeah, I'm in New York, I'm trying to go on StreetEasy and Zillow to see anything about air rights and nothing. Um, does the future look like that for you guys? Um, you know, in terms of being able to quickly— I guess for, for the audience, you know, most people can relate to real estate, like how big is this market? What are the, what are the kind of the the different verticals or types of transactions that you anticipate for air rights? Is it just places like Manhattan, or does this really apply to not just, you know, in large cities, but other places and outside the US as well, which there's like legal differences in terms of how air rights are monetized, I guess?

Sure, yeah. I mean, the market is really big. So kind of last estimates of, and again, I know we talk about New York a lot, but it's because This is where transactions have happened. Well, one of the places. So underutilized air rights here estimated at about $500 billion. That's what the estimate is. London in Zone 1 and 2, £52 billion. So it's huge. It's really, really very, very big. And yet there are zoning things, and there are all sorts of complex things that need to be brought in. And that complexity is what we're untangling. Which is, you know, a big part of our value prop.

Is it mainly just in the cities that are confined by space, Jonathan? Because I think if I think about like Phoenix or Kansas City or something like they just build horizontally instead of vertically, right? They just expand their city limits to accommodate more things. But like New York is an island and can't do that.

Yep. Yeah. Well, yes, it is in kind of, yeah, kind of compact cities. Definitely. It's more valuable. Like the land space is more valuable. But in those smaller areas, they do build up as well for different reasons. It can be just they want to keep people together. And also the land values can kind of change. And you sometimes actually put in barriers to stop you moving out. But there's kind of two, I suppose, to kind of go back to the kind of two use cases, one being real estate, developing into it, maybe holding on to it as an asset. And then the other one is for drones to actually enter the airspace to kind of scale. So what we're seeing is that it kind of separates naturally, right? Because in the kind of dense areas of real estate, yes, you trade them mainly for this real estate purpose. Drones in cities, in my view, I could be wrong, but drones in cities are further away from drones in small rural areas, which is where they are at the moment. So this airspace then becomes valuable for drones to get into, and the people who own the airspace can actually get a rental from it, which is what we've also built as well. So that when a drone company wants to go from A to B, we say, fine, here's the permission route. It's a small rental fee, and that rental fee is distributed down to the air rights owners. So that's kind of where we're seeing the kind of the market, if you like, kind of separate out. But those rights and those air rights then become valuable. So in Phoenix, if you have drone delivery happening within your air rights, your capital value of your property has gone up, but also those air rights have become valuable. So you might sell it because the purchaser might go, okay, there's drones flying through that. There's going to be a residual and I'll buy that as well. So yeah, that's kind of what we're seeing on that front.

Expand a little bit more about this drone. How do you actually enforce it? You know, is there a deepened angle in terms of you know, looking at, hey, if a drone flies through my farm, my 50 acres, who's tracking that? And how do I enforce that I get paid?

Yeah, yeah, yeah. Great question. Yeah. So as it stands at the moment, the default is that drones can't be in private airspace. That's just the default. It's private airspace you need permission to be in. So when a drone does fly through, like, how do you know who it was? How do you know what flew through? And, you know, why don't they just go ahead and do it? So in the US, same in Europe actually, you have an emitter within each drone. In each commercial drone, it has to emit its serial number, its ownership details, there's metadata that also sends its GPS coordinates. So we intercept that. So the kind of the deep inside of it is we launched an app only available on Amazon Store right now. We're bringing it to Play Store soon. It's free, you download it and that intercepts the drone signals from an Android device. Like phone, up to 5Ks. And that picks up that data, and then we use that data to cross-reference to the actual air rights ownership as well. And we can say, yes, this drone went through these number of spaces and the fee is X, and we can then invoice the commercial drone company. And interestingly, we can do that retrospectively as well, because a lot of these flights can actually be picked up in the back. Because sometimes they— most of the time they do a flight log as well, so that we can find that as well. So yeah, kind of the deepening angle is— and what we're finding in our communities is people are like, like they're just using this for fun, right? They're just looking at drones and they're like, okay, that's interesting. A little bit like, um, what is it, like Flightradar24? I don't know if you've ever looked at those kind of things.

Oh yeah, yeah, quite popular with the Russian oligarchs during the war in Ukraine.

Yeah, yeah, exactly.

Jonathan, Jonathan, if this is such a big market and such an exciting and like obvious market, and there's a— I think you said it was $500 billion— why hasn't this become a big thing in Web2, right? I feel like after Uber and Airbnb, like, there are so many marketplaces that got funded. Like, why didn't— has anyone tried this before? And if so, why did it fail? And if they haven't tried it, why haven't they tried it?

Yeah, so there's no particular names you can kind of bring up that has been a kind of a failed marketplace as such. People have tried to trade them for sure, but generally it's been traded as part of a real estate transaction. Um, so because it does— so if you own the building, you own the air rights, it just transacts, it just, it just trades. And people haven't really looked to sever them and put that severed air rights into a marketplace and trade it separately. And kind of my view on why is it's a hard problem, right? It is a hard problem. I mean, I'm kind of making it sound like, hey, you know, this is super easy, but it's actually quite difficult. And that's again, one of the reasons we quite like it because it reduces the competitive field naturally by doing that and we can untangle it. There are legal aspects to it. There are zoning aspects to it. There are ownership aspects to it. So there's a lot of kind of bits in there that need to kind of be tied down and tied together, which we can do. There's also data pools now that are actually more mature that we can get into, which you probably wouldn't have been able to get into 5 years ago. There's actually on-chain people who are pulling real estate data that we're working with, like Parcel, and we kind of pull that in, and that's really helpful. There's other databases we can get access to now we wouldn't have been able to 5 years ago. So I think a lot of that is the reason that it didn't go into Web2, and I think Well, it's, it's so opaque, uh, the people I think necessarily didn't kind of latch onto it. You know, they were saying, yeah, property, we can do that, but air rights, that's maybe slightly nuanced, it's too niche. Um, but then again, with drones coming in, like, the valuations are going to be going up. So again, it's kind of a timing thing, I think, as well.

Yeah, maybe on that last point of, um, the real estate markets, I think people like, you know, in the US you have an MLS, you know, the real estate data is very clean. But that's not the case in other places, most places outside the US and, you know, Western Europe, I guess. Is that an angle that you think about, like pulling in that data, incentivizing people to feed you that data? And from a coordination standpoint, that being a, an unlock that perhaps makes it easier to, to get to these markets, whereas historically it's been quite like, there's a Web2 company, I think funded by a big real estate developer. I forget that. Went to Brazil and some of these places to like try to build more structure into the real estate kind of data, just for like land plots and what have you, let alone air rights. I'm curious, like, if— I'm curious, I guess, like, as you think, maybe talk a little bit more about like your go-to-market, like how, how important is it to go to these other markets? Is it enticing enough for you guys, or are you just going to be focused on like the US and Western Europe kind of?

Yeah, yeah. So, so the US definitely is our primary target right now, um, and there's several reasons. So yeah, I mean, air rights in New York people know, right? So it's interesting, like the in-brand stuff from real estate people knowing what air rights were. You talk to other people in different jurisdictions, they're like, hey, you know, what are you even talking about? This is like, you're crazy, get out of my office kind of thing. Um, so when you talk to the real estate people in New York, they kind of understand it. And then with the, with the difference, with the way, um, low altitude space works— so low altitude airspace is owned by the property owner, it's not owned by the FAA— and that's actually really interesting for us. That's really helpful and so it means each different state can actually arbitrage this as well slightly. So there's different states who are very pro-drone, they're very pro-air rights, how they can actually make it work for their people and for their community. Um, and a little bit like companies wanting to go to, like, fighting over whether it's, you know, Texas or wherever they move to, the similar thing is kind of happening in the background, um, with, with air rights. So yeah, definitely US primary target. I mean, we have a limited team as well, so I can't put like 100 teams around the globe, um, but, uh, US primary target, then UK. So the UK, um, there's been some really interesting transactions in the UK. So if you've ever been to London, Cannon Street Station, that was built above— there's like multi-million pound offices above it. Liverpool Street as well. And in the UK, they have— they've kind of loosened things with zoning. So if you have a building with a flat roof, um, you can build 2 stories above it without getting zoning permission. You can just go ahead and do it. So that's a load of people who don't really understand that they have this asset above their building. So for us, that's really quite attractive. And they're kind of also looking to kind of sell off air above train tracks as well to be built above. So yeah, the UK will be next. There's a couple of interesting markets as well. Singapore is an interesting one. So basically, if you kind of look at your map of where the British were, most of those places with common law as a base. Yeah, most of them have some level of air rights in there that we can go in and work with. And again, for us, you know, we're kind of agnostic. If people want to register their air rights wherever they are, they can do that. Now, we can't definitely say that we'll be able to validate them. Let's say if it's in the middle of the Amazon, we probably won't be able to validate that because there's no actual database that we can, we can check. But in the more mature locations, we can, we can go in, we can check. And we can check the people in front of us. So yeah, initial US, it's a big market, it's big enough for us to, to start with, I think, without getting distracted. Um, but definitely the, the UK would be, would be another one. Um, and yeah, I think Singapore is quite interesting, although that there's different rules and regs in all of these places. So again, there's an expertise level, uh, that we need in those jurisdictions. So when you talk to, uh, for example, legal folks, um, like there's ones in New York. I'm here at the moment, like, I can talk to who have done air rights transactions, right? So we can pull all that information, we can kind of mine these guys' heads, and we can kind of bring that into what we need to be able to give information to people. Um, one of the interesting things along the data that we're doing as well is we're actually currently just building so you can go in and you'll be able to put in your address and it'll give you, um, an estimate as to the value of your air rights. So that'll be based off bunch of stuff, but, you know, a lot of it from real estate data and then a lot of it from transaction data and what we've been able to pull from air rights and then, you know, putting in a few kind of assumptions in there as well. So it'll give you an indicative, but the data as we pull, and as you said, some of it is clean, some of it's not. Like, you know, even in the US, like, it's not, it's not all just sitting there in one nice tiny box that we can go in and look at. Like, it's kind of, you have to dig around for it. Yeah.

So let's maybe walk through an example and maybe comparing it to Web2 kind of flow. Particularly interested in this data piece of like the privacy, or is it going to be totally transparent for people to observe the transaction value? And then that builds really good comps. But like, say you own a property in New York, like what does it mean for them? Like walk me through like the flow for SkyTrade.

Sure, sure, sure. So again, if you're an individual, you own a property, you go onto sky.trade and you can register. Registered. So you put your address in, you just click claim. So it's super simple. You click claim. In the background, then we go about our work like little losers, and we find out if that stuff that you said in there is right. So is that Santi's? Like, is that in a register? What register is it in? Is that register valid? When was it validated? And we go through a whole kind of process in the backend to make sure that that is the case. And then before you can actually transact it or trade it, we actually need to know it's you as well. So we do need to do KYC. And we leave that to the last minute because nobody really likes doing KYC, we understand. But, you know, these are property transactions. You do need that, you know, validation there as well. So that happens as well. That's valid. And then that property or the air rights effectively are tokenized. We tokenize those. We use Solana as well to do that. So we tokenize those and they're then available in the marketplace when the marketplace is live. So we have a marketplace which is like an auction house, we call it. And if you own the property, you can go in and set an auction. So you can go, okay, here's the time limits, here's the pricing, here's the ranges. And that's what I'll transact this for. And then it attracts bids. We have an uninvited bids engine we're building as well, which I really quite like. I think that's just kind of fun. So that anyone for any air rights that are in the marketplace, they can just throw in a bid and it will like give you a little ping and you will say yes or no. What we are— what we think will happen with that is, yes, some people will transact immediately, but most people we're hoping will then encourage them to set an auction and say, okay, there's interest here in what I have, someone's offered me X price, maybe I should offer this out to the market and see if I can get more. Um, so yeah, that's kind of how the flow kind of currently, currently works. If it's a large real estate developer that we've, we've partnered with a few, um, they're not going in and tapping in their, their individuals, they're just sending us a dirty file and we're cleaning it up and we're getting it all put in and tokenizing those for you.

Jonathan, how do you deal with the, like, licensing and the documentation of this? So the way that I'm thinking about it is like an Airbnb or an Uber. They're so— they're like almost microtransactions. They're like, you know, either $5 up to $1,000 or something like that. But like Zillow, I'm thinking about SkyTrade in contrast to Zillow and Zillow or Compass or whatever might show you the price of a home. But then at the end of the day, you're still getting in touch with a broker. The broker goes to the home. Then you sit with the lawyers and you do the whole signing and all that kind of stuff. Like, will that— will you have to do that with SkyTrade, or will it all be on the platform?

Yeah, so yeah, so on the platform you will be able to sign, sign off the deal. Yeah. Um, so yeah, we do need lawyers to kind of check through things, and each individual can get their own lawyer if they want to check the deal as well. There's nothing stopping them doing that. But once you've tokenized it and once we've confirmed it's you and you've given permission for that to trade as what it is trading and it trades, that's, that's deal done. Auction. So like traditional auction, hammer goes down, done.

Yeah. Paint me a picture of what the market— of like what the platform will feel like. Is it more like, like when you are sitting down with your product team, or, or you— I don't know if you have a product team yet, but like, are you looking at Zillow? Are you looking at Compass? Are you looking at Airbnb? Like, are you looking at hotels.com? Like, what, like, what, what marketplace type sites do you look at?

I suppose we look at them all, but yeah, um, yeah, Airbnb, definitely early days we looked at because I just it feels so nice, right? I just like the product. I think it, I think it feels really nice, um, and I think it's a good user experience. So yes, definitely, uh, we've kind of looked at that, um, so you'll be able to kind of go on effectively, and when you see, uh, the marketplace, you'll see each individual, um, uh, like air rights, and you'll see the map for where those air rights are. So you'll be able to pick and choose that, um, and also we're going to bring in a feature where you can actually put in your own kind properties picture if you want. I mean, it doesn't need to be. For me, it's not necessary, but we're going to look into that because people have said they would like that as well. And so, yeah, I suppose Airbnb, Rightmove is another one we've looked at, which is again like a Zillow. So, yeah, so it'll feel kind of like a marketplace that you would go in and use normally in a Web2 world. Of course, we're putting in dark mode because people like dark mode, but there's a kind of an angle to what we're doing as well, because it's in crypto. There's crypto people interested in what we're doing, right? So we have to try and appeal to them in a way that balances these two kind of forces. Because if you think about it, real estate traditionally is traditional, right? There's a lot of traditional people in it, a lot of traditional asset managers. And then crypto people, a lot of them depending, you know, can be quite different. And so those two worlds like we have to kind of get the Venn diagram, right? We have to kind of make that nice in between for, for both of them. Um, I guess kind of to indicate that, we launched a waitlist for the auction house like last Tuesday, and we've got like 4,500 signups. And I think they're mainly, from what we're looking at, they're mainly from kind of crypto community who are looking, okay, so there's stuff in here to trade. Yeah, we'll come in, we'll trade, there's value. Um, we can do that. So we're also trying to, in the product design, balance those two out. Um, it's, it's, but I mean, it's tricky, right? I mean, I'm sure, uh, but we're open to feedback. So anyone who wants to feedback to us on it from any, uh, world, uh, we'll, we'll happily listen to that info.

You know, real-world assets and that narrative around capturing yield and tokenizing that is obviously something that has taken off. How do you think about the different products? So like when you transact an air right, Are there different types of transactions, meaning you're buying them permanently, you can lease them? Obviously there's a drone piece, so maybe there could be— I'm trying to think of like, maybe go into the different types of products and types of transactions and maybe yield opportunities that may arise in this marketplace.

Yeah, definitely. So yeah, so drone side, yeah, the kind of the base product is, is rent to So, you know, you want to rent airspace for a set period of time as a drone company. You get that and you pay a rental and the rental goes to the air rights owners. We also see long leasing in that as actually being quite interesting. So when we talk to departments of transport in different states, some of them in the more kind of forward-thinking states are very interested in using the air rights above their highways for drones, but not just for like drones sending like a burger and fries, like for cargo drones. They see that as being quite an interesting use case. And they're talking about long leasing. And the kind of comparable is like spectrum sales. So, you know, spectrum sales for people who don't know, effectively, you sell the spectrum off or the government sells the spectrum off, crazy auction prices, one person wins, and then they sublet it out effectively. And that's how they make their money back. So the states are looking at this, send a long lease of the air rights above your highways, which will be channels for cargo drones. And then whoever purchases that long lease can then sublet it out. So that's kind of an interesting one as well, you know, because it kind of gets immediate capital injection. Then on the kind of buying side for, for the air rights as well, yes, definitely a purchase you can do. And you can also long lease as well. So it's up to the person who owns the air rights how they want to do it. For us, the long lease actually is quite an interesting product because Long leasing is actually legally easier to a degree than wholeheartedly selling. Both can be done, but the long lease is kind of quicker. That's what we're seeing, but both can be done. And again, it depends on what people want it for. So we're speaking to property developers who have lots, you know, nothing on them, and they're saying, okay, it's going to take X years for us to build this, but we're only going to build a certain height because of what we're able to get out of banks or whatever it is. So we know we're going to have residual here. We know for a fact there's going to be X amount of storage residual. So we either syndicate that and get someone in now, or else we can sell it off. And that's one of the things they're also looking at doing. Um, one of the things— now we're not building this right now, but one of the things I think is super interesting about this whole market, um, and you know, hopefully what will, um, spawn out of it— you can get mortgages on air rights right now. So I think that's super interesting. Like, I think if you, if you think about that, you have these assets that are sitting above properties that are unlevered, unused, underutilized, and can be utilized and can be levered. And I think that's really interesting. So products around that, I think, are going to be, uh, going to be pretty interesting. And because it's on-chain, um, they can be built on, right? So that's the beauty of it. Like, you can actually kind of look and go, okay, you can look at us and go, okay, I see what these guys are doing. People are originating these air rights, they're putting them in, they're renting them, trading, whatever. But there's all these things around it that can be done. Another one we're looking at as well, not to build ourselves, but someone we're talking to is Per Minute Drone Insurance, which I think is really cool, right? So yeah, we only know you're going to be traveling for like 25 minutes, so we just insure you for the 25 minutes. Why do we need to insure your drone for like 365 days a year? So I think there's all those kind of products that will be built on it. But yeah, the main ones for us are the rent, the sale on the long lease. Um, I think certainly talking to the real estate guys and talking to the drone companies, um, they're the ones that they're happy with. Uh, you know, they're more than happy with those products. But I mean, who knows, something else might arise. Who knows?

Yeah, no, that's super interesting. I mean, I think generally the way I thought about it was we know crypto is really good. Um, you know, you take something like Uniswap or even Curve, like it, it allows you— these marketplaces have been able to get you price discovery on on pretty diverse markets and tail end of assets. And the air right market strikes me as like very heterogeneous in terms of types of transactions, types of, you know, air rights. And that I think crypto lends itself really well. And the more liquidity, the better the price discovery in that flywheel and the incentivization to get people to get on the platform, you know, and, you know, earn an additional yield Particularly at a time where like commercial real estate is struggling or what have you, like you're thinking about this, like from a timing perspective, it just becomes even more important. Um, so how, um, I'd like to maybe transition a little bit into the fundraising journey. I think Jano alluded to it. It's either some of the best projects that I've invested in are very polarizing. Either people really get it and love it, or people have a very strong reaction to it as like, this is never going to work. Um, You, and I think that's certainly the case here. Um, what really caught my eye when I first talked to you was, uh, you mentioned the Mercatus Center and I've been following this blog, uh, Marginal Revolution, which is like from an econ, like I'm an econ nerd. And so it's just that it's Tyler Cowen, right?

Yeah. Tyler. Yeah. Yeah. Yeah. Tyler. Yeah.

And, and his counterpart and they put out anyways, great blog. And so when you said that, I'm like, okay, he's clearly done something right. Um, But yeah, walk us through the fundraising journey and how that was, the type of reception, um, and maybe why investors really liked it or didn't really like it.

Yeah, yeah. So I, I guess kind of to, to go back when, uh, I know I mentioned earlier when I got, uh, my co-founder. So as we were digging around and we, we came across Mercatus and what they had written, um, and one of the things I, I was then introduced to, uh, a place in, in Honduras. It's like a special economic zone called Prospera. And I started talking to people down there because I was quite fascinated by this. They were looking to do air rights as a marketplace as well. So I was like, hey, you know, we could work together. And they were very open to this and was kind of a connection there with the Mercados. And then they said, listen, we're going down to Zuzalu, which was Vitalik's pop-up city in Montenegro. And they said, come down, you know, there's people here who might be interested. So I said, okay, I went down and I met a bunch of people down there. And when I talked about what we were looking to do, the reception was just overwhelmingly positive. It was overwhelmingly like— it was pro-crypto down there, absolutely. But there was a lot of network state people as well. And they were like, no, no, this makes a lot of sense. Sure, it's big and sure, it's difficult, but that's good. Don't worry about that. So this kind of, if you like, social proof kind of almost catapulted me. It was like, huh, OK, this is really quite interesting. And then the Mercatus, they have a grant program called Emergent Ventures. So I applied for that and Tyler, I got talking to Tyler, I was explaining what we're trying to do and he was like, yeah, okay, get market in everything. Yeah, there's a market in everything. So they gave us a grant. That program I think was originally funded by Peter Thiel. So it's kind of this idea that there can be products or like projects that could meaningfully impact society basically. Like there's some sort of positive force here. And they're like Lyft grants, you know, just go and see what you can do. And so that kind of encouraged us. We started building the POC. We talked to Solana and then we got some funding from Solana. They said, okay, see if you can do an MVP. You got a POC, see if you can do an MVP. And we whipped that up kind of end of last year. And then with that, we got like inbound from real estate people and started kind of talking to people in kind of venture. And to your point of the polarizing, 100%, 100%, right? I'm sure every founder gets a million nos or whatever. I mean, by the way, just to say, I have a contention that VCs are wrong most of the time on the basis of the power law curve. They have to be. So I'm OK with nos. That's OK. So I think you need to build a strong neck. But yeah, very polarizing. So people who aren't involved in crypto, don't know why you would do anything crypto anyway, right? Whatever it may be, they're kind of like— so, so that kind of narrowed the field down. Um, and then we started talking to other VCs who were kind of interested in crypto and how it could work and how this would, uh, would work around it. And yeah, the main things, just like you guys mentioned, like why blockchain? Like why does it need to be there? Um, you know, how can it impact society? How can this actually grow, um, grow the size of the pie, right? So we're not taking a slice of an existing pie, we're actually growing the pie. And that is what's quite exciting to the, the VCs you've talked to. And yeah, so the journey has been interesting. But yeah, met some great people along the way. And I have to say, my background, I haven't been in crypto for 10 years. So that's something my co-founder has. But I found a community of people who've overwhelmingly, generally, are very positive. And there is the polarizing stuff. I mean, I've been getting the stuff too that probably you've been getting, Sandy, like, what are you doing? This is crazy. You know, this is, you know, you're, you're mad. Why would you try and do this? But that's okay. That, that's fine. I mean, you know, you think about the other interesting products or ideas that are out there. Like, I mean, always people say people are crazy for doing these. That's certainly not a reason not to do it. Uh, in fact, I mean, early days when I spoke to, uh, someone in the, uh, in the real estate and also kind of, he was slightly in the drone industry And he was like, no, it's never going to work. We'll just fly the drones around that. I was like, no, no, no, this is private property. You're going to have to pay, my friend. Sorry, that's just the way it works. And they were like, no, no, we're not going to do it. And that kind of like, that really annoyed me, right? So that kind of like, no, no, no, this is not going to happen. I'm going to shift the Overton window here. This is going to happen. So yes, that's kind of the journey is to how we've got there. And yeah, I mean, as I said, the crypto communities are ones that have been by and large the most positive about what we're, what we're trying to do, because they can see it's not only speculation. Sure, they can see there's an aspect there, and that's fine, um, but it's also a use case for crypto, like an actual use case. Like, it's, um, like one that you don't, you don't need to kind of, um, dig into big technical blockchain stuff if you're not a crypto person. You can kind of understand, okay, it's an asset, it's on-chain, it's not already in Web2, that's why you're digitizing pricing. And that all kind of makes sense to, to, to the VCs who like this.

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I think, uh, when I, I mean, I talk to founders every day and the best ones are the ones that, um, deliver a key insight in a way that becomes you can't unsee it. And it's one of those things where you're left wondering, like, it's so obvious, why didn't I see it before? And when I had a conversation with you back in— was it April? The minute you talked about air rights, I was like, I think I'd read about them. And I, you know, I like real estate, but it was like, huh, why didn't I think about that? And sometimes the danger of that is that you think it's so obvious And the questions that Jan was asking is like, why hasn't someone built this before? Like, it feels so obvious. But, and then I think that's where your, the reasons that you articulated when I had a call and you're articulating now makes sense, right? From a timing perspective, from a, it's a very complicated market. And so there's a reason why. And so, you know, now it's left up to execution, I guess.

But yeah, I think it's interesting to kind of highlight. I mean, it's, it's my contention that it probably it would have been like really, really, really difficult to do this without crypto, without blockchain, without that technology. Yeah. So can we go—

can we go there? Because I think Santi asked like 5 minutes into the episode and I cut him off and we went on a 35-minute tangent about other stuff. So I'd actually love to— I think we have to address that. Like, why is it— and I know this is a crypto podcast, but like, maybe close your eyes and think about the traditional gray-haired real estate person Or the person who works with Jason Yanowitz.

The CEO of Ornato is listening to this.

Yeah. Why the—

what the hell is this guy talking about?

Why does this have to be on-chain?

Yeah.

Yeah. Well, so there's a couple of reasons. I guess what you guys said as well earlier. So yeah, price discovery, definitely. So we know that's kind of useful in crypto and that's where you can get it. The immutability of it is really, really important, right? It's really, really important. So you're bringing all these documents, you're bringing all these this information and you're putting it and saying, yes, that's true at this moment in time, that's done, stamped almost, and you're making it immutable. That's really, really important. And also as it trades through, so traditionally when you think about, um, one of the interesting things I think when you think about a real estate transaction, so you have a property, uh, you have lawyers on both sides, right? So they're looking at the same documents effectively. And then 5 years later that property trades again, so you've got another 2 lawyers looking at the same documents again, and on and on and on and on. On and on, right? So I mean, it's crazy. So you put it on chain, you can see it, so you can see if any changes have happened as well. So you don't need all this kind of stuff in the middle. So I think that's also one of the, the key reasons for it. Um, I think as well, I think as I kind of mentioned, the, the blockchain allows us to do this quickly. It allows the transaction costs to be low. Um, it allows people to see what's going on as well, which is It's opaque at the moment. So we kind of open it up, we make it bright, and we shine a light on it. We see how these are working, and then we bring other people into the marketplace. So if you think about it, it's a closed, relatively closed marketplace because, you know, a few probably large companies, they're okay with that generally, but they're not okay with that forever because you still need growth, right? So you can't just keep trading between the three people. Are the 3 companies or the 5 companies in New York, right? You need new capital in, like it has to happen. And crypto brings that as well. And they bring the trading ability from the crypto communities in. So it's one of the things we've noticed as well is since kind of there's been a, if you like, kind of, I don't want to say a change, but a kind of a development in crypto with tokenization, KKR looking at tokenization, BlackRock looking at tokenization. I mean, this is all very much happening. You know, you've got the, the ETFs with Bitcoin. Like, I mean, this is happening, right? It's, it's moving that way. And the people who are making money within real estate, um, yes, sure, there's people sitting there happy to take their 5 or 7% a year and sit back and count it. But there are other ones who can't do that, right? Because they're leveraged. They need to actually move things. They need to move them forward. And tokenization is very much in their minds. So when I talk to real estate people, it's not that they're they don't necessarily understand all of it. That's fine. But they understand the concept of tokenization and why that's useful to them. And I think that's kind of the why blockchain moves into that as well. It's like they can see there's a value prop here for what they're trying to do. It opens the market up and it makes it more fluid. So a market that's more fluid for the real estate people makes them more money. There's more trades, more transactions. So that's what I'm seeing from them. So if I was, you know, we were sitting down 5 years ago and I was saying, okay, we're just going to do this in Web2 like build a marketplace and then like, what are they actually trading, right? So what can they trade there? So they trade what, the promise of this going to happen? And this way you don't need a promise, you actually have the thing you're trading. So, you know, you can open it up. So yeah, that's, that's for us, it kind of made a lot of sense. And as I said, when I kind of met Marcin, he, he, he's, his background is like everything from prediction markets right through to kind of DeFi. And, you know, when you dig into the use cases for blockchain and put real estate in there, If you step back and you forget everything you know about real estate, if you were to redo the system today for real estate, you do it on Chainlink. Of course you would. I mean, if you didn't, I think you'd be crazy. Right. And that's me. It's not been blockchain for years. You know, I can— and I think maybe that's helpful to me as well, because I'm not kind of— I'm coming to this slightly fresh, I guess, but I have no preconceived notions. I'm just looking at the technology that my guys can build. And I'm looking at that use case for that. There's not like an overarching— like, I don't have this idea that you must hold loads of Bitcoin. I don't have that. The technology is good. It's useful. And so let's use it.

Yeah. I think sometimes when I talk to traditional people in finance or skeptics, we come defensive. And we sort of seem to think that we need 10,000 reasons why it should be on the blockchain. And the reality is we need one, but very compelling one. And that's enough. And it might be just, it's not a perfect solution, uh, but it's marginally better. And by law of inertia, you just, the market will flow into that. And, and the compounding effects of that are meaningful. Like if you're, uh, marginally better, well, more trans— like, you know what I mean? Like the effects of that over, over a longer time horizon are explosive. Um, and like the thing that you said of all of that, that strikes me the most important is the fee component. Um, I just generally think real estate is a scam industry because you, it's like the entry and exit, um, costs are, are very high, like 2 to 3%. And so that reduces the number of transactions and the velocity of the market and the liquidity of the market and the type of participant that can get into this market. But if you collapse that, then it like is explosive. Like it just, you see all of a sudden a market, as you said, really flourish. And I think that's what we'll see here, right? Because if you have the transactions happening on-chain, the immutability of the data is there. It allows you to do so many things and invite new market participants and just opens up in a really nice way. And so, as you said, like, there is no other reason to go to a Web2 provider. It's just you go on a Web3 provider because there's lower fees and that's it. Like, we don't need to justify 10,000 reasons.

I think that's brutal. Yeah. I think you're going to start seeing like this question of why is it on-chain? I think you're going to start asking this question. Why isn't it on-chain? Right. You've got global scale of users and global scale with payments where the fees are lower. Like, why, why would you build it?

I mean, I remember like probably Tyler Cowen probably writes about this a lot, but like Hernando de Soto, Theories of Economic Development, he talks about the single number one important thing of why countries have developed and others have not is property rights.

Yeah.

And you needed a strong government to enforce the title of your land. Well, do you don't really need that? Like if, if it's important to the block, I mean, of course, like you, you need a strong foundational government, but like if you have the immutability of like of these transactions on chain and the certainty of like of that and the, that you're transacting, then that's kind of a new chapter in property rights and, and economic development. I think if it's on chain.

Yeah, absolutely. I mean, I think, I think one of the things with property rights as well, and, and again, I know I mentioned it, I, I, I write a subset called Where's My Flying Car? And I write quite a lot about kind of air rights and property and so on. Um, kind of, you know, just from my own being, you know, like, property is like incredibly important. And, uh, you know, when you look at things like— and I'm not, I'm not American, right? So, but when you look at the U.S. Constitution around property, like, it, it is so strong. Like, like, on the dollar bill, I know you guys have, you know, In God We Trust, but it's, it's in property. In we trust, you know. I mean, property is what builds everything, and the right to own, transact, dispose of, and use your property how you see fit is like the essence of freedom. Like, I mean, that is it. Like, if somebody else has taken that from you, what can you do? So I think property rights are so strong, um, particularly in the US and, and other kind of common law jurisdictions, that this idea around air rights as being part of your property means that you're taking what you already have to make more of what you already have. And I think that really fits into kind of a narrative as well, that we're getting people who— and again, Mercatus writes a lot about property rights and all that kind of stuff, and kind of it feeds into that as well. It's like, okay, this idea that you have space above your property, there's drones that want to get in and you can give them permission. Fine. So why are drones flying into that property space without permission? That seems kind of wrong. So let's try and write it. So that's also one of the kind of property angles we're looking at as well, is to kind of we're not enforcing people's property rights, but we're encouraging them to, um, to enforce them themselves, I suppose, or at least use them in a positive way for society as well. So, uh, but yeah, I mean, I, I think you're right, there's kind of— there's a whole property angle here because we, we've also got kind of, as you said, this polarizing thing. We've also got people saying, hey, uh, you know, drones should just be able to fly wherever they want, you know, but why are we stopping flying? You know, that's fine, that's somebody's view, um, I don't think it's the right view, and it's certainly not the view of most people who own property. But people who don't own property, yeah, that's fine. Maybe it's their view. But in order to make that market work, we need to get it on-chain and make it liquid. And that's the way I kind of—

I think it's really interesting what you said around this question of like, if you were to reinvent the system from scratch, you would do it on the blockchain. And that's, I think, like a really good like kind of way to invert and like ask a question and inform how you build something, um, or disrupt a particular industry. Um, should we talk about, um, I know your co-founder is more crypto native, but I am curious, uh, why build on Solana, how you think about the infrastructure, um, and the things that you can do today and the things that maybe you can't do today and you're kind of dependent on infrastructure that may not be built yet.

And I'm curious what else you looked at, like what other L1s and L2s and stuff you looked at.

Yeah, sure, sure. So I think really early on we were using ImmutableX, which is like a ZK rollup equivalent for our kind of proof of concept. And that worked reasonably well. And as we were starting to build, just— this was probably 18 months ago— a lot more of the developers within certainly my co-founders' kind of network were EVM finding Solana builders was kind of trickier, it was harder. So people are like, no, no, no, go that way. But what we discovered when we started talking to the real estate guys, and it's kind of, it's pretty clear, we're tokenizing like millions, like millions here. Like this is not just like a thousand, it's millions. And to do that in a kind of a way that's affordable is really important as well. Because we're actually doing it for people when they register for free right now because we can, because the Solana costs are low. We're using compression NFTs and that makes it really useful for us. And when we started talking to Solana early on, they were like, no, no, when this market gets moving, there's a large number of transactions on this. Like, so tokenized on Solana blockchain makes a lot of sense to them. And for us, it's quick. I know it had problems a couple of months ago, but like those seem to have been ironed out, which is good. It's for us, the Solana blockchain, from what we can see, attracts kind of a wide variety of people and users, which is nice. I mean, we like that. So there's people coming from all angles on this, which is really interesting and helps kind of open the market as well. So yeah, that's kind of why we went to Solana. And, you know, I have to say they've been incredibly supportive. You know, they're available all the time if we have questions. They've been able to kind of link us into people in kind of some of the technology side that we needed information on as well. So yeah, they've just been a great partner. So yeah, that's why we went there.

Yeah, that's great. What, I guess, from a roadmap perspective and what it means for listeners and how they could get involved, like, walk us through kind of what does a product look like? Um, you know, we talked about what we're going to do today, but what does the next 6-12 months look for you guys? Where are you going to be most focused?

Sure. Um, I suppose there's kind of a couple of ways people can get involved on the roadmap. So the next big thing is the— what we're calling the auction house. Uh, so you can be able to— you'll go on and be able to, um, offer your air rights for, for auction, uh, or you'll be able to do an uninvited bid if you don't have air rights you want to get involved. So that's definitely one of the big ones. We have it testing at the moment. So we're— I'm not going to give you a date right now because I'll get it wrong. But that will be released soon. And that I'm really excited about that. Then other ways people can get involved. So we do have a point system. So we don't have a native token right now. We do have a point system. So when people sign up to our waitlist, which they can get on the website, they get points. 125 points will then be given to them with their first successful bid. Um, we also have the drone app, uh, it's called Skytrade Lynx Radar. You can find on the Amazon store, so you can go there and get that. And we're going to be giving points for picking up drone data as well. We're incentivizing people to do that. If you register your air rights, we're going to incentivize them with points for that. And if you don't have property, that's okay. You can go in, register, you can get your code, and you can actually refer people in as well. Um, so you can be part of that as well. So you don't have to be a property owner to, to take part. So that's kind of the kind of short-term roadmap. Um, and then towards the kind of latter part of this year, uh, we're then just tightening that whole thing up and going to make it kind of transact much easier. We're also building a widget at the moment for MLSs. So we're talking to a couple of them at the moment so that you'd be able to put our widget in there. You'll be able to check what your air rights are worth and then come to us and kind of register them there as well. Um, and the MLSs will get a, get a part of the action as well, because we, we realize they have kind of captive audience, um, but that captive audience isn't necessarily kind of immediately trading, which is fine, but they may want to trade their air rights, or they may want to see what value they are, um, and kind of sever them out from the, from the main transaction. I mean, the interesting thing as well with the air rights piece is even if you don't think they're valuable today, someone might think they're valuable tomorrow, right? So that's the interesting thing as well. So you know, when I walk around New York, like, I'm here, I'm here all week. And I'm like, I just can't stop myself. I'm looking like Lego bricks, right? I'm going, okay, so what's that transfer? Has that been sold? Or would that be sold? And all that data is kind of available. It's all messy and stuff. And so I'm like, okay, so move that there and move that there. And would someone buy that there? And even if you don't know 100%, you know, you know, Will someone build into that in the future? Will zoning let you? Zoning changes. So like the one constant is change. So, you know, Manhattan used to be a swamp, right? So it's not any longer.

That's the beauty. That's the beauty about markets. It's just, uh, if you, when you invite market participants, uh, you know, you just create more consumer preference and then all of a sudden you unlock these more transactions, lower fees, more transactions, better price discovery, and then a whole slew of things that, you know, you never thought were of interest, but there's someone out there that might be. and you just need to allow them to open the door and come in and transact.

Exactly. Yeah, yeah, 100%.

Jonathan, I'd love to, uh, bring up some of the counterarguments that people brought up on Twitter when I, when I announced— when, when you, when you guys made this announcement. So I'm just going to read a couple of these to you. Uh, maybe we can start with the first one. So someone said, yeah, but this is only so practical in Manhattan where you can provide example air rights— where you can, uh, bad, bad grammar here, but in Manhattan where you can provide— where you provide example air rights can only be transferred to adjacent properties, not universally through the city. So the respective buyer audience is relatively small, let alone— and not considering the other encumbrances neighboring properties may have. So I think the gist of this is, look, in Manhattan, uh, you, you actually— not everyone can buy the air rights. It's the neighboring property can buy the air rights, not everybody. How do you think about that?

Yeah, so, so I guess everyone can buy the air rights. Uh, what you can use them for then is different. In different locations. So, um, they, they— it was much tighter originally in Manhattan. So yes, you could only do it neighbor, and then that slightly changed where they could transfer them between. Um, the amount you could transfer changed as well. Um, so yeah, that's changing as well. So, and the zoning regulations then are, uh, you may not have the ability to develop into your air rights already. So when you sell it, how valuable is that? Well, I mean, that's up to somebody to decide whether that's valuable. Will it be valuable in the future, will that zoning change, etc. So there's definitely an element of like they're right, but there's also an element of that they're not 100% right in there. And that's okay. You know, I mean, it's okay that there are these restrictions. In fact, the restrictions can make certain parts more valuable, right? Because the ones that are restricted, the ones next to it become more valuable. I mean, it's a little bit like, you know, the architects who say they need constraints to build nice buildings. Buildings, you know. I mean, if you let them unconstrained, they just build grotesque things. You need constraints in a market to also add value, um, in, in areas. So it's again— and to give an analogy to the drone one as well— when, when we talk to people with air rights in areas where drones are flying, they're saying, well, I don't want drones to fly in mine. I'm like, that's great, that's good, because you're narrowing the market and those other air rights that allow it in become more valuable. Then you may open yours up and the market kind of moves. And the same is true in Manhattan. So the reason that the rules changed slightly is because people wanted them to change and there was demand, right? So if you start having more air rights being bought and sold, um, perhaps not being built into— not all of them need to be built into. I mean, they're not being built into right now, but they can be built into in the future, um, or they can be used for other things. So we, we, we're partnering with, uh, and we'll announce it soon, I, I won't totally give it away, but we're partnering with a company who who do helipads and drone pads, and they're also looking at this for buildings. And so a little bit like cellular towers, right? So yeah, you might not build 10 stories above, but you might put in a drone pad, for example, or you might put in a vertiport for a flying car. And so there are a bunch of different things that can be done with it. But yeah, I mean, our Twitter friend is right and wrong.

Nice. Uh, next question is, air, uh, air rights can only be used once, so there's only a one transaction event per said air rights before you have to go source new deals completely?

Yeah, I think what they're referring to there is if you trade air rights and there's the right to build into it, once you build into it, you can't trade what you've built in again. Now, that, that's not true for a start. So once you've built into it, you can trade it as real estate. So, um, yeah, you can't trade necessarily the air right, but you have the air rights above it still. So you have 500 feet above the highest part. It doesn't mean you can build into that because zoning may be different, right? So, uh, that's again not, not, not fully grasping it, I don't think. But, uh, yeah, if you build into it, you can't build into it twice for sure, but you can build up again if you have zoning permission. But you can also trade the bit above it because it could have other uses as well, or it could be zoned in the future.

Got it. And I think the last one here is it requires you to go through the Department of Buildings regardless. Generally, there's incredibly small demand right now for air rights. Well, actually, I guess there's a couple things here which we've covered already, but the respective pool of buyers that can acquire them is small. There's no encumbrances on the respective properties to apply and use. Near one of the worst deep end ideas I have ever seen. So I think we've actually covered most of the pushback there, but I guess, I guess the one thing we didn't cover is it requires you to go through the Department of Buildings, right?

So yeah, so if you do any real estate transaction, you need to go through the, through, through the right channels, um, and have it registered if you need it registered registered. There are not, you know, you don't necessarily have to have it registered. If it's sold, yes, you should, and it should be open. But yes, you do. And part of what we're building as well is a flow to be able to do that and have it registered.

Nice.

Also, by doing it on-chain the first time, we effectively become the de facto register. So yes, you will want to look at the official one for sure, but we become the de facto one as well on-chain, which is valuable. Nice.

I love, I love these comments. The worst, the worst D-Pen idea I have ever seen.

So I've seen some terrible ones.

No, I just remember getting those comments like that when we like a lot of different things we've done at Blockworks, like when we launched our news site, it was like, why would you ever launch a news site? There's already The Block and CoinDesk and all these. It's like, I don't know, these things are funny spectators commenting.

So yeah, absolutely.

Yeah, go ahead, Santi.

I'd like to ask maybe as someone that is coming into the industry relatively fresh, I guess, what is something that surprised you the most about crypto? And then what is something that the industry can do better?

Hmm, that's a good question. What surprised me about it? Um, I suppose the biggest degeneracy. Well, actually kind of the opposite, the opposite actually. Um, so, so the people I've talked to um, in general— I mean, this is not everyone— but in general have been really positive about what we're trying to do. Um, now that doesn't mean all of them don't— like, some of them who are positive don't think I'm crazy as well, but they've been overwhelmingly positive insofar as that, yes, moving it on-chain or putting it on-chain makes sense to people within the crypto community. Um, growing the size of the pie, uh, is, is, is really net positive, we found, from people in the crypto community. A lot of them we've talked to is bringing something real world in kind of legitimizes to a degree what's going on. So I've been actually really surprised with the support levels I've got from people and the connections. People are just like super happy to say, hey, this is someone who you might want to talk to and kind of do that. I'm not so close. So I've worked in other industries in Web2 and sometimes people are very precious. They don't want to kind of open the open the doors quickly. And I think in this community they do. And that's kind of what I've been mainly, mainly surprised by. Um, I mean, what could it do better? I don't know. Uh, you know, I mean, I'm not, um, I mean, I think there is a narrative around, um, like allowing real world stuff in. Um, you know, so maybe this is more degen stuff that, like, it's almost seemed like the real world stuff is like, hey, they don't know what's going on. We don't really want them involved that much. Whereas I think getting that side of it in, I mean, even the fact we call them real-world assets, like, I mean, of course they're real-world assets, they're assets, right? There's, you know, I mean, you know, this, this separation between like, you know, one world and another world, it's like, hey, you know, it's all part of the same thing. The technology behind crypto is really valuable. And I think if more people are looking at it from that side, more things will be done on it, which will allow kind of the general population to say, okay, yeah, crypto isn't just this crazy thing. And I mean, I look at it as well, and people have traded all sorts of things in crazy ways forever. So just because it's called crypto, I mean, my view is cryptography saved the Second World War. It was cryptography that was used and broken in order to save it. So I think we're very kind of— if we don't kind of connect the dots on that one, there is a danger that, um, you know, the real world, quote unquote, uh, will be nervous of it. So I think it's important to kind of welcome people who are questioning of crypto in and let them question it, because without that questioning, um, they'll never come in fully, I think.

Yeah, maybe as a last— well, I don't want to end with risks, um, but as a second to last question What if we were to talk to you in a year or two from now and the project didn't take off? What could materially derail the project and the ability to really scale? Is it the— becomes so expensive to ingest the data? Is it because a particular government just really doesn't like this idea at all, or market participants don't like it at all and you never get scale? What, what are the things as you sit here today that concern you the most?

Yeah, I mean, I, I think definitely there's a, a government element, um, to it. Um, but I think that's just necessary. I think that's just around crypto in general, right? So I think if, I think if the narrative around crypto goes wrong within government, certainly within the US side, um, that'll make it very hard for everyone. I think, um, won't be impossible, uh, but I think that will make it very hard. And I think that's just a necessary— that's just a risk factor of it. The whole industry right now. I don't think we're unique to that. For us specifically, yeah. I mean, if people who we're talking to at the moment, people who've expressed interest, people who've signed up, if they decide they don't actually like it or it's not for them, yes, that will not be helpful. But for me, the thing I guess that we— I suppose keeps me up at night most to make sure we get this right is actually making the product useful, like making— like when someone can go on and transact something, even if it's just a couple of hundred bucks, and they can see it works, right? And they can see what they're buying, or they can see what they're renting from a drone perspective. You know, that will be enough to kickstart this on the drone side. So the kind of the way we kind of view the business, we have the real estate side, which we kind of view as kind of a B2B kind of And then we look at a consumer side, which is the drone side. Um, if the drone industry doesn't take off, that side of the business probably won't take off. But we look at the drone industry as like a call option. That's what we look at it like. So we're there. Yes, you can register air rights. Yes, you can rent them out, you can trade them, whatever drone companies can get permission to be there. And the drone business is, is expanding faster. So the new chief of the FAA used to work for a flying car company, so he's issuing more and, you know, licenses and stuff. But, you know, that could maybe not take off. So that could be a side of the business that, if that takes too long, just becomes a side of the business that's there but maybe not kind of generating what we need to generate. So our kind of main focus right now is the, is the B2B and the real estate side. So yeah, I think those are kind of things that, you know, we look at as being, um, I don't know, problematic, but, you know, certainly concerning. Um, the blockchain piece as well, making sure that we're on Solana making sure that upgrades as well as it can and continues to do so. And I think that's happening there and continues to be like fast, useful, and the costs don't go crazy. That will help us as well. So yeah, I think that's kind of about it.

How big does this get? What's the endgame?

So, well, for us, this is without doubt a billion-dollar business. Without a doubt. Um, endgame, uh, I don't have an endgame, Santi, right now. Um, I'm, I'm, I, I'm too, uh, in kind of in the middle of it and kind of getting this thing moving. Um, again, for us, if this thing is moving, this thing is increasing, uh, valuations, this thing is increasing, uh, passive income to people if they're renting, this thing is generating revenue for people, that to me is just positive all around. And for the people involved in the business, you know, they'll do well out of it. And that's great. And that's a wonderful thing. But I think for society in general, having an asset that's locked above your heads and can be opened up, I think is just great. I think that— and that for me is, is really what I'm looking at. I mean, we open that up, it's a new market, it impacts society in a good way, in a positive way. And that for me is endgame. Once I can get to that, I'm going to be very happy. But yeah, I mean, this can be, this can be, or will be huge. I mean, it's already a big market that's untapped, right? So yeah, it's going to be big for us.

Well, we certainly believe in that vision. Well, we wanted to bring you on, and this has been a fascinating discussion across just understanding a market that perhaps most people may not be as familiar with. And I wanted to replicate that initial call that I had with you, and hopefully that was the goal of the pod, and I hope Hopefully that really came across of just at minimum to understand that, uh, at a time where, you know, crypto is being questioned in terms of real use cases and why it's necessary, I think we have enough proof points to understand that this— there's a reason why you're building on-chain, and there's a reason why it hasn't been built before. And these are not small markets by any stretch of the imagination. So yeah, I think your version of success is a really good one. And hopefully, uh, you know, especially seeing someone like Tyler, traditional investors appreciate that, and real estate investors— which the real estate industry, like finance, like, it's really like hard to convince, I appreciated, um, and the resist change. But whenever you give them an opportunity or an extra yield, yeah, they're gonna take it. Yeah, like, yeah, it's not just, uh, it's not just on-chain farmers that want to chase you.

Oh no, absolutely no. That's what we find. And, you know, there's, there's going to be some announcements as we come come along with the real estate guys we're talking to. And, um, you know, as you said, they're looking for yield, but, uh, you know, there's also a reality, um, of how the world is moving. Um, you know, and it is moving in a direction of tokenization, uh, like that is happening. It's not, it's not that we're waiting on the sidelines. It's young, but it's, it, it's happening for sure. And like real estate people, you know, like they're, they're not stupid, right? They're very clever, you know, they, they know how to manage assets. They know where value is. So you can offer it to them, you show it to them. Yeah.

Absolutely. Well, awesome, John. I don't know if there's any parting thoughts or maybe just tell folks where they can find more about the project, potentially get involved and yeah.

Yeah, sure, sure, sure. Yeah, you can find us at sky.trade. So that's the main site and you can kind of sign up there. You can register air rights or you can just sign up and you can sign up to the waitlist as well for the auction house. Yeah, you can get us on, we're at Sky Trade Network on on X, or me, I'm @droneevito.

So yeah, I guess you can also subscribe to your proper newsletter.

And subscribe to my newsletter.

Yeah.

So where's my flying car? So yeah, actually, I know we didn't say it, but that was pivotal in this whole thing. I need to write things down just myself. I always need to write them down to kind of get my head straight. And so I started putting it on Substack and people were like, hey, this is quite interesting. So yeah, we've got a bunch of subscribers. I don't know what, we've got 15,000, 16,000 So yeah, please sign up. Yeah.

Amazing. Jonathan, thanks so much for treating us for the episode. It was a treat.

Thanks, guys. Appreciate it. Yeah.

Hey everyone, big thanks for watching today's episode. Wanted to just quickly remind you about the Stellar Development Foundation's 6th Annual Meridian Conference this October 15th through 17th in London. This is an incredible opportunity to network with the forward thinkers who are defining the future of this space. Head over to meridian.stellar.org and use the code BLOCKWORKSPOD for early bird pricing.