Lightspeed Newsletter: SkyTrade is building a marketplace for air rights

16.07.2024

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Howdy!

What a weekend, huh? Saturday was a “two beers at the neighborhood bar and be generally sad about US politics” kind of night.

Now it’s Monday, which is a “wonder what the price of air is” kind of morning. Bear with me:

SkyTrade’s air rights marketplace

What if you could tokenize the air?

The 500 feet above the highest point of a building generally belongs to the property owner. SkyTrade hopes to build a Solana-based marketplace that would let individuals or real estate companies sell these air rights and developers or drone operators buy or rent them.

Property owners already trade their air rights, just not in a public-facing market. Billionaire hedge fund operator Ken Griffin reportedly paid up to $164 million for the airspace above St. Patrick’s Cathedral in Manhattan over the winter. The deal would allow Griffin to build a skyscraper to house Citadel on Park Avenue.

Currently, SkyTrade lets individuals “claim” the airspace above their property with the promise of passive income earned from drone operators who fly in their airspace (this would only be for drones since airplanes, you would hope, are unlikely to fly that low). It’s currently possible to rent airspace on SkyTrade for $2 in 30-minute increments — though there aren’t very many properties currently live, and the site felt more like a proof-of-concept in my time spent browsing it.

SkyTrade co-founder Jonathan Dockrell told me the platform is launching an auction house within a couple weeks where investors will be able to list and bid on air rights.

Before founding SkyTrade, Dockrell was working at a delivery company and started thinking about the implications of drone delivery, he told me. He realized that while most people assume the government owns all airspace, property owners actually have the air rights to the 500 feet above themselves. Dockrell got thinking about how he could build a marketplace for this decentralized network of air rights.

Dockrell and his co-founder wanted to build the marketplace on blockchain in part because it would let individuals own and control their tokenized air rights. They were initially working with a zero-knowledge rollup equivalent, Dockrell said, but switched to working with Solana after finding that it would be much cheaper. The air rights are tokenized on Solana as compressed NFTs — which was the standard built for Instagram during its erstwhile NFT experiment, I previously reported.

SkyTrade received grant money from the Solana Foundation and Emergent Ventures. (As a disclosure, Blockworks co-founder Jason Yanowitz is an investor in SkyTrade.)

Dockrell said SkyTrade will aim to court real estate companies who might buy and sell air rights as investment opportunities alongside individuals who want to earn passive income from drones flying above their property.

On the business-to-business side, Dockrell gave the example that real estate investors might realize zoning laws are going to change and buy up cheap airspace that they can then sell to developers in the future.

On the consumer side, SkyTrade developed an app for property owners to track drones that are flying on their property. SkyTrade will keep this data, and is working with drone companies on built-in ways for drone pilots to pay for their airspace usage. SkyTrade won’t get involved with any legal disputes between property owners and drone operators, Dockrell said.

Dockrell said the startup’s biggest hurdle will be accumulating enough demand for its marketplace — a common concern among RWA and DePIN projects. Dockrell said the real estate development side of SkyTrade is the more dependable side to find it.

“It’s like a call option is how we view the drone side of what we do. So if the industry expands, we expand. But real estate is always there,” Dockrell said.

— Jack Kubinec

Zero In

Real-world assets, or RWAs, predominantly consist of private credit.

This dashboard from rwa.xyz tracks over $12 billion in onchain RWAs. Private credit — which revolves around non-bank lending — separated itself from other forms of RWAs in September 2022 and has widened its lead since. It’s seen notable growth over the past few months, alongside strong growth in tokenized US Treasury debt.

The numbers are dwarfed, however, if you include stablecoins — which can be thought of as a kind of RWA insofar as they bring US dollars onchain.

— Jack Kubinec

The Pulse

All the world is green as prices across the crypto space rally, with solana reaching a nearly two-week high. Some have attributed the recovery to the aftermath of an unsuccessful assassination attempt on pro-crypto US presidential candidate Donald Trump. Following the incident, solana’s price increased by approximately 4.75% in a single day, reaching over $153 at time of writing. The price has rebounded from a recent low of about $121.50 on July 5, which was attributed to the impact of Mt. Gox’s rehabilitation trustee making repayments to creditors. This represents a 26.85% increase over 10 days.

Social sentiment seems to reflect a growing optimism. @HighCoinviction noted, “Things are starting to look exciting again. My gut tells me we are playing on a similar fractal to Q3’21 with shades of Q4’20 — in both cases the most explosive returns were just around the corner.” Similarly, @MoonOverlord commented, “This is so clearly the intermission to the bull market. The 2nd half is going to be batshit insane and about 5 people on Twitter are ready for it.”

Others kept their celebrations to simple “W“s and “LFG“s. @SorayaIMX proclaimed, “Solana is crushing it!” while @queencryptooo cheered, “Lfg $SOL on top!”. However, my personal favorite response came from @0xHarmon, who quipped, “I can afford to eat again.”

— Jeffrey Albus