CuBit™ Curiosities (FAQ)
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In the cryptocurrency world stablecoins have traditionally been a cryptocurrency characterized by being coupled to a major sovereign fiat currency, such as the US Dollar (USD). These stablecoins derive their perceived stability from the associated sovereign currency. As their actual stability is heavily dependent upon computer formulas, there is almost no line of sight into the reserves they purport to maintain in support of their liquidity. Thus, their actual stability is debatable.
CuBit™ is set forward as a stable coin because its price stability is dependent upon the assets in the publicly viewable CuBitDAO™ Asset Ledger (the Ledger). A portion of the Ledger assets are tied up in real estate investments and the remainder is available in liquid assets. The Ledger and its underlying assets are audited periodically by internationally recognized outside auditors. The purpose of the audit is to assure CuBitDAO™ members that the assets shown in the Ledger are real and valued as stated in the Ledger.
Universal Real Estate Stable Coin (URESCu™ or CuBit™) is the name of the cryptocurrency created by Universal Real Estate Wealth Protection Solutions, LLC™ (UREWPS™). We add a “u” at the end to emphasize that this currency can help rescue you from inflation and volatility. We shorten this acronym to Cu.
Universal Real Estate Wealth Protection Solutions, LLC™, also known as UREWPS™ (the Company) was formed to create wealth protection solutions using a combination of real estate and cryptocurrency. The nominal notion was to provide a reliable solution usable by middle-income savers to protect their modest amounts of wealth from the depredations of inflation, volatility, and scammers.
Real estate was selected because of its proven success in preserving and growing wealth. Real estate investments provide a natural hedge against inflation and are generally far less volatile than any other investment. Unfortunately, real estate investing is a very capital-intensive business. Real estate investing is also replete with many specialized risks and many scammers. The specialized risks and need for large amounts of capital put real estate investing out of reach for most middle-income savers. To make the benefits of real estate investing available to middle income savers requires a solution which:
- Lowers the capital requirements to be within reach of most middle-income savers
- Effectively manages the specialized risks associated with real estate investing
- Protects against real estate scams
Cryptocurrency was targeted by the Company because of the inherent transparency, accessibility, and durability of the distributed ledger technology (blockchain) and smart contracts which are at the heart of cryptocurrency. Unfortunately, the existing world of cryptocurrency has several major obstacles hindering its widespread adoption by middle-income savers:
- Technology requires specialized knowledge to understand. This puts off many middle-income savers because they are too busy earning a living to dedicate the time needed to understand technology.
- The cryptocurrency market is saturated with scammers and others who deliberately sow confusion about the technology and how it works.
- Most cryptocurrency offerings are mislabeled. Most are not currencies. Most offerings are either securities, or collectibles.
A cryptocurrency solution which meets the needs of middle-income savers must:
- Provide a simple, easily understood, and believable value proposition
- The solution should clearly relate to real world assets with which middle-income savers are familiar
- Provide a simple, easily understood, and believable process for protecting and growing their wealth
- Protect against cryptocurrency scams
- Give the middle-income savers significant control over their wealth
To meet these needs the Company has come up with the Universal Real Estate Stable Coin™ (URESCu™ or Cu for short), the CuBitDAO™, the CuBitDAO™ Asset Ledger, and Distributed Regional Affiliates (DRA).
Cu is an abbreviation for URESCu™. We use Cu (pronounced kyoo) for convenience. Cu is also the symbol for Copper from the Periodic Table of the Elements.
A DAO is a distributed autonomous organization. Every member of a DAO holds some sort of crypto token or coin, the possession of which makes them a member of the DAO. The CuBitDAO™ is comprised of all people and entities who have exchanged some of their wealth for URESCu™ (Cu) and hold it in a cryptocurrency wallet.
The CuBitDAO™ Asset Ledger (the Ledger) is a publicly viewable table showing the value of the assets in the CuBitDAO™ Treasury, as well as a few additional data elements which are helpful to CuBitDAO™ members.
The Ledger shows the following information and is maintained by the Company.
- The amount of Cu in circulation, denoted in CuBits™
- The most recent date of the Ledger (updated each month)
- Liquid assets pledged to the CuBitDAO™ Treasury
- Real estate assets pledged to the CuBitDAO™ Treasury
- Date of the most recent outside audit
- Results of the most recent audit
- The current USD to CuBit™ exchange rate
Universal Real Estate Wealth Protection Solutions, LLC™ (UREWPS™, the Company) is the company which created Cu or CuBit™ and everything associated with them. The CuBitDAO™ has contracted with the Company to manage the assets which CuBitDAO™ members deposit into Cu. The Company invests an agreed upon portion of the CuBitDAO™ assets into real estate. As the value of real estate increases, the value of Cu increases. When the Company liquidates the real estate, those gains are realized and transferred into the liquid assets of the CuBitDAO™. CuBitDAO™ members do not experience a taxable event from these gains until they redeem their Cu for another currency, goods, or services.
UREWPS™ provides many services for the CuBitDAO™:
- Maintains the CuBitDAO™ Asset Ledger Manages the assets in the CuBitDAO™ Treasury
- Receives deposits into the CuBitDAO™ Treasury
- Redeems withdrawals from the CuBitDAO™ Treasury
- Acquires, manages, and liquidates real estate assets
- Manages the liquid assets of the Treasury
- Manages the CuBitDAO™ administration
- Mints and burns Cu at the direction of the CuBitDAO™
- Establishes and oversees all the DRA
- Designs and maintains websites for URESCu™, CuBitDAO™, UREWPS™, and DRAs
Marketing of Cu
UREWPS™ has created the Distributed Regional Affiliate (DRA) companies to bring together experienced, localized real estate investors to directly oversee real estate deals the Company funds using CuBitDAO™ treasury assets. The roles and responsibilities of the DRA are designed to manage specialized real estate risks and to protect against real estate scams.
Company shareholders have many responsibilities. Some may lessen as the Company matures. Initially, ownership requires both an investment of time, capital, and intellectual capital. When shareholders fill management roles they are entitled to appropriate salaries and benefits.
To recompense the shareholders:
- 15% of each new minting of Cu is granted to the Company shareholders on a pro rata basis.
- Shareholders are required to loan their Cu back to the Company for unlimited use
- Shareholders are paid interest on their loaned Cu
- Shareholder Cu is returned to the shareholders from the annual profits generated by the Company
- Shareholders and Company employees are not prohibited from holding ownership interests in Distributed Regional Affiliates (DRA).
- Shareholders and employees may be awarded shares in DRA in return for helping to establish the DRA.
- Shareholders and employees are not restricted from acting as real estate investors, or DRA members. However, they must recuse themselves from all decisions and deliberations related to deals they have originated.
CuBitDAO™ members swap their wealth for Cu. As Cu increases in value due to the increasing market value of real estate in the Company portfolio, CuBitDAO™ members have the option of redeeming Cu from the Company at the increased valuation. CuBitDAO™ members may also swap their Cu for goods, services, or other currencies with third parties outside the control or purview of the Company. Cu is a currency. It pays no dividends. The value proposition for buying Cu is in the stability and hedge against inflation.
The Company collects fees from real estate investors for being the funding-partner for their deals. Repayments of the funding goes back to the CuBitDAO™ and the fees are retained by the Company. These can involve capital gains, one-time transaction fees, interest income, and payment streams from rent or lease payments. Deals often produce both equity gains and rental cash flows. Equity gains are usually shared between the real estate investor, the Distributed Regional Affiliate (DRA), and the Company. The portion of equity allotted to the Company passes through the Company directly to the CuBitDAO™. Rental cash flows not allocated to repay funding are split between the Company, the real estate investor, and the DDRA. The DRA earns their portion of the deal providing third-party verification of nearly all aspects of the deal. Operating expenses of the property are deducted from the gross revenues and net income before taxes is shared according to the terms of the joint venture.
Company management has sole discretion over handling the Company’s share of net income.
The weighted average statutory corporate incomes tax over the whole world in 2021 was 25.44%. In the US the rate in 2021 was 21%. It is paid on all profits after all expenses, including depreciation, have been applied.
If the Company generates a base ROI of 4.8% NIBT, netting out a tax rate of 21% results in a dividend eligible ROI of 3.792%.
The Company will always try to minimize the necessary number of employees and contractors by leveraging blockchain technology and market features to automate functions which traditionally have required human resources infrastructure.
The Company will likely have some employees and contractors aside from Governance. Paying these people will likely be carried out according to industry standard practices. If employees or contractors opt for payment in investment coins, we will need to figure out the proper way to handle tax obligations and payroll obligations in that scenario.
The emerging reality of the blockchain economy means that many payments are made automatically through smart contracts. Smart contracts also tend to carry out many actions which typically required human intervention (and compensation) in the past. These embedded payments are often made to ad hoc providers (e.g., Keepers and others) who may be effectively anonymous. This may create some friction with taxing authorities. We need to have a defensible response for those situations.
Source: https://taxfoundation.org/corporate-tax-rates-by-country-2021/#:~:text=The%20weighted%20average%20statutory%20corporate,over%20the%2041%20years%20surveyed.
Source: https://tradingeconomics.com/united-states/corporate-tax-rate
The primary activity of the Company is to make money through the secured, unleveraged, acquisition of income producing real estate in the USA. Everything else the company may do is based on this foundation.
The Company has several reasons for not using leverage (taking out loans to finance the acquisition of properties):
- Leverage decreases profits. Loan payments (debt service) often are the single largest monthly expense which owners must pay out of the cash flows generated by the property. Without the drain of debt service, more cash is available for reserves and for returns to the owner(s).
- Leverage creates substantial risks. Management believes that the gains resulting from using leverage are usually insufficient to adequately offset the associated risks.
- Leverage subjects the Company to interest rate risks
- Leverage subjects the Company to refinancing risks. During the downturn of the USA real estate market of 2007 – 2009 many banks were pressured by regulators to get out of the real estate lending business. Responding to this pressure they refused to renew many commercial loans, even though the borrower (a leveraged owner) was making timely and full payments. Unable to find any other lender and with the current lender demanding immediate payment in full of the entire loan, many owners were forced to sell profitable properties at discount prices to repay the loans. If the owners had not been leveraged, the perverse behavior of the regulators and bankers would not have forced them to take losses on the sale of their properties
- Leverage exposes the Company to foreclosure risks if cash flow problems occur – if you own a property free and clear, sovereign lien (e.g., tax liens) become the primary threat for foreclosure. Nearly every property experiences times when cash flow falls to zero or may even become negative. When there is no cash flow from the property, the owner uses reserve funds to reposition the property and to pay taxes, insurance, maintenance, while continuing to pay back any loans. Loan payments often are the largest single monthly expense. If they are absent, cash reserves will go much further while repositioning the property to resume the cash flow. If reserves are insufficient to pay the loans and reposition the property, the leveraged owner may be forced to sell the property at a loss or sign it over to the lender.
The Company is not a lender. UREWPS™ is a funding-partner for small real estate investors. In the USA lending to consumers is highly regulated. These regulations and laws have the primary result of shifting most of the risk of these loans from the consumer to the lender. These regulations also require significant reporting and tracking, which costs the lender.
All parties to the deals it funds are businesses. In contrast with the rigorous and highly intrusive regulations for all business to consumer (B2C) relationships, business to business (B2B) interactions are relatively lightly regulated. Businesses, and business owners, are considered ‘sophisticated’ and do not require the elaborate and extensive protections afforded by government to consumers. B2B law tends to focus on deterring fraud and theft.
The Company Is not a lender. UREWPS™ is a funding-partner for small real estate investors.
