The rush to open early wage access in Indonesia

The Top Up is Tech in Asia’s free newsletter that breaks down the biggest stories and trends in fintech. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Melissa Goh Fintech Journalist Hello {NAME} , Happy New Year! We hope the past few days were restful for you. I sure did enjoy unplugging for a good week and a half while our office closed for a year-end break. But back to the grind: “Feature or product?” was something that many people asked about buy now, pay later (BNPL) as the trend swept across the globe. It’s a fair question. After all, assuming all things are constant, are you as a consumer more likely to try a new product or service from a platform you already use, or try a whole new application altogether? If you’re like me and prefer using apps in silos - i.e., having one app per service - you might find yourself eventually running low on real estate on your smartphone’s homepage, or needlessly scrolling through pages of apps just to locate the one you need. The early wage access (EWA) sector is grappling with the same dilemma. This is particularly evident in Indonesia, where pure-play companies from GagiGesa and Wagely to established peer-to-peer lenders, staffing platforms, and software companies are flocking to the space, as my colleague Ardi writes in this week’s big story. (We’ve covered the EWA model from a regional perspective and the billion dollar opportunity it affords in [an earlier story]( so do check that out if you haven’t.) The answer to that question - at least in the BNPL space - has become clearer in recent months, as tech juggernauts such as Apple, PayPal, and Block (formerly Square) have acquired BNPL outfits to provide the service on top of their existing hardware, payment, or merchant offerings. These incumbents could have a real edge over younger BNPL firms, owing to the sheer size of their consumer and enterprise customer bases, as well as the pools of data available to them. The same could apply in the EWA space. Will software firms that can tap existing relationships with enterprise clients beat EWA-focused startups to the punch? Read on to find out. Meanwhile, our analysis this week features [CitaDAO]( a decentralized finance (DeFi) platform for real estate that has the potential to change the way people invest in properties. -- Melissa THE BIG STORY [Is earned wage access Indonesia’s latest hot ticket?]( Image credit: Timmy Loen While startups like GajiGesa and Wagely have stolen the spotlight in the earned wage access segment, numerous VC-backed companies have quietly stepped into the arena. THE HOT TAKE  Real estate ownership on the blockchain Here’s what’s going to happen: - CitaDAO, a DeFi platform for real estate, will launch its [first]( “introducing real estate on-chain (IRO)” process this Friday, Jan. 7, for a freehold commercial building in the UK. - During the IRO process, community members determine if a property will be tokenized by committing USDC, a US-dollar stablecoin. - Built on the Ethereum ecosystem, CitaDAO says that it overcomes the frictions of owning physical real estate such as illiquidity and high costs. - Individual property owners can list their real estate on the CitaDAO platform and mint their own real estate [NFTs](. - Token holders own a fraction of the title deed of the underlying real estate through an ERC20 real estate token (RET). Here’s what it means: Real estate is an age-old way of building and preserving wealth, whether through buying actual properties or investing in real estate investment trusts (REITs). CitaDAO is taking a new approach to the investment vehicle by breaking up real estate title deeds into smaller pieces and selling them as blockchain tokens (a process called fractionalizing). Photo credit: CitaDAO It’s worth noting that the division of assets in real estate isn’t new. REITs, for instance, are another - albeit analog - way of breaking up properties into affordable chunks that can be owned and traded by retail investors on a stock exchange. CitaDAO’s differentiation is that it is breaking up these properties on a blockchain, making it easier for people around the world to own its real estate portfolio. And while each REIT consists of multiple properties, CitaDAO issues tokens for individual assets. Through an IRO event, interested investors can commit their interest by staking USDC, a US-dollar stablecoin. Following a successful event, RETs are distributed to holders based on their amounts staked, effectively giving each token holder a piece of real estate - or, more accurately, a piece of its title deed. This piece gives RET holders the right to buy out all other token holders and to legally redeem the full title deed of the underlying property. The organization also plans to issue a separate CitaDAO token that gives holders the ability to vote on its decisions. It will also allocate 2% of every property it lists to the decentralized autonomous organization (DAO), giving token holders exposure to its entire portfolio. CitaDAO is confident that a majority of high-quality real estate will inevitably be tokenized as assets. [The DAO says]( that it has a pipeline of US$240 million worth of real estate that will be tokenized within the next six months. CitaDAO isn’t the only firm tokenizing real estate: [Shareable Assets]( is a Singapore-based asset tokenization platform which has issued real estate-backed security tokens [based on physical residential and hospitality properties]( in the UK. Seoul-based property investment platform Kasa also issues digital asset-backed securities that represent fractional ownership of commercial properties, which can be traded on the Kasa exchange. It plans to launch an asset-backed securities platform in Singapore this year. Commercial buildings in Seoul / Photo credit: 123RF Landlords are constantly on the hunt for new sources of capital and higher yields, so it’s no surprise that real estate sits at the forefront of tokenization. It’s worth noting that even within fractionalized real estate, there are different business models. Some platforms purchase the real estate before tokenizing it, while CitaDAO simply transfers the title deed for the real estate from the existing landlord to a special purpose vehicle. CitaDAO’s offering could change DeFi in the following ways: - Any landlord can list their properties on the platform (after going through verification and anti-money laundering/know-your-customer checks), making the model highly scalable. - As the ecosystem of DeFi products around real estate grows, RETs can be used in other DeFi applications. For example, RETs can form part of an index token for investors that want exposure to diverse assets. Borrowers could also offer their RETs as collateral. - CitaDAO could offer a way to stabilize crypto markets. Given that property values often appreciate over time and are less volatile than cryptocurrencies, RETs could form the backing for a stablecoin that also hedges against inflation. It also promises to supply token holders with access to additional yield in the form of rental incomes. But there are important legal and regulatory concerns to consider. Say RETs are successfully awarded to 1,000 different token holders. Would all of these token holders’ names be listed on the property’s title deed at the local city council level? If not, will they be listed in any legal documents? Also, after an IRO event, who owns the property? How is ownership split between the original landlord and RET holders? Does the RET holder have a right to a property’s cash flow? But the hardest questions will arise months or maybe years down the road, when the actual property exchanges hands. If stamp duties are incurred, does each token holder share in the cost? Are property taxes split among all token holders? In the event of a downturn where the valuation of the property falls sharply - or worse still, is foreclosed by a bank - what happens to each token? There’s also selection and exclusion biases built in. There’s a higher chance that landlords who seek capital streams in alternative routes - such as through tokenization - own assets that are less appealing than those included in REITs. Accountability will remain a key question as DAOs proliferate and mature. According to CitaDAO, a property manager will be appointed to lease and manage the real estate. This manager is chosen after inviting all “qualified property managers” on the DAO to submit proposals including their projections for expected rent, operating costs, and the property management fee for the upcoming year. The property manager who submits the proposal with the most optimal metrics is automatically appointed, while manage​​rs who significantly underperform are automatically replaced by the person with the next best proposal. While such an approach certainly decentralizes authority, a question here is whether metrics like track record and qualifications should also be taken into account. If you enjoyed this read, you can check out our previous analysis on MeanDAO and its money streaming protocol [here](. Disagreed with our analysis or think there’s another DAO we should check out? Drop us a note! – Melissa MORE NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](.  1️⃣ [Tencent takes a stake in UK bank Monzo’s latest funding round]( The round raised US$600 million in new investments and values the digital bank at more than US$4.5 billion. Monzo presently has more than 5 million customers, and the firm doubled its revenue in 2021.  2️⃣ [Ant Group to shut mutual aid unit in January]( Alibaba fintech affiliate Ant Group, which owns payments service Alipay, said it will shut down Xianghubao, the company’s mutual aid healthcare platform, on January 28 amid Beijing’s regulatory crackdown on financial services.  3️⃣ [SoftBank Ventures Asia co-leads $45m round of Korean fintech startup]( South Korea-based Chai, a blockchain-powered payments solution platform, currently processes more than US$6 billion in transactions for over 2,200 merchants.  4️⃣ [YC, Alpha JWC pour $5.2m into influencer-focused fintech firm]( Indonesia-based Upbanx, which began operations in June 2021, helps content creators, artists, and freelance workers get discovered. The firm also manages their workflow and finances.  5️⃣ [AirAsia cancels $10m acquisition deal for Gojek Thailand’s fintech unit]( Details for why the acquisition deal for Velox Fintech didn’t go through weren’t disclosed. The airline’s digital unit, however, completed the acquisition of Velox Technology, another business of Gojek Thailand. FYI  1️⃣ [Crypto ban would move India closer to an authoritarian nightmare]( If the government has a monopoly on digital currency, its bureaucrats will have zero incentive to innovate. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! P.S. 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