In a recently published thread, I explained what the V3 upgrade is and how it is of benefit to everyone interested in getting exposed to the real estate market scene.

In this article, I will be explaining in detail what Parcl is, its unique features and how to get started with using it practically.

What is Synthetic Trading?

Parcl is built on synthetic trading principles. This is a financial strategy that involves the combinations of financial instruments to replicate the performance of a different asset such as a stock, an index or even a currency. With respect to what Parcl offers, you do not need to get involved with any direct real estate exposure. In the comfort of your wallet, you can buy/long, sell/short real estate assets.

The purpose of a synthetic strategy in the finance world is majorly for Hedging Risk and Arbitrage trading (more on this later).

Introducing Parcl

In February 2023, Parcl launched the first-ever synthetic real estate perpetual market. This platform allows users to trade on the future value of real estate assets (i.e indexes) without having to own the underlying property (as explained in the synthetics section above).

The launch of the synthetic real estate perpetual market is a significant development in the DeFi space. It could make real estate investing more accessible to a wider range of people and could also lead to the development of new and innovative financial products.

Parcl is a decentralized finance (DeFi) platform that allows users to trade on the future value of real estate indexes. The platform is built on the Solana blockchain and uses a variety of smart contracts to execute trades. Parcl implements a tool called the Parcl Labs Price Feed (PLPF) which indicates the real-time price change in the residential real estate market and general properties using the price per square foot metric. This metric is a daily estimate of prices according to how the market values them per time.

Additionally, Parcl's synthetic real estate perpetual market is a permissionless market, which means that anyone can participate without having to go through a know-your-customer (KYC) process. This could make the market more attractive to institutional investors, who are often hesitant to participate in DeFi markets due to KYC requirements.

Parcl can help users in hedging and arbitrage in a few ways:

Hedging

Parcl's synthetic real estate perpetual market can be used to hedge against risks in the traditional real estate market. For example, if you own a rental property, you could use Parcl to create a synthetic short position in the real estate market. This would protect you from losses if the value of real estate declines.

Parcl can also be used to hedge against specific risks in the real estate market. For example, if you are concerned about the risk of a downturn in the Chinese real estate market, you could use Parcl to create a synthetic short position in the Chinese real estate index. (A Chinese market on Parcl is coming soon).

Arbitrage

Parcl's synthetic real estate perpetual market can also be used to arbitrage opportunities in the real estate market. For example, if you notice that the price of a real estate index on Parcl is different from the price of the same index in the traditional market, you could buy the index on Parcl and sell it in the traditional market to lock in a profit.

Parcl can also be used to arbitrage opportunities across different real estate markets. For example, if you notice that the price of a real estate index of a city in one countries offered by Parcl is different from the price of the same index in another city, you could buy the index in the city where it is undervalued and sell it in the country where it is overvalued to lock in a profit.

Parcl can be a good option for newbies because it is a permissionless market, which means that anyone can participate without having to go through a KYC process. This makes it easy to get started with synthetic real estate trading.

Parcl also has a user-friendly interface that makes it easy to trade on the synthetic real estate perpetual market. Additionally, Parcl has a variety of educational resources that can help newbies learn about synthetic real estate trading. From its docs, to tweets and articles on the blog platform, Parcl is committed to helping users get started on a gentle learning curve.

Using Parcl

Let’s get started on how to use Parcl. Navigate to the application here - https://app.parcl.co/

Connect your favorite Solana blockchain wallet. Only Possible On Solana you already know!

Read the Terms and Conditions just like we all do :)

And then you are in. Explore all the markets available and go to the ones already live and active.

I selected Miami Beach because it sounds like the Solana Beach, I think.

As with all futures trading platforms, you will be needing an account where the amount you want to trade with will be deposited.

After depositing, you get a success alert as shown below.

In the image below, I Longed with the 7.9x leverage. If you are not a professional trader, please do not try this at all. The example was to max out the leverage available. The index price was $570.06 and the liquidation price was $569.54.

In the same way, by switching the Short tab, you can make a Short trade on leverage.

Liquidity is the fuel that makes the trading experience efficient and hitch-free. By supplying liquidity, traders get a pool from which their trades can be executed speedily. Providing liquidity means you get to earn a portion of the trading fees received from traders in the market.

By selecting your portfolio, all open interests, Profit and Loss calculations and general trading account balance is displayed.

By clicking on the Account section above, you can deposit more funds or withdraw the balance you have there.

Some additional benefits of using Parcl

Fractionalization: Parcl allows users to trade on fractional amounts of real estate indexes, which makes it more affordable to get started with synthetic real estate trading.

Liquidity: Parcl has a good level of liquidity, which means that it is easy to buy and sell real estate indexes on the platform.

Transparency: Parcl is a transparent platform, which means that all trades are recorded on the Solana blockchain. This makes it easy to track your trading activity and to ensure that you are getting a fair price when you trade. You don’t need to trust, just verify.

Either you are a newbie or an OG who is interested in hedging and arbitrage in the real estate market, I encourage you to check out Parcl. It is a powerful tool that can help you achieve your investment goals.