One Concerning Development And One Interesting Change At Lofty


Depicts a person in glove typing on a computer. Used as a cover image for an article discussing fractional real estate investing platform

Lofty is a blockchain-based marketplace for fractional real estate investing. Their user interface and experience allow people without any knowledge of crypto to use the platform without any real issue.

That leads us to the first part of the article – the concerning development. First, remember that Lofty is still using blockchain and cryptocurrencies under the hood. This is important context for the following series of Tweets:

Lofty is based on the Algorand blockchain. MyAlgo is a wallet for the Algorand blockchain that allows users to store tokens and to connect to other applications within the ecosystem. On March 5, multiple users were impacted by a security bug with MyAlgo that allowed funds to be stolen. This included Lofty.

The $68,000 reportedly stolen is about 1.36% of the total funds the company has raised to date, as per Crunchbase. Additionally, Lofty’s tweets imply two other things that should catch the eye:

  • The $68,000 lost from the hot wallet is only a fraction of their resources kept in cryptocurrency.
  • They did not express a need, interest, or ability to store or manage these funds in a different way in the future.

In summary, it does seem reasonable to believe that this amount isn’t enough to materially affect Lofty. However, they will continue to have funds in hot wallets and even greater amounts of funds in cold wallets. Both of these could be the subject of future exploits. Perhaps an individual loss of $68,000 won’t hurt them, but what about potential repeat losses? Overall, this just represents the extra risks of crypto-oriented investment platforms.

Now that we’ve discussed the bad news, there’s a piece of exciting news as well. Traditionally, the way investments work on the platform is mostly similar to other fractionalized real estate investment locations. There are periodically new listings that are curated onto the platform, divided into small shares, and openly available for any registered user to invest in.

Earlier this month, the company sent out an email about a new offering called “Lofty Select” that will work differently. Select allows a group of investors to find an investment property and co-invest and manage the property through the Lofty platform.

Effectively, this offering is looking like a potential rival to Fractional. Or, to a limited degree, TribeVest. It won’t appeal to most people since 1/5 of a rental property is much harder to purchase than 1/5000. However, Lofty’s platform does seem to handle voting and group property management decisions fairly well, so it could be an interesting option for those looking to co-invest and manage an investment with a small group of others.

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