Web3 for Ukraine’s property market: will smart contracts replace notaries?

Ukraine has unveiled a prototype blockchain property registry (Blockchain Estate Registry) built on Web3 technologies. The authors aim to streamline real-estate transactions through smart contracts. In time they propose extending automation to wills and mortgage agreements.

To assess whether the new system might sideline notaries and estate agents, ForkLog spoke with the concept’s authors and the prototype’s developers. They outlined the project’s technical architecture and explained where to buy the first tokenised homes in Ukraine.

From excessive bureaucracy to automation

The concept of the Blockchain Estate Registry was set out by Alexey Konashevych, PhD in law, science and technology (Australia), in a doctoral dissertation presented at the University of Bologna. Its key element is a so‑called title token—a digital asset recording ownership rights.

“A blockchain property registry, unlike a traditional one, is not simply a list of entries of ‘who owns what’. It is at the same time a digital environment for conducting transactions without intermediaries, including registrars and notaries,” Konashevych explains.

Trimming red tape is not new to the field. In Slovenia, property transactions do not require mandatory notarisation. In Australia, registration of purchases and sales takes place online without intermediaries.

Konashevych’s idea is to automate the system by deploying smart contracts and decentralised applications.

Existing centralised property registries cannot technically allow an unlimited number of users to perform internal transactions simultaneously.

To avoid such loads and to protect against cyberattacks, the registry is a closed database accessible only to administrators, technicians and registrars. The latter “translate” real‑world deals into paper form.

“Blockchain will allow the registry to have an open database and conduct transactions online in digital form. I propose using a combination of robust public blockchains to ensure competition between technologies,” Konashevych notes.

He also supports retaining legacy registries while allowing users to move ownership records to and from the blockchain for convenience.

Web3 technologies—and in particular the tokenisation of real‑world assets—are coming of age, making the project timely for Ukraine, says Alexey Zhmerenetsky, head of the МФО Blockchain4Ukraine and a member of parliament.

“This will make it possible to solve a number of issues in cybersecurity thanks to strong cryptography and decentralised data storage in the registry. In addition, it will help attract investment into real estate,” he said.

To finance the prototype, the public union “Virtual Assets of Ukraine” (“VAU”) submitted several grant applications to various crypto funds. The first to respond was Switzerland’s Dfinity Foundation.

Kitsoft served as the technical developer. The work ran for five months, from July to December 2023.

The current prototype is for demonstration and to familiarise users with how property tokenisation works.

The process is as follows:

1. A user wishing to sell an asset registers on the Web3‑registry platform using an electronic digital signature.
2. They then see, in their account, a list of their assets pulled from the state real‑estate register.
3. They choose the asset to tokenise and the decentralised platform they trust to handle the sale.
4. They list the tokenised apartment for sale.
5. A second user buys the property.
6. At the same time, the P2P platform’s ability to manage the tokenised property is automatically revoked, and title passes to the buyer.

Under the hood

The project has two components: the Web3‑registry platform itself and a decentralised P2P application where purchases and sales occur.

Alexander Efremov, Kitsoft’s founder and CEO, set out the technical stack:

• frontend built with React.js, Alchemy Web3, MetaMask and the IIT digital signature library;
• backend: Node.js, Web3, HttpAgent, Dfinity/Identity and the IIT digital signature library;
• for data and logic transparency, Internet Computer (Motoko) and smart contracts on Polygon (Solidity).

Efremov cites the rapid progress of these two blockchains:

“On Internet Computer we keep the list of assets tokenised on Polygon and store permitted information about users.”

The Web3 registry also integrates with external systems: the АЦСК for e‑signature authorisation, and the state register of rights to real estate to obtain property data.

The plan is to turn the registry into a multichain system. Alexey Konashevych grounds this in technological neutrality and pluralism.

A cross‑chain protocol will enable an end‑to‑end database spanning several networks. Public blockchains, he argues, provide unparalleled reliability and data protection.

“To everyone who claims that Bitcoin is centralised or that Ethereum is vulnerable, I would like to suggest they try to hack them. In the history of mankind there has been no system more reliable and fault‑tolerant than Bitcoin,” he stressed.

Combining several blockchains will further bolster data protection and address network throughput.

The proposed title token is tied to a user address whose private key is under the exclusive control of the owner. This enables programmable transactions.

“A simple example is an atomic transaction in which a title token is exchanged at the same moment for another asset, say a payment token such as a cryptocurrency or a stablecoin. This obviates the need for an escrow intermediary who holds the buyer’s money while the seller handles documentation and registration,” Konashevych explained.

Title tokens can be used in DeFi or to build investment DAO projects.

The system provides model smart contracts. These already include automated legal and technical parts for standard procedures and require no further offline actions—no paper contracts, no visits to a notary, no manual registration by an official.

At the first stage the team will offer several types of deals, including purchase and sale, rental, smart mortgage and smart will.

“For example, in a smart mortgage the program will monitor loan payments, and if the borrower stops paying, the pledgee will be able to sell the title token at an automatic auction,” Konashevych said.

An open registry ecosystem will let third‑party developers offer services and apps, and over time the system will authorise custom smart contracts.

All transactions will be underpinned by smart laws that help the registration authority fulfil its tasks—for example, forcibly transferring a token as a result of a court dispute or by inheritance.

Working with the authorities

At present the Ministry of Justice and the state enterprise «НАИС», and for land operations the Ministry of Agrarian Policy, which coordinates the State Land Cadastre through its enterprises, are involved in registering rights to real estate in Ukraine.

As a baseline model for cooperation with government bodies, the authors envisage public‑private partnership.

Implementing the project will require amendments to regulations on registration and notarisation of land and real‑estate transactions, as well as the law “On public electronic registries”. The existing qualified e‑signature infrastructure will also need adapting to the new ecosystem.

Although the Law “On Virtual Assets” is not directly related to a blockchain property registry, the VA market creates a regulatory field, including for asset‑tokenisation projects. According to Alexey Zhmerenetsky, the initiative group plans to present a final version of amendments to the Verkhovna Rada in spring.

Alexey Konashevych acknowledges that blockchain will not fully remove intermediaries from property transactions. The project is primarily aimed at freeing the state from the duty of maintaining registry infrastructure.

“I hasten to disappoint crypto‑anarchists: at the current stage of science and technology it is impossible to abandon a third party entirely when concluding a deal. Someone must set rules, resolve disputes and enforce the law, and so far no one has done this better than the state,” he said.

Citizens will interact directly with registrars less often, but the function of state registration will remain. Notaries and estate agents will not disappear either, as there will still be demand for them.

The project’s present and future

The registry’s authors have already struck a strategic partnership with the construction holding KBD.estate. It will implement tokenisation of assets and blockchain registration of ownership for homebuyers in the “private city” of Hlebivka near Kyiv.

According to KBD.estate’s founder, Evgeny Leskiv, by “private” the company primarily means convenient logistics and coordination of all social and utility processes in the city.

Hlebivka will comprise ten residential quarters totalling 925,000 sq m. Ten percent will be allocated to internally displaced persons, families of servicemen and Ukrainians affected by the war.

“We plan to tokenise every square metre, setting an initial price for each. With each stage of block‑by‑block construction the price per square metre will rise—that is the primary profit for the investor, who will be able to sell their tokenised property at any moment on a liquid secondary market,” Leskiv said.

A secondary profit is the ability to earn steady income from renting out or reselling the property after commissioning. All these processes will be automated both within the Web3 ecosystem and inside the smart‑city concept.

Leskiv added that he is exploring the use of AI to manage the private city as a whole and each apartment in it individually.

As of today, the project has a detailed, phased roadmap, and broader memoranda have been signed with the Ministry of Digital Transformation and the Ministry of Justice, said VAU’s CEO, Konstantin Yarmolenko.

“At the moment the Ministry of Digital Transformation is actively working on a regulatory sandbox concept for Web3 projects. We hope it can accept its first projects as early as this summer, including the blockchain property registry,” he added.

On further funding, Yarmolenko said that part of the technical solution will be built by VAU using crypto grants. This open‑source functionality will be available to the entire Internet Computer ecosystem and the donor crypto‑funds community.

In addition, a commercial component will be added—a startup to create a working blockchain registry platform that will allow real‑estate transactions to be registered under a transactional model and a public‑private partnership. It is to be financed with international venture investment. VAU is already in talks.

As examples of countries among the first to privatise segments of real‑estate‑transaction registration, Yarmolenko cited Australia and Canada. Ukraine has discussed this for several years. Back in 2019 President Volodymyr Zelensky proposed introducing blockchain into the real‑estate registry and gave several weighty arguments in favour of the breakthrough technology.

“This is not a simple project, because most states have a monopoly on the centralised registry and on formalising transactions in real estate and land, but we are positively minded to demonopolise this huge global market and bring innovation to it. This will make it possible to conduct transactions online, and also to carry them out much faster and cheaper,” Yarmolenko noted.

Interview by Lena Jess.