TL;DR – the original amsterdreams concept was to pay a fixed investment every month, so you own your home at the end of the period. This is still the method with the highest return, which we now call amsterdreams Growth. Based on feedback from our 2022 customer survey, we have also added the amsterdreams Budget option, where your monthly payment stays the same, no matter what. Investment is slower, but you know exactly how much you have to pay.
amsterdreams Growth: the original
As you can read in this article, the classic way to live in an amsterdreams home is by investing the same amount of AMS tokens every month. In an example where a home costs 360 AMS, you save 1 AMS a month. And this investment already grows while you are living in the home. Fantastic.
The consequence of this model is, that in euro or dollars, the amount you put in every month also goes up. If the Amsterdam housing market rises in value by 1% (an annual growth of 12%, not unheard of), then you could pay 1,000 euro this month, 1,010 euro next month and 1,020.10 euro the month after. All this money is pure investment, so with (in this example) a 12% annual growth behind it. If you can afford it, it’s a great place to put your money. But varying home expenses may not be what you want, even though most mortgages have it as well.
amsterdreams Budget: predictable
You can now also choose amsterdreams Budget. With this method, your monthly payment in euro is fixed. That means that after deducting the amsterdreams fee, your investment in AMS gets a little lower as the value of AMS rises. You are still building investment, only a little slower.In the example of the 360 AMS home and the rate of 1,000 euro per AMS that we used above, the first month you would invest 1 AMS, the next month 0.99, the month after 0.98 and so on.
The monthly amount you pay to amsterdreams isn’t even increased for inflation. The only thing that would cause the monthly payment to increase is when the starting payment does not cover the amsterdreams fee. For the example of 1% housing value increase per month, that moment occurs a little over 10 years after you start living in your home.
Similarities
The other properties and benefits of both schemes are the same. You don’t get penalized for choosing amsterdreams Budget, it’s just that you work more slowly towards owning your home. That means that all of the following still applies:
- You can put extra money in at any time, without any penalty
- You can take money out, as long as a minimum amount of 3 monthly AMS payments remains in your home’s smart contract
- You can move on to another home at any time and take your saved capital with you
- You can buy your home outright by putting in the remaining money, from a mortgage, inheritance, selling your company, or whichever other source
What is not supported by default is a hybrid of amsterdreams Growth and amsterdreams Budget: some monthly payment that is in between. This would become very complex to administer and makes the smart contracts on the blockchain vulnerable to bugs. However, you can quite simply engineer a hybrid model yourself by either starting with amsterdreams Growth and periodically taking some money out or by adding some money to amsterdreams Budget.
Switching
You can switch between amsterdreams Growth and amsterdreams Budget at any time. There is blockchain cost associated with it to create a new smart contract for the type your switching to. This is not cost charged by amsterdreams but the so-called ‘gas fee’ for the ‘gasoline’ that powers the Ethereum blockchain. Switching is planned to be available in the amsterdreams user interface in the second half of 2023.
Summary
Next to the classic amsterdreams Growth model, where the amount of AMS invested is equal every month, there is now amsterdreams Budget, where the amount of euro paid is fixed. It was always possible to create a kind of amsterdreams Budget from the classic model by taking AMS out of the contract. We provided amsterdreams Budget as a more hassle-free way of doing so.
