What Is Security Token Offering (STO)?
An Security Token Offering (STO) is a blockchain-power cryptocurrency token. STO-based projects assure investors that they will receive something concrete or tangible for their investments. Unlike Initial Coin Offerings (ICO), the promise of ownership rights, such as assets, business shares, equity, dividend, voting rights, and buy-back rights are the backbone of an STO-based project.
Types of Security Token Offering (STO):
There are four types of security tokens: Equity, Debt, Utility and Asset-backed.
1. Equity Tokens
Equity Tokens (ET) are similar to security tokens (ST). The main characteristic is that it
gives both the company and token holders equal rights. Those rights, but not limited to voting rights and distribution of dividends
2. Debt Tokens
Debt tokens (DB) function more like debt liabilities… sort of like a loan to the company
with the assurance that investments will be paid back to investors (token holders).
3. Utility Tokens
Utility tokens (UT) developers promise that token holders will have access to some types of products or services in return for investing in the company or tokens. UT have real-use cases.
4. Asset-backed Tokens
These tokens are backed by something tangible. Such assets can be properties, profit sharing, derivatives, or the company’s revenue or reserve.
Future STO Investors’ Due-diligence Advise
The same due-diligence advice apply across the board for all three types of blockchain project funds raising campaigns. Click ‘here‘ to go over them all.