Mapping out Security Token Offerings Ecosystem

On-chainJuly 19, 2021, 11:52AM EDT
UPDATED: March 7, 2022, 1:40PM EST
Mapping out Security Token Offerings Ecosystem
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Security Token Offerings (STOs) provide a way to offer shares of a company, ownership of real estate, and or participation in an investment fund wrapped in a tokenized form on a blockchain network. The main feature of STOs is that they bring together the benefits of blockchain technology for financing and enhanced liquidity but in a regulated environment.

One of the most significant benefits of a tokenized security is the liquidity aspect. Especially for private equity or illiquid assets such as fine art, customers can trade tokens on a secondary market. As buyers get more freedom (possibility to sell because it is accessible to everyone), sellers benefit from the “liquidity premium,” generating a greater value from the underlying asset. Additionally, the smart contracts make these tokenized securities more transparent (rights, responsibilities directly embedded into the token) while allowing for faster and cheaper transactions (no administrative burden and fewer intermediaries). Finally, since STOs can be divisible up to infinity, investments in these assets can be opened to a much wider audience through lower minimum investment amounts.

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