A Security Token Offering (STO) is a way to raise funds by issuing security tokens that represent ownership in real assets like stocks, bonds, or property. During an STO, investors get tokens that are tied to actual assets, giving them ownership rights and the chance to earn dividends.
How STO Works?
STOs kick off when a company decides to gather funds by launching security tokens. First, they need to meet regulatory standards to make sure everything aligns with current securities laws. After that, the company picks a blockchain to issue these tokens. Usually, security tokens are made through smart contracts that lay out the rules, like ownership rights and how dividends are paid out. Investors can buy these tokens with either cash or cryptocurrencies. The money raised can be used by the company for growth, funding projects, or other ventures that need startup capital. In exchange, investors get tokens that signify a stake in an underlying asset.
The Benefits
STOs let you own a piece of expensive stuff, like real estate, by buying smaller shares, which makes it easier for more people to invest. Plus, you can trade these tokens on secondary markets, giving you the flexibility to buy and sell whenever you want. And with everything logged on a public ledger, you can easily check all transactions online, adding a layer of transparency.
Conclusion
A Security Token Offering (STO) is a way to raise funds by creating security tokens that signify ownership of actual assets. STOs provide perks like better liquidity, transparency, and the ability to own a fraction of an asset.