Security tokens are cryptographic blockchain based tokens that represent financial assets such as bonds, notes, debentures, shares (stock), options, and warrants. Security Token Offering (STO) increases the investors' trust and also empowers investors with financial rights such as profit sharing rights, and equity.
What Is Tokenization?
Tokenization is the process of turning a meaningful piece of data, such as an account number, into a random string of characters called a token that has no meaningful value if breached. Tokens serve as reference to the original data, but cannot be used to guess those values.
What assets can be Tokenized?
Real Estate Properties: Real Estate Tokenization involves the digitization of properties as the token. These tokens allow agents and owners to sell properties rapidly by fragmenting large property assets into smaller tokenized assets.
Assets: Any real asset can be tokenized. Such tokens represent ownership to a specific asset, like precious metals (gold, silver), art pieces and commodities. Real asset token’s value is linked to the real-time value of an asset backing it.
Equity: Tokenization of the company’s shares is also a promising area for STO. Owning an equity token provides investors with a portion of the company’s profits. It is a new fundraising model for early startups.
Investment Funds: If you manage an investment fund, STOs can be the best option for you to seek new sources of funds for improving the portfolio. It may help you determine what rights you want to share with investors.
Pre STO Launch
1. Legal Services
Before planning the launch Security Token Offering, it is essential to generate an idea that can attract more investors. Since a security token must follow certain regulations, we provide a team of legal advisors that can help you with the regulatory requirements. The regulations vary in different countries. The manner in which a token may gain value, also matters.
It is important to understand the tenets for a token’s value. Three principles on the basis of which a token’s value can be decided are
Each role defined for the token has a specific purpose for which features can be decided as per the business needs.
Since most of the ICOs are investment opportunities within the companies, many ICO startups classify the tokens as securities. To be a security token, it needs to qualify the Howey test.
The US Supreme Court established the Howey test to determine whether the arrangement includes an investment contract (security) or not. In the context of crypto tokens, Howey test can be represented as three independent elements which must be met to create a security token:
- An investment of money
- In the same enterprise
- With the belief of profits from the efforts of others.
A crypto asset which passes the Howey test is classified as a security token. Else, the token is considered as a utility token. It should be subjected to federal securities and regulations.
2. Write a Whitepaper
An STO whitepaper is the most crucial marketing document of the product. It includes an outline of a problem that the STO project is looking to solve, the solution to that problem as well as a detailed description of their product, its architecture and its interaction with users. Whitepaper, if written wrong, can kill the product even before it goes to the market. Sections that should be covered when writing STO whitepaper
- Legal Disclaimer
- Product Details
- Industry Overview
- Technical Architecture
- Business Model
- Assets and another type of security associated with the token
- Tokenomics and Token Usage Details
- Team members and advisory
Once you are ready with a whitepaper, you should look out for the expertise in your area of interest and build a team.
3. Create a Marketing Website
A website is necessary to introduce and sell the security tokens to crypto investors. We provide an informative user-friendly website to enable token sale and encourage investors to get started quickly; that can run securely and handle loads of numerous requests at the time.
The website designed for Security Token Offering should allow investors to register to participate in the security token sale. The web platform for STO should be integrated with KYC/AML to validate the users.
1. Creating a security token
Our STO technical team can create security tokens using token issuance platforms. Here is a demonstration using the Polymath platform. The steps to creating a token involves the following steps:
- Funded Metamask Account
- Creating an account on Polymath
- Register the token symbol
- Selecting the partners
- Creating a token
- Set up offering details
- Whitelisting the investors
2. Crowd Sale
It is the main stage of an STO project where a company sells its tokens to the public in exchange for raising funds. To run the crowd sale, we have a button for the token sale on the website from where the investors can buy the tokens by registering and passing the KYC/AML checks.
Our team deploys the crowdsale contract that allows the sale of a specified number of tokens within that round of sale and at the predetermined value of the token. While the tokens are sold to the public, it is essential to provide the community support services to give them prompt assistance whenever required.
3. STO Marketing
Trust building is vital to market an STO and to reach out to the right crypto investor. It must be ensured that you have allocated a budget for the Security Token Offering marketing activities.
Cost for STO listing can start at around $200 and may go up to an infinite number. Like ideation of the STO is essential, designing a marketing campaign is equally vital.
We help run paid ad campaigns on different search engines, email marketing campaigns and share STO updates on various social media channels and also remain active on social media platforms. We utilize the specialized forums designed for sharing the cryptocurrency-related news and posts.
After receiving a positive response from the promotions your Security Token Offering you may conclude, is the time to launch a Security Token Offering (STO) and begin the crowd sale.
Post STO Launch
Technical Support Services
Once the product is built and released to the public, we offer technical support services to provide technical help to the customers. Our technical team provides round-the-clock support services to resolve all technical issues through different sources like chat, email and phone.
Build a Product
To ascertain the successful launch of an Security Token Offering, it is crucial to build a product that supports the launched security token. Our team builds a user-friendly, secure and robust application on the blockchain.
To run us through the process we employ development experts who have an in-depth understanding of the various blockchain platforms and security tokens.