All You Need to Know About Security Token Offerings

While 2017 was the year of initial coin offerings (ICO), 2019 is touted to be the year of the security token offerings (STO).

The demands for ICOs fuelled the prices of cryptocurrencies intensively. These assets recognized as the most liquid investments for easily trading in various exchanges across the world. It is estimated that over $22 billion was raised through ICOs. Many companies, from start-ups to established firms with publicly traded equities, issued ICOs to fund their projects. However, this fundraising goldrush came to an end with the rising number of scams, hacks and delayed projects, which resulted in losses to the investors of ICOs. Many ICO offerings remained unsubscribed that combined with the bear phase in cryptocurrency markets.  

The downfall of ICOs opened doors to a new form of investments known as security Token offerings. STOs are investment contracts that are regulated by law. The companies that issue it must pass stringent KYC and ALC procedures before releasing it. STOs are the stocks or bonds which tokenized on a Blockchain. The value of the STOs is determined based on the value of the real assets of the issuing company. The firm issuing the security tokens proposes to share the gross revenues with the token holders or promise to protect the value of the investment.

The main difference between ICOs and STOs is that ICOs are utility tokens, which need not be listed on the exchange, while STOs are security tokens, which should be listed in the exchanges. STOs are backed by tokenized assets of the issuing company, which makes them safer than the ICOs. The tokenization of the real assets makes the calculation of the value of the STOs far easier when compared to the speculative nature of the ICOs. The Duel Token System will support the reliability of the companies.

Security tokens are catching the fancy of investors as they provide the liquidity benefits of cryptocurrencies but have a lower risk profile. STOs enable companies to increase the investor base as they can raise investment from a larger base of investors when compared to the standard methods of fundraising.

ECOSC Security tokens

The ECOSC Pvt Ltd, a new Trade Oil Using Blockchain based supply chain management company in the Energy Sector, has launched its security tokens. The ECOSC security tokens are empowered by the Ethereum Blockchain. The tokens will be listed on prestigious exchanges such as Latoken exchange and RGL Bank.