STO or Secure Token Offering is an innovative way for a company or business to raise capital. The increasing demand for STO services led to the rise of the STO development company. Through an STO development company, a business can approach STO creation in an efficient way.
Recently, Blockchain technology became the subject of focus in the crypto space. Also, this technology gained notoriety among entrepreneurs and startups. Blockchain works for several crypto-related services. The technology also works for STO development services. Hence, STO and the STO development company became established names in the blockchain industry.
One question that several businesses and, also organizations ask themselves is, “Why to create security tokens instead of crypto tokens?” One reason for selecting STO over the rest is the credibility it brings and the token’s unique nature. The other reason is that ICO has several drawbacks not rectified. Seeing this, companies move away from ICO to STO and work together with an STO development company.
This article tells you everything you need to know about STO and, also the benefits of working with an STO development company.
Understanding Secure Token Offering or STO
Security Token Offering is a popular fundraising mechanic that helps organizations and entrepreneurs raise funds through shares assets like shares, gold, silver, crude oil, real estate, etc. Security tokens provide features in addition to crowdfunding methods. One part is that they assure ownership through a secured blockchain ledger.
These tokens can only exist with the backing of some securities. One benefit to security tokens is the lack of third-party involvement. These tokens exist using smart contract mechanisms and developed under government regulations and, also SEC guidelines.
However, do note that the rules change for each country. Knowing the guidelines each country has is an arduous task. Hence, it is better to work with an STO development company that provides solutions to these issues.
Types of Security Tokens
Presently, there are three security token types available in the crypto world. They are:
- Debt token
- Asset token
- Equity token
Debt tokens exist through real estate, debt cash or contracts and are similar to short-term loans. The price determination of debt tokens considers the risk and dividend factors. The smart contract for a debt token must include terms like dividend model, repayment terms, and the token’s risks.
This security token includes real-time assets. Asset token has the backing of physical commodities like oil, real estate, gold, silver and more.
Equity tokens include the company stocks. These tokens are formed by dividing the ownership shares. It is a method of recording ownership on an immutable blockchain. There is an increasing demand for Equity token development as other investors can gain ownership of the company and its products.
The Strategy Used by Every STO Development Company
There are several ways to develop the STO platform. One approach is to develop it from scratch. However, it is not good to try this method as it requires significant time and investment. The alternative is to create an STO through STO script software.
The STO script software is the ideal way to launch an STO platform and save time and money. It helps if you partner with an STO development company that can create the script software for you. These companies follow a specific strategy and, also achieve the required results. The system is as follows
Start with an Idea
The first thing any business needs before engaging in STO development services is a unique business idea. Consider an innovative approach that is attention-grabbing and captivates the target audience’s attention.
Follow The Regulations
Launching an STO requires you to follow the rules made by your country. An STO operating in several countries means you must follow each country’s laws and complete their legal compliance procedures. This process can be arduous, which is why most entrepreneurs rely on an STO development company. They can handle the process from start to finish while keeping their client updated throughout the journey.
Develop the STO Whitepaper
A whitepaper is a technical document that covers every detail of the STO project. An excellent whitepaper has the project’s aim, teams involved in the process, token information, roadmap and other essential features. Also note, a disclaimer is necessary for every whitepaper.
Find the Right STO Development Company
Finding the company that provides the STO development services you’re looking for is not an easy task. The growth of the crypto industry means that every day there is a new STO development company launching. The company you select should be one with experience in blockchain and STO development. Additionally, look for companies that provide the following in their STO platform
- KYC AML solutions
- Asset fractionalization
- Legally compliant tokens
- Investor contract management
Create the Security Token
This step requires you to choose the security token you want to develop. As discussed earlier, there are three types available in the industry. You can select the type that best suits your project, and, also the STO Development Company takes it forward from there.
Launch the STO Website
It would help if you also considered developing and launching an STO website before the official release. The website attracts investors and, also is where the token sales take place. Interested investors can register and participate in the sales only through a token website.
STO Promotion and Marketing
Marketing and promotion is the last step of STO development. The STO development company will help you promote the project through traditional and, also unique STO marketing strategies. Some ways to market the project are social media marketing, content marketing, and, also email marketing.
Crypto experts believe that STO will become the most popular fundraising method in the future. The reason for that is thanks to its unique features. Launching a security token provides a significant return for a business. These tokens can become the preferred choice for crypto entrepreneurs and startups. Hence, it is better to create security tokens and sell them on the exchange platforms.