Token Offerings
Token Offerings
An equity token serves as an equity certificate on the blockchain and is a collection of various blocks (encrypted data). Similar to book-form or conventional equity certificates, equity tokens include the same contractual information, but they are stored on a distributed ledger rather than a shared register.
A firm might avoid a traditional initial public offering (IPO) by using blockchain technology and smart contracts to issue shares and voting rights on the blockchain. Moreover, a lender might also generate debt tokens, representing the company’s financial obligations, allowing loans to be purchased and sold in a high-liquidity environment.
An equity token is a type of security token (issued during security token offerings or STOs) that reflects ownership in an underlying asset, usually a company’s shares. The contract, like shares, specifies the terms and circumstances that apply. Furthermore, the holder of an equity token may be entitled to dividends, voting rights, or both. Contracts, like share certificates, can incorporate appraisal rights, subscription rights, and other entitlements.
Additionally, equity tokens could also follow the value of traditional shares and mimic their performance on the blockchain. In this scenario, equity tokens are called crypto derivatives that do not entitle investors to security ownership.
Therefore, equity tokens reflect underlying assets in all circumstances, whether indirectly or directly, distinguishing them from most blockchain coins available through initial coin offerings (ICOs).
