STO
Last updated
Last updated
A security token refers to a digital token in which real assets and real values are linked. In other words, it can be said to be a virtual currency that has the property of securities. Unlike the complexity of the transaction process of existing securities, it is a technology that simplifies and processes existing securities transactions. Securities-type tokens are also attracting attention as a way to resolve legal protection as much attention and attention has been paid to virtual currency. Securities-type tokens refer to ownership of a particular company's assets and can be seen as the same as the concept of investment we generally know.
In Utility Token, you have to use or sell those tokens to make a profit, Like dividends in Security Token stock, for example, if you have 10 Security Tokens for a snack bar, you'll get 0.0001% of the profits generated by the snack bar in the form of dividends. In addition, having an Equity Token (or Stock Token), one of the subcategories of the Security Token, allows you to have a stake in the company's management rights. Voting for management is transparently carried out on the blockchain, so you have more authority than the number of tokens you hold. In other words, you can exercise your decision-making power about the future of the snack bar.
The characteristics of the security token are as follows.
▪ Stability: Since security tokens (STOs) are based on blockchain technology, all transaction records are data that cannot be forged or manipulated, so there is also a tendency for investors in institutions that want stable and large investments to prefer security tokens.
▪ Simplicity: Existing securities trading methods require a lot of time and cost to pass and approve national examinations, but securities-type token transactions do not need to go through the above complex procedures because they are carried out through smart contracts within the blockchain network.
▪ High liquidity: Due to the nature of blockchain technology, securities tokens have no time and space constraints and can be traded in very small units, so you can secure a high liquidity pool when issuing securities tokens such as real estate.
Security tokens are issued in four forms
■ Real Estate - Token as real estate and distributed into investment concepts
■ Financial Instruments & Investments - Token as securities and distribute securities
■ Venture Capital - Token as stock and distribute a stake in joint venture companies
■ Commodities -Token as assets and distribute assets such as gold and silver
The outlook for the STO market is very bright. This is because experts are increasingly saying that most financial products, real estate transactions, stocks, etc. will be traded as STO in the future. The security token (STO) market is positively evaluated for being a financial product with improved protection for investors, and even though the security token is in its infancy, many securities companies and economic markets are paying attention and investing in it, and its potential is also high. In addition, investors of large institutions are also showing high interest in security token (STO), which also means a bright outlook for the STO market.
Based on data from the STO market, the STO market cap has experienced tremendous growth, surging from 374 million to approximately 1 billion from December 2020 to September 2021, representing an extraordinary growth rate of 2670%. This momentum has persisted into 2022. From April 2021 to April 2022, STO trading volumes witnessed a remarkable increase of 386%, accompanied by a 2650% growth in the market cap. In May 2022, the total market cap of traded security tokens grew twentyfold in a year to surpass $19 billion. Looking ahead, it is anticipated that by 2030, the STO market in Korea will reach an impressive 367 trillion Won ($287 billion).
From 2019 to 2022, many traditional financial companies, including large securities firms and banks, have entered the STO sector. The types of Japanese STOs include corporate bonds, credit card bonds, real estate, carbon emissions, etc. In line with this, the Japan Exchange Group (JPX) is set to launch the STO market in 2025.
On STO, experts predict that it will grow to $USD 2 trillion (KRW 2,240 trillion) by 2030, with its share rising to 94%, and as the development potential is high, asset-backed securities are expected to drive the overall growth of the securities-type token market.
