Denial11

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Defining Security Token
Offering And Its advantages
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When it comes to defining Security Token Offering
or STO, then it is known to be a fundraising tool
like ICO when an investor exchanges money for
tokens and coins. But it consists of regulations
that make token holders responsible for their
activity. It is considered a big step in token
evolution.
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Now, the question is what makes it so important.
However, if you have been in touch with upcoming
security token offering listing, then you will
find that STO is a step further to ICO which
includes distribution of tokens falling under
security. They are connected with the underlying
investment assets like bonds, REIT (Real Estate
Investment Trusts), stocks and other funds.
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Ever since the evolution of blockchain
technology, it has gained much popularity due to
Bitcoin in early stages. And now with the growing
development of smart contracts, security tokens
are making their mark as real digital assets
running within legal boundaries. As the name
suggests, security tokens provide security
distribution which is changeable.
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These tokens cannot be traded for regular token
exchanges. Exchanges interested in security token
trading must follow the regulations, including
data sharing. It indicates the fact that security
tokens prefer to do trading on special exchanges.


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Explaining 4 Layers Of Security Token Offering

While defining Security Token Offering, you need
to understand its 4 layers, which are as follows
1. Smart Contracts
Smart contracts are underlying programming
languages that are set by the blockchain
protocol. Along with utility, they contain a
value, which is why they are also termed as
utility tokens.
2. Exchanges
As the digital asset ecosystem facilitates
trading, it makes exchanges an important
component. Having no exchanges makes the token
worthless unless someone is ready to pay for
them.

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3. Blockchain Protocols
Security tokens cannot inherit their protocol
technology but can be set up on blockchain
protocol like Ethereum, as being the most popular
space, currently. However, it is not the only
chosen option, as other protocols are entering
the space too.
4. Issuance Platforms
These platforms are behind the distribution and
creation of utility tokens and are responsible
for maintaining smart contracts.
After defining Security Token offering through
its 4 layers, now let us know about what made STO
became a better alternative to ICO for the
investors.
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STO Replacing ICO

Dating back to the year 2018, during the time of
ICO mania, there came a sudden rapid rise in STOs
which was never expected before. This remarkable
shift from ICO to STO came due to a low point in
the retail market (Ethereum and Bitcoin). Another
reason that became the reason for ICO downfall
was the reducing demand from the retail
investors. This failure made them switch their
choice to STO.

Listing some of the advantages which made STO
superseding ICO are
https//www.cryptoknowmics.com/upcoming-stos
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Reliability During the time of ICO, many
projects got flunked as they failed to meet the
promises. Besides this, most of the investors got
stuck with useless coins. Contrary to it, STO did
the opposite by following regulations and making
blockchain and cryptocurrencies sustaining the
credibility.
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Low Cost In comparison to traditional
currencies, which are costly and sluggish due to
their old rigid infrastructure, security tokens
offer services at a low price.

No limit Security tokens are free from any
limitations from borders or any local
regulations.

Enabling Liquidation Of Assets Since security
tokens aim to trade on special security
exchanges, it will make it easy for investors to
liquidate their assets.
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Conclusion

So now by defining security token offering (STO),
you must have got a clear understanding of the
subject. The blog made you know about the STO and
how it surpassed ICO because of its poor
functioning. Apart from defining STO, you also
got to know about its 4 layers, which gives you a
better understanding of its operation. Other than
this, you got to know the reasons which reflected
ICO downfall and the dawn of STO. The rising
popularity of STO completely overshadowed ICO and
prompted the investors to switch their choices
from the former to the new uprising one.
https//www.cryptoknowmics.com/upcoming-stos