When we first started working on our Security Tokens Insurance Platform, we had two main purposes: 1) make the security tokens issuance process as easy and automated as it can be; 2) create the STO Marketplace in the secure, regulated environment where issuers can easily list their tokens and investors can invest in the projects they find the most interesting. In this article, we want to share our vision of how we see STIP, how it works and which benefits does it have for both issuers and investors.
What is STIP
STIP is a unique solution to simplify Security Token Offering for both companies and investors. Based on the Waves Blockchain we made security tokens issuance as easy as it can be. We achieve this by using Smart Assets technology that allows issuers to design a fully compliant digital asset that has attractive features for the investors built-in into the code.
Security Token Offering is a great new way to raise funds but we believe that it should be automated as much as possible. Automated token issuance encompasses the creation of tokens on a blockchain combined with legal structuring and fully compliant features built-in right into the code. Automation of these processes leads to a significant reduction of costs. This is a real step forward when compared to traditional fundraising methods which are overloaded with extensive costs.
STIP offers a solution to prepare a fully compliant STO and get access to secondary markets. No programming skills required, everything is done through the browser, along with that, Tokenomica helps issuers during every step of the process.
There are 4 steps that issuers need to take.
- Fill in our pre-made questionnaires;
- Choose a suitable instrument for the issue;
- Our legal partners can prepare all the necessary paperwork for you;
- Create the script for the token sale. No programming skills required all you need is a browser.
Let’s take a closer look at the process. All issuers start the process by filling out our questionnaires, issuers will need to provide the information about their company, identify who they see as their key target investors. After that, the platform will help issuers choose the appropriate instrument for the issue and jurisdiction to operate in.
After the instrument is chosen, we connect you with our network of experienced lawyers that will do all the paperwork based on your information. During this step, you negotiate the terms directly with them. You can skip this step if you want to do all the paperwork yourself. Usually, it takes about 2 months to prepare all the necessary paperwork.
As soon as the instrument for the issue is chosen and paperwork is ready, issuers can launch an STO in just two clicks. Once the token is issued, it will automatically appear on our STO marketplace where investors can easily invest in projects that they find best. To make the process easier for issuers, we’ve included KYC procedures for investors, bookkeeping, token distribution, token offering statistics, and reports inside issuers account. Most of the platforms don’t provide simultaneous issuance and marketplace to sell your tokens. Moreover, Q4 2019 Tokenomica will launch Security Tokens Trading Platform for the secondary trading of security tokens.
More Than Just a Fundraiser
Our work doesn’t stop on just launching an STO. We believe that the right Post-STO management is as important as the preparation for the campaign.
With Tokenomica’s Security Token Issuance Platform, you can manage your companies activities from your account after STO is conducted. Our goal is to help modern companies eliminate excessive paperwork and automate back office. Our platform will allow you to create the code for the execution of your plans and will also automatically create the necessary legal documents that will legitimize the established restrictions, as well as the execution of token holders decisions.
Conduct stakeholders voting, manage dividend payments, prepare corporate documentation, publish P&L statements, annual reports, news and updates directly from your account to your companies dedicated webpage on the platform.
For example, in the traditional system, stakeholders voting process is conducted once or twice a year. The reason for it is that voting has to be conducted at a certain time and place. While in the decentralized model, each stakeholder can take part in a voting process from anywhere.
On our platform, the issuer can customize which actions require the participation of stakeholders and conduct as many votes as needed, requirements are specified in the code of a smart contract. These decisions can be:
- Change the CEO;
- Dividends payout;
- Approvement of an annual report;
- Contract a vendor to get his/her service;
- Issue the stake to someone because that person/address is adding more value.
The results of these actions will be automatically reflected in the legal documents. The stakeholders, on the other hand, can play a bigger role in the work of the company, along with that they are provided with tools that give them protection from fraudulent activities.
Access to New Types of Investors
With security token offerings, issuers get access to a pool of investors that are familiar with the industry, who will be willing to invest in security tokens to support technology-based projects all over the world.
For investors on STIP, we have prepared the STO marketplace where all STOs that were issued on STIP are available. So what so special about it? Let’s take a look at the main benefits of investing in STOs using STIP.
Invest in Early Stages Without Fees
Security Tokens open the door for everyone to invest in promising companies in the early stages. Prior to security tokens, there were only two ways that investors could get involved in the early stages of investing, either by becoming an accredited investor or by taking part in crowdinvesting where they were fees two types of fees charged: up to 6% from the whole campaign and 2% from the payout to an investors.
Crowdinvesting made people millionaires in the early stages of its development. STO market is predicted to be worth around US$10 trillion by 2020.
The main issue with ICOs and the major issue for the whole crypto market is a lack of regulation, hence no investor protection mechanism is in place.
The case with Security Token Offerings is completely different since security tokens are treated as “Tokenized Securities” by most of the regulators thus same traditional securities laws apply for security tokens. This means that a company that issues security tokens has to fully comply with all applicable securities regulations.
Invest With More Flexibility
Currently, in the traditional security markets, investors are only able to purchase financial instruments using fiat currency. Security Tokens can be purchased with fiat as well as with cryptocurrency.
In traditional markets, you rely on a number of entities: Security Issuer, Brokers, Transfer Agents, Registrars, Clearing Firms, Custodians. With STO there are only 2 entities you have to trust: the issuer and the platform, thus any risks of data tampering and manipulation are also drastically reduced.
On June, 11th we will release STIP Sandbox — a virtual testing environment that mimics the environment of the final product. You will be able to launch your own virtual STO campaign on the Waves Testnet and create your security token within the STIP Sandbox. Along with that, you will be able to invest in test STOs.
All projects that will be released on STIP Sandbox will take part in our STO Contest with a chance to win up to 500 Waves. More details will be coming to you this week, stay tuned for the updates.