After the introduction of bitcoins, many cryptocurrencies have started replacing fiat currencies. Such a digital revolution led to the rise of Initial Coin Offerings (ICOs) in the blockchain. There are now digital assets known as Equity tokens that are slowly penetrating the mainstream market.
Many start-up circles and business entrepreneurs are looking towards erc20 token development as an astonishing business opportunity that will increase raise their venture capital.
Before diving further let’s know about Equity tokens and how do they work.
What is Equity Token(Eto)?
An equity token is a digital asset that works like a traditional stock. Every equity token holder garners some form of ownership in the blockchain. As per the experts, these token boasts some contractual data that could be third-party assets, property or any business venture. Equity tokens are available in various forms, some of the most common include.
- Options Contracts
- Tokenized Real Estate
- Tokenized Companies
Equity tokens are the securities of investors that involve them in the progress of the Blockchain network and payout rewards on the basis of how token performs in the market.
How does an Equity Token Works?
The process of buying equity tokens is similar to buying a share of the company but in equity tokens, holders are not only ranged to ownership but they’re also involved in some significant portion of the company’s profit.
A company can issue equity tokens either through public or private placements under the guidance of a regulatory body in the country of issue. Below is the step-by-step process of the working of equity tokens.
The working of equity tokens start by registering the Blockchain company to an exchange platform and record all of its registration documents or corporate documents for identification and verification.
Terms & Conditions
After the registration process, the company has to represent its terms and conditions such as the value of the company, maximum investment amount available, minimum share amount, and other investment provisions to their potential investors.
Pre Equity Token Campaign
In this step, the company offers a certain amount of tokens to its private investors. This step helps the company in increasing their desired amount before the beginning of the public sale.
A company initiates this step when they fail to reach the maximum funding amount in the pre-equity campaign. The company offers the rest of the tokens to the general public like individual investors and business enterprises.
After the purchase of equity tokens, an investment agreement is signed between the parties. This denotes that investors are the legal owners of the purchased tokens.
Top-3 Equity Token Development Platforms
Now you know about the science behind equity tokens, let’s know about the top 5 erc20 token development companies.
Polymath is a leading erc20 token development company that deals in creating and issuing blockchain tokens. They assist companies in managing the legal and jurisdictional provisions of equity tokens as well.
Swarm is an innovative erc20 token development company that helps startups in easing the tokenization journey of a company by providing token development, fundraising, legal jurisdiction assistance, token redemption, and a lot more.
Capexmove is a well-known erc20 token development company that provides 360-degree security token services such as IPOs cultivation, legal and jurisdictional assistance, pre-equity placements, access to lending markets, etc.
Future of erc20 token development
erc20 token development is rising as one of the most popular methods of fundraising as it provides value to the investors and also benefits the investment value of companies. It also plays an evident role in boasting a form of security to the investors and also facilitates the flow of regulations.
These all aspects give a strong hand to equity tokens as compared to the traditional share investing in which the investors only get benefits from the certain share value that they have purchased. Therefore, we can predict erc20 token development as the future of fundraising.