Equity Token Platform Development
The Equity Financing of new companies is common practice to dilute shares to raise capital. The traditional method involves the existing shareholders diluting the company for new investors to raise capital in several rounds. There are two stages in equity token based finance; Private Locked up Stage and Public Liquidity Stage. You can keep the stocks as non-dilutable during the lock-in period. The tokens are available for investors through Equity Token Offering(ETOs)
ETO development is typically carried out with the objective of raising capital through share dilution. Current shareholders in a firm dilute their holdings so that fresh investors can infuse new capital through multiple rounds of funding. There are two phases in equity-based financing — public liquidity stage and private locked upstage. Over the lock-in period, the stock can be retained as non-dilutable. The tokens are distributed to investors via Equity Token Offerings (ETOs).
Equity Token Offerings provide the following advantages to prospective investors:
- Voting rights,
- Automated dividends,
- Buyback rights,
- Profit share rights,
- Holdings in another fund, and finally
- Cash flow.
Types of Equity Tokens
Dilutable Tokens
You can authorize to create a lot of stock, however, release on a part of it to the investors and shareholders. The remaining unissued stocks can be used for later sale. Only when all unissued shares are sold is when the existing shareholders have diluted their shares. The number of tokens represents the number of shares in the company which is etched on a smart contract. As the company grows the stake held by the investor reduces, however, the stake is more valuable.
Non-Dilutable Tokens
Each token is equal to a percentage share on the company forever. The investor holds the percentage of the company, as long as the token is his/her wallet. The anti-dilution premium is added as an insurance, for the investor to remain in the company without diluting their assets. The provides an opportunity to get a future value at the present. Dilutable equity tokens are recommended instead of non-dilutable tokens.
Features of Equity Tokens
Programmable Equity
The digitized equity tokens allow you to take control of illiquid asset into an equity issuance through a programmable code.
Regulatory Compliance
We will build SEC compliant tokens and help you in assisting with regards to security laws in your jurisdiction.
Liquidity
Dilutable equity tokens increasing the liquidity for the investors. However, you can set a lock-in period of 1 year from the day of Equity Token Offering
Secure Wallet
The Wallet is designed as a multi-signature, multi-device wallet on a blockchain with an elliptic curve cryptography, which makes the storage of funds secure.
Global Capital Investment
The equity tokens provide trust and reliability for institutional investors to join in the crypto-market, leading to a larger pool of capital investment.
Greater market efficiency
Provide assurance to investors with its recognizable structure and its affiliated technological advancement, leading to investors gaining trust and their investment in the project.
No Intermediaries
There are no intermediaries between the company and investors, hence reducing the cost of commissions for the middleman.
Own Blockchain
The equity tokens are developed on your own blockchain, thereby giving full control to you. No more worries of gas prices and changes in protocol or regulations.
Backend Dashboard
A complete backend panel for you to manage retail and institutional investors such as dividends, buybacks and announcements.
Benefits
Automated Dividends
The dividends from the investments will be automatically transferred to the investor’s wallet. The wallet is secured on the blockchain with Elliptic Curve Cryptography.
Voting rights
Similar to the shareholders, the equity token holders have the right to vote in the decisions of the company, hence ensuring transparency.
Profit share rights
You can share the profits of the company with the token holders in the form of tokens, by directly depositing into the investor’s wallet.
Buyback rights
The company buys the shares from the investors at the market price, hence re-absorbing part of the ownership distributed to the investors.
Cash flow
The company’s cash flow per share is on the smart contract, making it immutable. The company can be transparent about its earnings, per token, with its investors.
Holdings in another fund
The equity tokens can be deposited into a fund or with a custodian service who can handle or hedge the funds in an efficient way.
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