STO stands for Security Token Offering, and it is one of the crypto industry's fundraising models, more complex than an ICO.
STO is a kind of public offering that facilitates trading financial assets through tokenized digital securities.
They were created in response to the ICO bubble burst in 2018.
Compared with an ICO -susceptible to scams and frauds- STOs are considered more secure, well-regulated, and lower risk.
STO is another fundraising method in the crypto industry but differs from ICO in the essence of the asset offered. Security Token Offerings are offerings of financial instruments representing traditional asset classes such as shares, bonds, rights, obligations, and derivatives, but also properties and commodities.
STOs function as digital representations of real-world assets, like bonds, stocks, and gold.
Their ownership information is not entered into a certificate of ownership as usual for stocks, but this information is recorded on the blockchain and represented by a token.
They offer the same securities on traditional investment platforms but use an innovative approach to investments within the crypto industry.
There are different security tokens: equity, debt, asset-backed, and utility.