Thomas Lambert, Daniel Liebau and Peter Roosenboom from the Rotterdam School of Management suggest that Value Token Offerings (STO) are better suited for financing startups than Initial Coin Offerings (ICO). His research was published on July 14 through the commercial law blog of the Oxford University.
The research document He noted that while ICOs and STOs are published in distributed books, the idea behind an ICO is “to create value for a community.” Utility tokens in ICOs You can only grant owners rights to use services or products and cannot be seen as a “funding mechanism”. However, STOs can. The researchers stated that:
“The tokens issued in an STO are investment products that generally grant cash flow rights and, in some cases, voting rights to their investors. Therefore, an STO is specifically designed to fund startups, while an ICO is to fund an organization, but does not include funding. “
Determinants of success
A value token is the digital representation of an investment product that is registered in a distributed general ledger and is subject to the provisions of the German Securities Act.
STOs can be issued both in the early life of a company as a capital token and later as a fund token. The researchers found out Corporate governance is another key factor for success. The document concludes:
“Even in the ‘more transparent’ blockchain-based context of STOs, the disaggregation of voting rights and cash flow rights has a negative correlation with the results of success, according to the traditional view of corporate finance.” .