Book Image

Security Tokens and Stablecoins Quick Start Guide

By : Weimin Sun, Xun (Brian) Wu, Angela Kwok
Book Image

Security Tokens and Stablecoins Quick Start Guide

By: Weimin Sun, Xun (Brian) Wu, Angela Kwok

Overview of this book

The failure of initial coin offerings (ICOs) is no accident, as most ICOs do not link to a real asset and are not regulated. Realizing the shortcomings of ICOs, the blockchain community and potential investors embraced security token offerings (STOs) and stablecoins enthusiastically. In this book, we start with an overview of the blockchain technology along with its basic concepts. We introduce the concept behind STO, and cover the basic requirements for launching a STO and the relevant regulations governing its issuance. We discuss U.S. securities laws development in launching security digital tokens using blockchain technology and show some real use cases. We also explore the process of STO launches and legal considerations. We introduce popular security tokens in the current blockchain space and talk about how to develop a security token DApp, including smart contract development for ERC1404 tokens. Later, you'll learn to build frontend side functionalities to interact with smart contracts. Finally, we discuss stablecoin technical design functionalities for issuing and operating STO tokens by interacting with Ethereum smart contracts. By the end of this book, you will have learned more about STOs and gained a detailed knowledge of building relevant applications—all with the help of practical examples.
Table of Contents (9 chapters)

Types of stablecoin

As we learned in Chapter 4, Stablecoin, there are several types of stablecoins. At a high level, there are three major types:

  • Fiat Collateralized
  • Crypto Collateralized
  • Non-Collateralized

The following diagram shows the major three types of stablecoin:

Let's look at them in detail.

Fiat collateralized stablecoins

Fiat collateralized stablecoins are backed by gold or fiat currencies such as the US dollar, euro, and so on. The token aims to keep a 1:1 ratio with the underlying asset. The token holder can redeem assets at any time with a stable 1:1 price peg. The centralized entity has to maintain a relative level of stability. This solution is a more off-the-chain centralized solution.

Tether and...