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FAQ - Token

What’s the difference between a token and traditional equity?​

The fundamental difference between a traditional equity and a token, specifically one with an aggregation of digital assets (the Treasury), lies in the concept of utility:

  • Equity (Traditional):

    Equity holders receive dividends but cannot spend their equity stake directly elsewhere in the economy.

    To utilize their investment, equity owners must receive dividends in a widely accepted currency, creating a bridge between their equity and other spending or investing needs.

  • Token with Digital Assets (Unit Network Example):

    Token holders possess a unique advantage in that their tokens inherently carry utility.

    Unlike equity, token holders do not need a bridge to unlock value. They can convert one token to another or spend it directly within the token's ecosystem.

    The value is readily accessible and flows freely within the token's network, eliminating the need for an intermediary currency.

    In essence, tokens offer a seamless and direct utility, allowing holders to utilize their assets within the ecosystem without the need for external conversions or bridges.

Why create tokens?​

Creating a token offers several benefits:

Efficient Value Distribution:

Tokens streamline value distribution, enhancing financial transactions and resource allocation.

Fair Distribution:

Tokens ensure fair value distribution among stakeholders via blockchain and smart contracts.

Decentralization:

Token creation involves decentralized technologies, reducing reliance on intermediaries.

Increased Liquidity:

Tokens boost liquidity within ecosystems, allowing easy trading and asset management.

Incentives and Rewards:

Token systems implement incentive structures, encouraging desired behaviors.

Customization:

Tokens can be customized to suit specific needs, serving diverse use cases.

Blockchain Benefits:

Tokens leverage blockchain advantages like transparency and security, fostering trust.

In essence, creating a token empowers efficient value distribution, fairness, decentralization, liquidity, incentives, customization, and blockchain benefits within an ecosystem.

Why tokenize a business, community, intellectual property (IP), or assets?​

Tokenizing a business, community, IP, or assets has compelling advantages:

Liquidity Simplification:

Tokens make it easier for founders and investors to access liquidity, as they can be traded efficiently on blockchain platforms.

Incentive Alignment:

Holding tokens aligns interests among customers, employees, and stakeholders, fostering a shared commitment to success.

Fundraising/Funding Made Easier:

Tokenization streamlines fundraising efforts, attracting investment from a wider pool of contributors.

Risk Distribution:

Involving more parties through tokenization spreads the risk of failure, making it more manageable for the business or project.

Transparency and Trust:

Smart contracts on blockchain platforms offer transparent and immutable records, reducing opacity and enhancing trust.

Global Reach:

Tokenization enables access to a global pool of investors and collaborators, expanding opportunities beyond geographic boundaries.

Efficiency Boost:

Digital tokens streamline issuance, transfer, and ownership tracking, making operations faster and more cost-effective.

Increased Stakeholder Liquidity:

Stakeholders can trade tokens on secondary markets, providing them with enhanced liquidity and asset management options.

In essence, tokenization revolutionizes business and financial models, offering benefits such as liquidity, aligned incentives, risk distribution, transparency, global reach, efficiency, and stakeholder liquidity.