Short deck introducing our research paper with the same title.

1. Security Token Offerings
Thomas Lambert, Daniel Liebau, Peter Roosenboom, Oct 2020

2. Introduction… hot off the press (Oct 2020):
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3. Introduction
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A number of papers analyse ICOs and cryptocurrency markets but much less is known
about Security Token Offerings (STOs)
In our exploratory paper:
• What basic facts about the primary STO market using a hand-collected sample can
we uncover?
• Can we present the first results on STO success factors based on our sample?
Security Token Offerings

4. Key contributions / findings
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• STOs are not initial coin offerings (ICOs) or a subset of it
• We find that the STO activity developed after the end of the ICO market bubble
• We show that the STO market is still a nascent market
• STOs are geographically dispersed but concentrated in jurisdictions with accommodating
securities laws
• We find correlations between funding success and:
• good governance practices, consistent with the corporate finance literature
• Independent variables known from the ICO literature (e.g. GitHub)
Security Token Offerings

5. Literature review
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Type ICO and blockchain literature Corporate Governance literature
Theory papers Chod and Lyandres (2018)
Li and Mann (2018)
Catalini and Gans (2019)
Goldstein et al. (2019)
Gryglewicz et al. (2019)
Empirical papers
Fisch (2019) Baker and Gompers (2003)
Deng et al. (2018) Hochberg (2012)
Lee et al. (2018) Cumming (2008)
Bourveau (2019) Cumming and Johan (2008)
Momtaz (2020) Cumming (2019)
Benedetti and Kostovetsky (2018) Hornuf and Schwienbacher (2017)
Hornuf et al. (2019) Huang et al. (2019)

6. Types of digital assets
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Digital Assets Payment Tokens Utility Tokens Security Tokens
Description A payment token (also called
cryptocurrency) is a cash
equivalent available on
distributed ledger
technology (DLT)
A utility token gives its holder
“consumptive rights to access a
product or service” (Howell et al,
2019). It has similar features to a
voucher.
A security token is a
digital representation of
an investment product
Use Is used as a means of
payment in a community
based ecosystem
Is issued mainly to be spent in a
developed, community-based
ecosystem
Is bought with the
expectation of a profit
Accounting Funding: “Revenue” on the
income statement.
Even if working capital, it would
fall under ”short-term liabilities”.
Financing: Right hand
side of balance sheet,
“equity or long-term
liabilities”.

7. The Security Token Offering process
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8. Sample construction
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9. The data, STOs over time: A post ICO phenomenon
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10. The data, success and failure: A nascent market
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11. The data, biggest STOs: A nascent market
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Source: Lambert, Liebau, Roosenboom

12. The data, main jurisdictions: Concentrated
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• Cayman Islands: 9.43%
• Singapore: 3.77%
• Switzerland: 7.55%
• United Kingdom: 9.43%
• United States: 30.19%
• Others: 39.63%
• Some jurisdictions have:
• An exception regime for small
offerings
• Aim to protect retail investors by
excluding them
• Require, at least, notification of
the Securities regulator

13. The data, economic purpose: Three favourites
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14. Variables
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Variable type Variable group Variable name
Dependent variables STO success Amount raised
Amount raised to target
Softcap achieved
Independent variables Investor rights / Governance Voting rights
Dividend payments
Non-dividend payments
Issuer and offering
characteristics
GitHub
Softcap use
Target amount
Country indicators
Planned duration
Equity Token
Telegram
Teamsize

15. Descriptive statistics
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Source: Lambert, Liebau, Roosenboom
High failure rate
Nascent market

16. Security Token success factors
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Amount raised
constant
𝑋𝑖, always includes
GitHub:
• Softcap use,
• Target Amount (in
natural log scale),
and
• country indicators
Investor Rights
contains the
variables:
• Voting rights,
• Dividend
payments,
• Non-dividend
payments
Standard error term

17. Security Token success factors
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Important variables come in two kinds:
1.) In line with ICO literature, such as
Github
and
2.) In line with Corporate Governance
literature, such as “Voting rights”

18. Average marginal effects of STO success factors
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19. Conclusion
• STOs are not ICOs
• STO market still in its infancy
• Correlations between funding success and good governance
• Next: Native digital securities or in short NDS, defined as a
legally accepted primary record of securities, created as
smart contract on a distributed ledger
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20. Questions & Answers
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