A security token offering (STO) is a public fund-raising event that involves the sale of tokenized digital securities or security tokens. An STO allows startups to tokenize real-world assets and issue them in order to sell to investors. A security token can be backed by the asset that it is designed to represent digitally, such as a company, a physical asset, or any other form of investment.
After an STO event, the security tokens may be listed on online exchanges, which would allow traders to buy and sell them on the open market.
An STO is analogous to an initial public offering (IPO), where stocks of a company are listed in a public exchange. However, it is much cheaper for companies to launch security tokens than file for public listing.