The tokens can be thought of like the stock offered by a startup where investors or firms will be a partial owner of blockchain and exercise the right to vote across the blockchain. These tokens impart a sense of security to traders in comparison to ICOs (Initial Coin Offerings) and are closely connected to the growth and evolution of the blockchain network.

The point of divergence between an equity token and a conventional stock is the procedure for documentation of ownership. A conventional stock is registered into a database and might carry a paper certificate. An equity token documents firm ownership on a blockchain.

Equity tokens, as shares of firm ownership, can be categorized into several classes. As it is, the shares of equity in a company have no classification and are defined as “common stock”. This leads to an equal split of earnings and voting power. Therefore, if a firm puts out 100 equity tokens, each of those tokens entitles the holder to 1% of the earnings and one out of 100 votes.