SLT: what type of token is it?
July 16, 2021
Since the first cryptocurrency was introduced in 2008, thousands of coins and tokens made their way to crypto wallets worldwide. It is quite a rapid development in terms of the history of the global economy. As a result, the classification process is very much a work in progress, becoming ever more complicated as legislation evolves from country to country.
In this article, we are not going to talk about the various types of tokens; we will only outline our standpoint for the SLT type and give more clarity on the difference between staking and investing as it is now.
We define SLT as a utility token.
It’s designed to be the native currency of the Smartlands platform and the only possible option for the transaction fees within the platform, while the transactions themselves are not limited to the native currency use. Being tied to the platform, the circulation of SLT will occur in a number of Smartlands’ own projects, partnering projects, and in outside cases where our white-label solution is used.
Smartlands platform utilizes the Stellar network, Stellar is focused on money transfers, and its network is designed to make them faster and more efficient, even across national borders.
Apart from servicing an internal economy within the platform, our token has additional features. SLT can let the holders take advantage of voting, allowing them to decide on the minimum value for SLT staking. And staking itself gives a chance to be a part of the fee distribution. 1/3 of the Smartlands Network revenue will be distributed as a reward to individual SLT holders who hold a minimum qualifying amount of SLT in their SLT Wallet.
Sometimes a misunderstanding arises whether SLT is a security token. It’s naturally caused by the company’s business, as Smartlands own projects are meant to tokenize real economy assets, and that’s the point where securities appear.
Security, which represents the value of an underlying asset only, and owning a security token doesn’t imply a share of the “issuer” company.
For the time being, to distinguish between utility and security token, we can give you a simple analogy:
Security Token = Investment Contract.
As in its essence, a security token is an investment contract; it represents legal ownership of an asset like real estate, company shares, art, etc. This ownership is verified within the blockchain, and the regulation of this process is more strict and presupposes KYC compliance.
In other words, you can trade SLT as a utility token, receive a staking reward and hold it as any other cryptocurrency. Alternatively, you can invest in a digital asset using SLT or other payment options and get an asset-backed yield.