Security tokens can be divided into several types, such as equity, debt, derivative or a commodity.
Debt Tokens represent debt or cash- generating vehicle.
Equity Tokens represent an equity position in an underlying asset.
They may give the holder the right to vote or not.
Also, investors purchase them as a form of anticipating future returns.
If the company’s profits increase so will investors’ gains.
In case a company doesn’t want to share any kind of partnership, then it should be stated in the smart contract.
Hybrid/Convertible Tokens can convert between debt and equity based on their behavior.
Derivative Tokens represent a digital asset backed up by a physical active, such as silver, gold, car, etc.