Blockchain & Cryptocurrency Glossary

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Share Token

1 min read
Pronunciation
[shair toh-kuhn]
Analogy
Like a digital stock certificate that entitles the holder to dividends and voting rights.
Definition
A tokenized representation of equity or profit-sharing rights in a project, company, or pooled asset.
Key Points Intro
Share tokens bring traditional equity features to blockchain environments.
Key Points

Profit distribution: dividends or buyback mechanisms

Voting: on-chain governance rights per token

Compliance: built-in transfer restrictions for securities laws

Standards: often ERC-1400 or similar security token specs

Example
A decentralized fund issues share tokens to investors, distributing profits automatically via a dividend smart contract.
Technical Deep Dive
Share tokens implement transfer hooks to enforce KYC/AML via whitelists. Dividend modules calculate pro rata payouts and trigger ERC-20 transfers. Governance layers integrate with DAO frameworks for proposal and voting logic.
Security Warning
Noncompliant token transfers can lead to legal violations and token freezes.
Caveat
Regulatory overhead and limited secondary markets can restrict token liquidity.
Related Terms
Security Token

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