Security Token Offerings as Issuance Technology: Architecture, Costs, and Governance

Abstract

Security token offerings (STOs) turn part of securities issuance into a technology-design choice. We measure the deployment and execution costs of five production tokenization standards on Ethereum and Solana and develop a stylized model in which an issuer chooses the architecture that minimizes the on-chain cost of issuing and servicing a security. The model yields a simple scaling restriction: holding the number of investor accounts, onboarding actions, and transfers fixed, total on-chain cost does not vary with the number of tokenized units. The benchmarks support two results. First, costs differ sharply across architectures. On Ethereum, the most complianceintensive standard raises per-transfer cost to 196,844 gas, 286% above an unrestricted token baseline, and requires 36.8 million gas to deploy, roughly seven to fourteen times the deployment cost of lighter Ethereum designs. On Solana, the shared-program model shifts deployment from issuer-specific smart-contract deployment to account rent, and per-transfer fees are several orders of magnitude below Ethereum's. Second, tokenized issuance scales differently from conventional issuance. Deployment is a fixed cost per security, while recurring on-chain costs are driven by investor accounts, compliance and onboarding actions, and secondary-market transfers. These results show that token standards do more than record ownership: they allocate compliance, transfer, and issuer-control functions across code, intermediaries, and platforms, thereby shaping both the cost and governance structure of tokenized securities.