A traditional stock is a share in a company. Shareholders are therefore co-owners who have a financial stake in the company. In return for the invested capital, the company gives the shareholder a stock. A stock can only be issued by the company itself and is subject to a number of regulations. Certain rights and obligations go hand in hand with the share, such as the opportunity to have a say or the right to participate financially in the company's success through dividend payments.

Decentralized stock tokens (which can also be referred to as decentralized loan tokens or dTokens due to the mechanics implemented to mint them) on the other hand, are not issued by companies and therefore only exist on the respective platform on which they were created –– in this case, on the DeFiChain blockchain. Decentralized stock tokens typically track the underlying price of an actual stock issued by a listed company.

However, on DeFiChain, rather than tracking and reflecting the actual stock price issued directly by a company or by a large institution, it tracks and reflects a number of variable factors. This means that you are not buying the stock itself, but rather a token that takes these variable factors into account, in a truly decentralised way.

On DeFiChain, decentralized stock tokens are based on DeFiChain's decentralized lending system. This system allows users to create (or mint) a “representation” of decentralized stock-, decentralized precious metal- and decentralized currency tokens. The most important tool required in order to facilitate the creation of decentralized tokens is a Vault. It’s a place where you deposit and lock away your cryptocurrencies and use them as collateral to mint and issue decentralized tokens.

Let’s take a look at how this would look like on DeFiChain. Let's take the Tesla share as an example: The actual ticker symbol for a Tesla share would be TSLA. However, due to the way in which decentralized stock tokens are minted by DeFiChain users, TSLA becomes dTSLA. Again, it is important to state that the holding of a dTSLA token does not provide the user with ownership of TSLA.