The Essence of Asset Issuance—The "Creation Mechanism" in Finance

I. Assets Are Not Innate

For most people, “assets” seem like things that naturally exist.

A great company is valuable, so its stock is valuable; a country has creditworthiness, so its government bonds are valuable; Bitcoin is scarce, so it’s valuable. But if we dig deeper, there’s a more fundamental question: assets are not naturally formed—they are “designed and issued.”

Before issuance, something is just value itself—not a tradable asset.

• A company before going public is just a business
• Only after listing does it become a “stock asset”
• A debt before contract signing is a credit relationship
• Only after standardization does it become a “bond asset”

In other words: the birth of an asset begins with issuance. And issuance is a financial engineering process.

II. What Is Asset Issuance?

Asset issuance is essentially the process of standardizing, splitting, packaging, and selling certain future returns or rights to the public.

This involves at least four core steps:

1. Defining rights
2. Structuring design
3. Pricing mechanism
4. Distribution channels

If any step is missing, the asset cannot truly enter market circulation. The classic example is the IPO.

III. IPO: The Standard Template for Asset Issuance

An IPO (Initial Public Offering) is the most mature asset issuance method in traditional finance. Before going public, a company only has private equity structures. Ownership may be held by:

• Founders
• Early investors
• Venture capital firms

These shares do not have a public trading market or public pricing.

When a company decides to go public, what happens?

1. Rights are standardized

The company splits its originally complex equity structure into tradable shares.

• How much equity each share represents
• Whether it has voting rights
• Whether it has dividend rights

All of this is clearly detailed in the prospectus.

This is “defining rights.”

2. Underwriters enter: the core role of issuance rights

The IPO price is not set arbitrarily by the company. It requires investment banks as underwriters.

Underwriters are responsible for:

• Valuation modeling
• Communicating with institutional investors
• Determining the price range
• Allocating shares

Note the key question: who determines the offering price? Not retail investors—but investment banks and institutions. This means issuance rights and pricing power are highly concentrated.

3. Separation of primary and secondary markets

An IPO is a primary market activity.

In the primary market:

• Shares are sold at the issue price
• Mainly to institutions
• Lock-up periods exist

After listing, shares enter the secondary market. Retail investors usually buy at prices already decoupled from the issue price. This creates a long-standing structural reality: most “low-cost shares” do not belong to the public.

IV. Issuance Rights = Pricing Power = Wealth Distribution Rights

Why are issuance mechanisms so important?

Because they determine:

• Who enters first
• Who bears the risk
• Who gains from premiums

A simple logic chain illustrates this: issue price → market expectations → post-listing premium → wealth distribution.

If the issue price is low:

• Stock price likely rises after listing
• Institutions profit

If the issue price is high:

• Price breaks below issue on listing
• Retail investors take losses

Setting the issue price is essentially the starting point of wealth distribution.

That’s why: whoever holds issuance rights holds pricing power; whoever holds pricing power shapes wealth distribution.

V. Bond Issuance: Another Form of Rights Packaging

Besides stocks, bonds are another major form of asset issuance.

Bonds essentially standardize and sell future cash flows.

When a government or company needs financing, it will:

1. Set borrowing amount
2. Set interest rate
3. Set term length
4. Issue bonds

Bond issuance logic differs from stocks:

• Stocks represent equity
• Bonds represent debt

But they have commonalities:

• Both need standardization
• Both need pricing
• Both need distribution channels

Bond markets also have primary and secondary markets. Bond yields are likewise determined by an issuance pricing game.

VI. The Three Core Elements of Issuance

Whether stocks, bonds, or later tokens, they all share three core elements:

1. Supply design

• Total issuance amount
• Additional issuance rules
• Dilution mechanisms

Supply determines long-term structure.

2. Pricing mechanism

• Fixed price
• Book building system
• Auction mechanism

Different pricing methods determine risk allocation.

3. Distribution channels

• Institutional priority
• Public subscription
• Permissioned participation

Distribution channels set participation thresholds.

These three form the basic framework of asset issuance.

VII. Why Does Issuance Mechanism Determine Market Structure?

Many people see markets as just “buy-sell games.” But real market structure begins at the issuance stage.

A simple comparison:

If a market has:

• Concentrated issuance rights
• Strict lock-up periods
• Standardized information disclosure

It’s more likely to form:

• Low volatility
• Long-term holding structures

If a market has:

• Low issuance thresholds
• Non-transparent information
• Low circulation ratio

It’s more likely to form:

• High volatility
• Short-term speculation

In other words: a market’s character is determined at the issuance stage. This lays the foundation for understanding ICOs, ETFs, and RWAs later.

VIII. Assets Are Not About “Value Discovery,” but “Structure Creation”

We often hear: “the market discovers price.” But more accurately: the market discovers price based on issuance structure.

Issuance structure determines:

• Who holds the shares/tokens
• Whether holdings are concentrated
• Whether lock-ups exist
• Whether there’s market making

Price fluctuation is just a surface phenomenon—structure is fundamental.

IX. A Key Cognitive Shift

Once you understand asset issuance, you’ll realize investing isn’t just about judging “is it good or not,” but about whether the “issuance structure is reasonable.”

The more important questions are:

• Does the issue price overdraw future value?
• Is initial allocation healthy?
• Who controls most of the supply?
• How are lock-ups arranged?

These questions matter much more than reading K-lines.