The next token we want to introduce in our STO series is POLYMATH, a project I am following since its ICO. It is indeed interesting that they raised the funds for their project long ago, still in the ICO crazy, to contribute to the next evolutionary step in this matter. To make one about thing about STOs crystal clear: We don’t see it as the holy grail in crowd-funding crypto investments – you still don’t a part of anything like with an IPO and after the ICO mess, we are not yet convinced to participate in STOs this year. However, personally, I pack a small bag of tokens which are STO related, as I can see them to provide intrinsic value if these form of crowdfunding becomes accepted soon and used soon. ICOs had gained tremendous popularity within the long-term crypto sector but pulled so many useless projects out of the hot air and so much scam. However, blockchain solutions are still gaining increased prominence within diverse fields like healthcare, film, and entertainment, education, retail, among many others and some even make sense with delusional view on it (which we should have by now). Despite its forays in the financial sector, cryptocurrencies have not found an inroad in the capital and investment markets. One company, PolyMath is however focused on changing this for the better and in this article we will take a look at the PolyMath project en detail to examine its purpose, operations, and its underlying features to access its ability to revolutionize the investment markets.
What is PolyMath?
Polymath is an Ethereum ERC20 token based platform that allows the creation and disbursement of regulatory compliant security tokens. The platform was developed to launch financial services on the blockchain network as well as creating a new standard in security tokens. They saw the signs early and started to build. Polymath aims to offer a platform for traditional investments to be tokenized and traded in the same way as other blockchain assets. The process of tokenizing investment assets is broadly referred to as Security Token Offering (STO).
Polymath aims at incorporating both the technical and legal aspects of Security exchange to create an ecosystem and protocol whereby investors can buy and sell tokenized securities. The project is aimed at instigating a revolution that will shift the multi-trillion security industry towards blockchain for increased liquidity, accessibility and security.
Challenges for PolyMath
In 2017 and 2018 over $10 billion was raised in ICOS or other functionally related activities. However, many projects have been extremely cautious about the wording of these activities often adopting names like ‘token generating events’ to avoid the ire of security regulators. Out of the several ICO/STOs conducted in this period, none of them was registered with the Security Exchange Commission.
The legal uncertainty has created massive problems for issuers and investors as well. An example of this mess is the class-action suit filed against Tezos an ICO that had managed to raise $232 million in 2017. Government regulations require investors to receive complete information regarding securities in order to prevent deceit, misrepresentation, and fraud.
The process for registering securities with government agencies is also substantially complicated and expensive. Polymath believes that incorporating compliance frameworks such as KYC, Reg D, and Reg A+ will help in simplifying the process of regulatory compliance. Polymath’s security token protocol includes regulatory requirements into the tokens themselves and would allow the simple and legal creation of digitized securities.
Polymath’s Use case
According to Polymath’s whitepaper, the project has four main use cases.
- To provide a decentralized platform for trading security tokens.
- To enable institution and individuals to authenticate their identities as specified under the KYC framework.
- To allow legal practitioners to bid on token issuance as well as represent issuers, ensuring that offerings are consistent with local jurisdictions.
- Match issuers with capable developers who can generate the relevant ERC20 compatible tokens.
How the Polymath platform works
To better understand how the Polymath network works, it is important we start by understanding who are involved. The polymath network has five distinct types of participants: issuers, developers, KYC providers, Investors, and legal delegates.
Issuers are the organizations or projects that wish to raise fund via an STO.
Developers are responsible for creating smart contracts for the STOs and tokens.
KYC providers are responsible for verifying investors who are allowed to participate in specific offerings. Investors invest in security tokens through POLY tokens.
Legal Delegates provide legal services to all the parties involved in the security issuance process.
The Polymath platform comprises three major layers: application, legal and protocol. These layers are developed to reduce the complexity surrounding security issuance and ensure that tokens released under the platform are compliant and remain compliant.
The launch of security token begins with an issuer declaring that they want to raise an STO. The issuer will be asked to provide a detailed description of their organization, activities, type of security, token characteristic, token allocations, legal details, and contact details. Upon providing the information about their ventures, issuers are then supposed to solicit for developers and legal delegates to facilitate their tokens. The developer and legal delegate will be responsible for dealing with the technical and legal aspects respectively. Upon completion of all the due processes, the tokens are now ready for issuance to investors.
On the other hand, investors need to be verified by KYC providers to ascertain their identities and illegibility to operate in the security offering. Once verified investors are free to participate in token offerings on the network.
POLY Markets and volumes
The resident coin for the Polymath platform is known as POLY. The coin is capped at 1 billion coins, however currently only 288 million coins are in circulation. With a price of $0.143727 on Coinmarketcap, the coin is ranked 85 with a market cap of $41 million. While it’s not possible to buy the coin using fiat, the coin is available on exchanges such as Binance, KuCoin, Huobi, and Bittrex and can be traded using either Bitcoin or Ethereum. Since POLY is an ERC20 token it can be stored in a variety of secure Ethereum wallets be it mobile, online, desktop or hardware.
Team and community
Polymath is led by Trevor Koverko, the New York Rangers hockey team draft pick, and tech entrepreneur. Koverko has also invested in several other cryptocurrency projects like Shapeshift.io and EOS. Besides Koverko there is a team of strong and committed visionaries such as Erik Voorhees and Patrick Byrne from Overstock. Besides, the leadership and development team, Polymath has a vibrant community of users on social media.
Over and above, the Polymath project solves a real problem as far as STO is concerned. The project seems to be run by a team of capable and competent persons. If they are able to deliver on their promises the company they will bring up the tech to enable many companies issuing an STO, which would have not been able to do so otherwise. This hasn’t to be a good thing in general but for example, enables small, visionary garage projects to make use of the opportunity, as well as supporting the next level of evolvement in Crypto.
Experts have projected that by 2020 security tokens will account to almost 10 trillion of the transactions on the blockchain. Polymath might be setting up itself as the standard torch-bearer in this field, it is, therefore, possible that the value of POLY tokens might increase as STOs grow in prominence.