Project to Watch: Polymath, the Securities Token Platform
The ICO craze has brought a lot of attention to the cryptocurrency space, with nearly $3.8 billion in capital having been raised since 2013. While ICOs have enabled a lot of great innovation, they have also been the subject of great scrutiny due to the lack of regulation. During what will likely be remembered as the wild west of crypto-history, nearly $400 million has been stolen in ICO-related scams.
The severity of this ICO fraud has led the Securities and Exchange Commission (SEC) to apply extra scrutiny to installing a regulatory framework. Just last week, SEC chairman John Clayton testified in front of the US Senate banking committee regarding the legality of Initial Coin Offerings (ICOs). Additionally, the much anticipated Kodak ICO (KodakCoin), has been delayed due to the need for increased measures to assure it complies with all applicable securities and other laws. Moving forward, there is a clear need for more regulated and compliant platforms for the tokenization of assets before broader market adoption is possible.
Enter Polymath, a new platform that opens up the blockchain to legally compliant securities offerings with a network of services designed to lower associated transaction costs over time. Powered by the blockchain and smart contract technology, Polymath and its unique Security Token Standard Protocol (ST-20) enables securities issuers to create digital tokens to represent shares and other instruments relating to traditional financial assets like private equity, stocks, debentures, commodities, VC funds, real estate, royalties, and insurance. This is the first platform to enable truly legal ICOs.
Interested in Polymath? Here’s a quick rundown of the project:
Platform & Development
The Polymath platform will be a tool that allows financial companies to create and issue their own tokenized assets.
At a high level, here are the main features of the Polymath project, as detailed in their whitepaper:
- Provides a decentralized protocol for trading security tokens.
- Enables individuals and institutions to authenticate their identity, residency,
and accreditation status to participate in a wide range of security
token offerings (STOs).
- Allows legal delegates to bid on new issuances to represent issuers on
offerings to be done in a regulatory compliant manner.
- Matches issuers with developers who can translate issuers’ Security Offering
parameters into secure code that generates ERC20 compatible tokens
As you can see, Polymath offers the first ICO platform that offers KYC and legal compliance, which will be a massive value driver moving forward. Relative to Ethereum, Polymath also offers ease of technical use and liquidity support.
While we are interested to see where the team intends to take the platform, there is no clear development roadmap listed at this time.
With any blockchain project, we look to understand the underlying use cases attached to the issued token. Here are the use cases for the POLY token, as described in the Polymath whitepaper:
For Issuers: Issuers are able to post bounties in POLY tokens, in order to encourage legal
delegates and developers to bid on providing services towards the issuance.
For Developers: Developers will earn POLY for creating STO contracts. In order to incentivize developers to create security token contracts, they will be required to have these POLY fees locked up for a minimum of 3 months after the end date of the security token offering. Fees will generally be payable after a security token issuance and also upon enumerated events of payment.
For KYC Providers: KYC providers pay a POLY fee to join the network. This fee is to identify legitimate KYC providers who can make this back in fees earned over time from investor verifications, potentially even after a single successful issuance. Furthermore, they can specify a fee to be paid by each investor requesting verifications (i.e. a set amount of POLY).
For Investors: Investors seeking to purchase security tokens will be required to pay a POLY fee to KYC providers for verification.
For Legal Delegates: Legal delegates are able to earn POLY tokens by (i) proposing bids on security token issuances and (ii) being selected by the issuer to take responsibility for the issuance.
The Polymath team looks to be very well-rounded and boasts a strong advisory board with backgrounds ranging from blockchain technologies to large corporations and financial institutions. The CEO, Trevor Koverko, is a silicon valley entrepreneur. Additionally, Polymath has a very active Telegram, but we would like to see a little more out of their Reddit in order to attract more interest.
Polymath did not stage an ICO, but instead conducted an airdrop. 1,000,000,000 POLY tokens were pre-mined, and none more will be created moving forward.
The POLY token currently trades at around $1.00 (~$240M market cap), with a circulating supply of 239,570,250 and a total supply of 1,000,000,000 POLY.
Polymath is definitely trailblazing the field of security tokenization. If Polymath can become the major platform for large-scale financial institutions and corporate entities to tokenize their assets, the POLY token should exponentially rise in value.
Join us on Telegram to discuss Polymath and other interesting projects.
More: Disrupting Goldman Sachs: Polymath Wants to Create a New Investment Banking Paradigm with Initial Coin Offerings
Disclaimer: The author of this article may have a position in one or more of the securities mentioned above. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.