What Is Polymath (POLY)?

The Polymath (POLY) network has been developed in order to migrate trillions of dollars of traditional financial securities to the blockchain. According to Polymath’s creators, tokenized securities allow firms to have greater control over their equity issuance process.

Digital token markets are also accessible 24/7 from any location throughout the world. Moreover, raising capital in crypto tokens “opens up an entire wealth of new investors”, Polymath’s management claims.

Eliminating Middlemen to Improve Access to Equity

As noted on its website, the Polymath network aims to eliminate intermediaries from transactions, and it also removes traditional financial structures that may prevent the effective allocation of equity.

The Polymath team believes that there is “a trove of untouched wealth” that may be accessed via the crypto token platform. Currently, there are around 2 billion unbanked and underbanked individuals and organizations who may use Polymath to access modern financial services. 

Traditional Financial Instruments May Function Better On Blockchains

As mentioned in an explainer video on Polymath’s website, initial coin offerings (ICO) and initial exchange offerings (IEO) have raised billions of dollars, and may potentially disrupt traditional fundraising mechanisms. However, the global securities market has not yet participated in the digital token economy.

Traditional stocks, bonds, private equity, and venture capital may function better if they are tokenized and traded on blockchain-based platform. Equity, LP shares, and share units may be represented by programmable tokens on the Polymath network.

More Secure and Accessible, Greater Liquidity

According to the Polymath team, the tokenized security platform improves the accessibility of financial assets, provides more liquidity, and makes transactions more secure.

In order to “bridge the gap” between financial securities and distributed ledger technology (DLT)-based platforms, the creators of Polymath aim to replace shareholders with token holders. 

By tokenizing traditional assets, every business could potentially gain access to “trillions of dollars” in crypto capital, Polymath’s developers claim.

A Decentralized Protocol for Launching Security Tokens

Businesses may access larger financial markets through the Polymath network, which is powered by its native cryptoasset, called POLY. Polymath’s creators aim to accelerate the growth and adoption of security token offerings (STOs).

The Polymath team has predicted that STOs will replace ICOs as more institutional investors enter the crypto market. Referring to it as a “mega trend”, Polymath’s developers intend to contribute to the STO industry by building a decentralized protocol for launching security tokens. 

Using “KYC Aware Token Technology”

Polymath’s standardized token creation protocol aims to simplify the technical and legal processes required to issue tokenized securities. By using “know-your-customer (KYC) aware token technology”, the developers of Polymath ensure that the platform only accepts authorized or accredited investors. 

Notably, Polymath’s Token Studio has helped launch around 130 security tokens – with 12 tokens having over 5 different token holders. Built on the Ethereum platform, the Polymath Token Studio has allowed several companies to create and distribute tokenized securities. 

At present, Poymath’s developers are in the process of building Polymesh, a “purpose-built” blockchain for security tokens. Charles Hoskinson, the Co-Founder of Ethereum and Cardano, is reportedly working with the Polymath team on Polymesh’s ongoing development.

Polymath Uses Consortium-based Approach to Launching STOs

Polymath’s management has clarified that its platform is not a crypto exchange and the company does not operate as a broker-dealer. As explained by its development team, Polymath serves as a crypto token platform that allows firms to issue tokenized securities through its “white label partners.”

The Polymath team uses a Consortium-based approach to launching STOs, which involves partnering with various fintech companies including Athena Blockchain, BitGo, Republic, among others.

Polymath’s Token Standard “Embeds Regulatory Requirements” within the Token

As mentioned in Polymath’s Crunchbase profile, the platform’s developers have created a security token standard, called ERC-1400, which “embeds regulatory requirements” into the actual tokens. This ensures that only verified participants may participate in the token trading and issuance process.

Trevor Koverko, the Founder of Polymath, told CryptoCompare that his crypto project aims to enhance Ethereum’s basic crypto token model. Koverko explained that the ERC-20 token standard does not specify how to implement transfer restrictions or securities functionality.

ST-20 Standard Allows Token Issuers to Control Transfer Restrictions

He also noted that if a security issuer distributes ERC-20 tokens to investors, there is “no way to restrict who can hold that token.” Because this is unacceptable from a regulatory standpoint, the developers of Polymath have created the ST-20 token standard. 

Koverko noted that the ST-20 standard allows token issuers to control transfer restrictions and perform various other tasks such as make dividend payments (in a compliant manner).

Decentralized “Does Not Mean Illegal”

Koverko, a business graduate from the University of Western Ontario, believes that there probably won’t be “a massive, global, widely used financial system that continuously breaks securities laws.” He also clarified that decentralized “does not mean illegal.” 

He continued: “Decentralized does not mean every person on Earth can always participate in every single function. For us, decentralized means that what we are building can exist outside of Polymath the entity, and can last until the end of time, even if Polymath does not.” 

Polymath’s Developers Lock $9 Million Worth of Tokens

In late January 2019, Polymath’s developers locked $9 million worth of tokens for a five-year period. As mentioned in the announcement, the tokens had been locked because the project’s founders claimed they did not need the funds at the moment.

In total, Polymath’s creators locked 75 million POLY tokens when they were trading at around $0.118 (in January 2019). Notably, the price of POLY tokens has now dropped to around $0.065669 and the market capitalization of Polymath stands at $28.8 million, according to CryptoCompare data.