Polymath: “The Ethereum of Security Tokens “
If you’ve been around for the last crypto winter in 2018/2019, you might remember that there was a time when Security Tokens started to steal the limelight from all the other crypto assets.
2 years down the road, and the conversation has switched more to NFTs. However, Security tokens remain an attractive option for existing businesses and investors to get hold of tokenized shares in a company. While there might not be a lot of hype surrounding them, slowly, we’re seeing that even traditional stock exchanges such as the Boerse Stuttgart are starting to operate venues for such tokenized securities.
When businesses want to start issuing digital shares or tokenized existing equity, they need a reliable, compliant platform that ideally abstracts away the technicalities — as very few legacy businesses will have a smart contract developer among their staff.
Polymath is such a platform.
What is Polymath?
The word Polymath describes someone who has very extensive knowledge of a wide range of topics. Leonardo da Vinci was a famous Polymath.
Polymath is often described as the Ethereum of security tokens. Its holistic platform makes the issuance, transfer, and management of security tokens achievable for any business.
Security Tokens: are tokenized securities treated just like existing financial securities from a legal and regulatory point of view. They can be anything representing ownership interest in assets ranging from equity, shares, to valuable metals and more.
Polymath is a Token issuing platform that provides the tech and tools to businesses to create their own tokenized securities. Businesses can make use of Polymath to raise funds.
As a regulated offering, all investors who want to invest in offerings on Polymath have to go through KYC. All token issuers have to comply with legal guidelines and AML similarly to selling stocks.
Founded in 2017 by two Canadians with a background in Fintech, Finance, and Law, Polymath has grown to facilitate more than 200 security token launches on its platform.
Benefits of Polymath
For companies, the benefits of using Polymath are varied:
- Easy issuance of security tokens
- Regulatory certainly, all tokens issued through Polymath are compliant with existing SEC regulations; investors only invest after passing KYC/AML.
- Investors: not only is it easy to create a token, but it also opens up access to a whole new audience of potential investors.
- Cutting out the middleman: raising funds through a traditional IPO or issuing new shares always involves Investment banks and very long due diligence/preparation periods. These processes tend to be very expensive. With Polymath, companies can directly sell to their investors at a fraction t the cost within less time.
- Interoperability: all tokens issued through Polymath operate as ST-20 tokens, the standard developed for security tokens by Polymath. Therefore, all tokens on the platform can easily interact with each other.
How does Polymath work?
The network itself consists of 4 different layers:
- Protocol layer: the underlying blockchain hosting the smart contracts
- Application layer: where the tokens are created
- Legal: where network governance happens, legal templates are created and used by accredited lawyers
- Exchange: the venue for trading security tokens.
Companies looking to issue their token will use the Token studio, a self-service application, to create, manage and issue their tokens.
After specifying their token by filling in fields such as legal details, if investors need to be accredited, if tokens are freely tradeable, and what percentage of tokens are held by the company, in the next step, companies will have to find legal delegates to conduct their due diligence, register with the SEC and create any other necessary documents.
Accredited lawyers are part of the Polymath ecosystem and available against payment in POLY — the network token, for hire.
Once new tokens are created, their transfer to investors is managed by smart contracts.
When looking to buy, investors initially put their funds into an escrow. Similarly, the token issuers lock their tokens in this escrow. The tokens are released to both sides only when the token issuer and the buyer fulfill all legal and other requirements. The buyer receives their security tokens while the issuing company receives the funds in crypto.
Overall, Polymath is providing a holistic solution for companies to start creating their own digital security tokens. It speaks for the platform that more than 200 businesses already used the service to create their own token, among them tZERO, BlockEstate, and Red Swan.
All transactions for token creation, compliance checks, and network maintenance are paid for in the POLY token.
POLY is an ERC-20 token that will soon upgrade to a native blockchain token, as the Polymath team works on building Polymesh — an enterprise-grade blockchain for security tokens.
POLY is now trading on Bitcoin.com Exchange with BTC and ETH pairs.