Polymath Review 2021 (POLY) – [The Rise of Tokenized Securities?]

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The securities market is a behemoth, even within the already burgeoning multi-trillion dollar a day financial industry. You may not know what they are, but any tradeable financial instrument such as stocks, bonds, options, futures, and so much more are securities. Just imagine then, what would it be like if every single one of those securities – even a tiny fraction of the trillions that move around every day – were to move onto a blockchain. Well, our Polymath review is here to find out if that's possible.

Indeed, it looks like Polymath is ready to challenge and disrupt this idea, with a platform that makes it easier for anyone to create, issue, manage, and trade tokenized securities on the blockchain. These securities tokens may just be the next big thing in the world of cryptos, and Polymath is getting ever closer to this goal, with over 200 of said tokens live on their network already. So, is Polymath the next protocol to go to the moon? Well, read along our Polymath review to learn more.

What Is Polymath?

Polymath Review

Built and powered on the Ethereum blockchain, Polymath is a decentralized blockchain network that aims to make it easier, faster, and cheaper for anyone to get into the securities market. This includes enabling people to create, issue, manage and trade those securities tokens on its very own purpose-built Polymesh blockchain. As of this Polymath review, there are 206 securities tokens that are trading live on their network, with 381 more tickers – like stock tickers – reserved for future issuance.

Polymath is made to be an institution-friendly gateway for the tokenization of securities, and could thus integrate its technology and “end-to-end” solutions easily with traditional financial institutions. This is helped by Polymath's vast networking of partners to aid anyone joining its platform, from broker-dealers, legal firms, custodians, KYC/AML providers, cap table management firms, token sale platforms, and more than Polymath could include in its all-in-one tokenized securities services.

How Do Tokenised Securities Work?

Polymath Review

Tokenised securities are a completely new breed of asset classes and marking the beginning of truly digital securities to be issued en masse. As to what the instruments that could be tokenized are, they could be anything from stocks, bonds, or debt which represent the more conventional liquid assets. Or, it can be completely illiquid assets such as real estate, fine artwork, intellectual property, private placements, synthetic derivatives, and other tangible or intangible assets that could be tokenized.

In other words, Polymath's network is able to create cryptocurrencies that represent your ownership of a particular asset, like stocks. The key difference with its traditional counterparts is that these securities tokens are created digitally, and tied to Polymath's purpose-built Polymesh blockchain. There are several key advantages of securities tokens over their old-school variants that we've found for our Polymath review…

The Key Upsides to Securities Tokens

Cost and Time-Efficient – By using Polymath's blockchain, they can remove legacy middlemen that are commonplace with traditional securities. The side effect is the reduced cost for issuing or managing (tokenized) securities since it won't need to go through as many third parties, as well as ensuring quicker settlement times for those securities come the trading day.

24/7 Markets – While the regular stock market closes on the weekends, cryptocurrencies can be traded and accessed 24/7. Securities tokens will leverage this benefit too, without any closure times on the weekends, holidays, or need to worry about bank closing times to get in the way of picking the time for when you'd like to trade.

Liquidity – Regular securities like stocks or bonds can't be subdivided into units smaller than 1. However, this is now possible with digitally-native securities tokens, where securities can be fractionally divided into decimal units. This will make tokenized securities far more liquid, not to mention how digitization can start securitizing illiquid assets, with easy access to investor pools around the world that could open up all-new secondary markets.

Democratization – Polymath's securities tokens could open the floodgates to securitization, and thus the ability to trade with or against once illiquid assets such as art pieces or IP, which could otherwise not be traded on a typical stock exchange or conventional marketplace. Plus, there's greater transparency owed to having all those securities tokens be managed across a blockchain.

Automation – Programmatic yields and dividends from the underlying securities tokens can be paid out to you daily, monthly, or based on any interval that's set by the issuer. The entire process is automated, thus saving further any precious time or money.

What Are Polymath's ERC-1400 Tokens?

So then, our Polymath review has looked into the many key benefits afforded by the advent of new securities tokens. But what exactly powers these securities tokens in the first place? This is where Polymath's Ethereum-powered ERC-1400 tokens come along, as a brand new crypto-token standard optimized specifically for the creation, issuance, trading, and management of securities tokens. This is Polymath's replacement for its old ST-20 tokens, with plenty of extra features built-in.

The key reason why an entirely new token standard was made for Polymath is how securities work in the real world. To make it as easy as possible, Polymath's ERC-1400 natively embeds core regulatory and compliance requirements, such as restricting trading only to verified participants. Moreover, these tokens can carry documentation or data, certify KYC (know your customer) and AML (anti-money laundering) procedures, and a whole lot more to make securitization a seamless operation.

ERC-1400 securities tokens could open up transparency, thus making audits and regulatory oversight a whole lot simpler to root out bad actors, and make acceptance easier. Investors and stakeholders can complete the analysis or due diligence is far less time, and without the need for overly complex processes. In all, securities tokens are a win-win for everyone from issuers and investors seeking greater flexibility and efficiency, as well as regulators who are more cautious to ensure compliance.

How Does Polymath's Polymesh Blockchain Work?

Polymath Review

As we mentioned much earlier on in our Polymath review, its Polymesh blockchain is a purpose-built system made for securities tokens. As to why it needed to be a wholly unique network, it's because of the added complexities of issuing securities that most blockchains can't support. The underlying Ethereum blockchain can provide smart contract functionality to ensure programmability and automation of securities tokens. But as we looked at ERC-1400, more is needed.

Polymesh can have built-in identity verification to meet the necessary KYC/AML regulations, which includes any other compliance measures to vet market participants. There's the need to maintain a certain level of confidentiality and privacy around particular processes, as well as stricter on-chain governance to prevent security exploits or forks. Plus, Polymesh could easily allow for cross-border regulations to be interconnected, thus guaranteeing smooth trade executions and liquidity access.

Polymath's solutions are all open-sourced and are extremely modular so that people could remodel any securities tokens their own way, as well as automating and simplifying the creation, issuance, and management of securities. Its nominated Proof-of-Stake (PoS) chain is powered by “operators“, who are all permissioned and regulated parties to help guide the Polymesh network, have a say in its on-chain governance, and most importantly, to run and verify all nodes and transactions securely.

What Are Polymath's POLY Cryptocurrency Tokens?

Polymath's native cryptocurrency is the POLY token. Mainly, it's used to pay gas fees incurred while accessing smart contracts to create, issue, or manage security tokens. POLY could also be used to settle other fees to cover the additional services that Polymath offers, which we've noted earlier in our Polymath review, such as paying for legal advice, assistance for the KYC and AML regulations, custodial solutions for your tokens, etc. Alternatively, node operators need to stake POLY tokens.

In return, their validation of blocks will see them earning POLY tokens as a reward. In January 2018, Polymath privately raised 120,000 ETH – equivalent to around $58,700,000 at the time – by selling 230,000,000 POLY to investors. So far, they've not yet held a public token sale. Polymath has a cap on the total supply set to 1,000,000,000 POLY. Gradually, POLY tokens will be released to the public once the respective vesting period ends, and all 1-billion POLY will be in circulation by 2024.

As of this Polymath review, the value of one POLY is $0.197. It's appreciated by quite a fair profit of around 1,700% from its all-time lows in March 2020 but is nonetheless a very lowly 88% down from POLY's all-time highs back in February 2018. During the latter time, POLY was worth $1.66. With its circulating supply of 618,764,165 POLY, this gives Polymath's native token a market capitalization of $121,947,006. This makes POLY the 200th-most valuable cryptocurrency.

What Does Polymath's Future Roadmap Update Look Like?

According to Polymath, its blockchain is in the top 10 when it comes to developer activity, which highlights the pace of its growth and its hopes for future expansions. As of writing this Polymath review, they're still in the midst of rolling out the Polymesh blockchain. Initially announced back in Q2 of 2020, Polymesh quickly launched its V1 Testnet shortly thereafter. The biggest update at the time was the Token Studio, which is an easy-to-use security token issuance and management tool.

The V2 Testnet for Polymesh came in Q3 2020, which included new features such as a unique identity, a new settlements engine, and extra features built into the Token Studio. By Q2 2021 (right around now), Polymesh will continue its Testnet stage with final testing and optimizations, before we will see the full launch and roll-out of the Polymesh blockchain in Q3 2021. At that point, users can use a built-in bridge to convert their Ethereum-based POLY tokens to Polymesh's POLYX.

Polymath Review: Conclusion

In all, Polymath is a most exciting project and one that may help catalyze cryptocurrencies towards mainstream adoption and acceptance. The first modern-day stocks started trading back in 1611, and the world of finance never looked back. Continued advancements in technology, from fax machines to the internet, securities have slowly changed to become faster, cheaper, and more accessible. This time, the art of digitalization and blockchains will mark the beginning of the next stage of evolution.

With Polymath, securities tokens are in every way, shape, and form better than what we have today. By adopting blockchains, they're transparent, secure, private, and leveraging cutting-edge tech has enabled these tokens to move faster and cheaper than before. You can now start securitizing what were once untradeable and illiquid assets, thus opening up new market opportunities. On top of that, it will make regulators' jobs easier. If there's one thing our Polymath review can highlight, its that the future will be a very exciting one.

Polymath Review
Overall
4.6
  • Long-term sustainability, and roadmap updates
  • Ease of use, and seamlessness of integration
  • Feature sets, technologies, and overall solutions
  • Project values, and mission
  • Monetary abilities, and tokenomics model

Pros

  • Easy integration with existing securities platforms used by broker-dealers, banks, and asset managers.
  • An easy-to-use engine and tool for anyone to create, issue, and manage securities tokens.
  • Polymath provides additional services such as custody, broker-dealers, KYC/AML provider, legal experts, etc.
  • ERC-1400 token standard is immensely capable and programmable, such as natively embedding KYC/AML compliance rules, auditing documentation, etc.
  • Newmarket opportunities are created, such a 24/7 access, securitization of illiquid assets, fractional asset division, etc.
  • The use of smart contracts can automate certain actions like dividend payments of cross-border settlements, as well as saving on precious time and cost.

Cons

  • Future growth will remain uncertain until the Polymesh blockchain launches in its full state in Q3 2021.

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Anthony

Thanks, great article. What do you think about Gain Protocol? I like their concept and it looks like the team have the spread of experience required to execute. Very promising overall