Informational Report on Polymath

PSA: Polymath is NOT doing a public sale. Please don’t send anyone Ether / Fiat who is claiming to be associated with a Polymath ICO.

Official announcement here: https://twitter.com/PolymathNetwork/status/956975621422362629

Explainer Video:
https://www.youtube.com/watch?v=pOYcro53SOI

The following report is NOT intended as advice to purchase software tokens. This report is presented for informational purposes only. ALWAYS conduct your own research before buying digital tokens associated with a software project during a crowdsale.

Full Disclosure: I’ve purchased POLY tokens and I advise the project.

TL;DR

Many of the current tokens on the popular exchanges are categorized and treated as Utility Tokens (basically software licenses). Polymath makes it easier for any company in the world to issue and trade Security Tokens by partnering with legal delegates, KYC (Know Your Customer) providers, accounts, lawyers, and other vendors to be fully compliant with local laws in the jurisdiction you are issuing the security.

The Difference b/w Security Token vs. Utility Token:

Polymath Securities Token Platform

The platform (https://www.polymath.network/) in short, allows any company to issue tokens that are tied to the performance of the company and offers the same benefits and risks as any other shareholder of equity of a company.

A lot of resources are needed once your project is categorized as a Security Token. You are now regulated by the SEC (if the project is offering shares to US persons) and local government security laws and need to follow the same rules as any other startup issuing equity to investors. The platform ties together all the resources (Legal Delegates, KYC vendors, developers) that you would need to launch Security Tokens. The platform will allow investors (mostly accredited investors) to invest in any securities tokens around the world, and allow companies to have global liquidity.

The Polymath Platform has adopted a Decentralized Applications model and has launched on 01/31/17.

Token Details, Whitepaper, Blog, Developer Links here:

Website: https://www.polymath.network/

Deck: https://www.polymath.network/resources/deck

White paper: https://www.polymath.network/resources/whitepaper

Blog: https://blog.polymath.network/

Summary:

Polymath is a software platform to launch Security Tokens in a similar way that Ethereum has promoted the growth of Utility Tokens. It’s important to differentiate the two because we are bringing a whole new asset class to life. The Security Tokens will be regulated and exchanged with mostly accredited investors when it comes to the U.S. and it’s important to note that the issuer (company) will determine who can get access to the security tokens based on local laws that they have to obey.

Polymath also partners with multiple vendors such as the tZero exchange, different KYC vendors (such as CIVIC or KYC chain), and legal delegates (Accountants, Lawyers and etc). They will be vendor and jurisdiction agnostic and the issuer will select who they want to work with after the vendors submit their bids.

Problem & Solution -> Value Proposition:

The security tokens are solving a few problems.

  1. Guidelines For Issuance

When you form a business entity, you go to Legal Zoom and they streamline the entire process for you. This lowers the barrier of entry for forming legal entities. Polymath is doing that for issuing Security Tokens. You will know step by step what you need to do in respective jurisdictions when you issue security tokens for your company. There hasn’t been a clear roadmap to issuing security tokens, and we now have that through Polymath.

2. Global Access

Right now, as a non Chinese Citizen, you won’t be able to purchase any securities on the Chinese Public Markets / Exchanges. All exchanges around the world have their respective regulations for who can buy and sell the securities.

However, if the security token for a Brazilian company is issued and listed on exchanges through Polymath and you, as an American investor, follow every step to comply with the local laws and given that Brazil allows foreign investors, you’ll be able to purchase the equity directly.

3. DTCC

DTCC is where all settlements currently occur for all securities. That’s where all records are kept for every stock that is being traded and settled 2–3 days later. It’s inefficient, and settlements occurs on many levels. The ledger is updated through banks, brokers, exchanges and then finally back to DTCC after a few days. During the financial crisis, trading nearly came to a halt because the DTCC couldn’t handle the volume and conflicting shareholder claims. With Polymath, the settlements are instant and recorded on the Ethereum blockchain.

4. Liquidity for any company

Because everyone on the platform can be verified as accredited investors and issuer can dictate who can participate based on the regulation, the government should have no problem allowing secondary markets for trading these securities. This could mean that you can trade security tokens for private equity company, VC funds, PE funds, Real Estate Funds, pre-IPO startups and any company that wants to have liquidity without the entire IPO process.

Token Facts:

Genesis Block For Polymath Creating The 1 Billion POLY Tokens

Polymath Token Distribution Post Software Sale:

  • 259 million + POLY in circulation today.
  • 1 Billion POLY total supply.
  • Airdrop: 250 POLY per each user (38,224 users successfully completed KYC) resulting in 9,556,000 POLY airdropped to 38,224 addresses.
  • NO PUBLIC SALE.

Founders / Top Executives Linkedin Profiles / Backgrounds:

Advisory Team:

Economics:

In short, all parties will be required to use POLY to be on the platform. Issuer will pay POLY to launch a STO (Security Token Offering). Issuer will pay POLY to Legal Delegates, KYC and Developers to help them with the launch. All vendors will pay POLY to be on the platform as a vendor.

Risks, Challenges and Issues:

Government Regulation — Since the security token will be a brand new asset class and there are only about $100 Million USD worth of Security Tokens in the market currently, we should see an increase in attention from the governments all around the world especially if more public companies decide to take advantage of this innovation.

Compliance & Expansion — New markets will require brand new compliance learnings and assembly of vendors and issuers. Each country will have different regulations and the learning curve will be new each time. Expect the expansions to be slow since we are dealing with governments all around the world.

Legal Delegates — Competency for these vendors will be important in every market. Since the issuer will be fully reliant on these delegates to be compliant, any mistake will fall on these vendors and the risks for mistakes are unimaginable.

Mainstream Adoption — The more traditional companies will adopt slowly. Overstock.com did issue 10% of their stocks on their own exchange tZero, but they are heavily involved in the space. It’d be shocking to hear an organization like NIKE or Bank of America to adopt the new Security Tokens in the near term.

Disclosures PLEASE READ:

I’m an advisor to the Polymath project, so this should be considered a friendly report based on my research into the team, technology and use cases.

The following report is NOT intended as advice to purchase software tokens. This report is presented for informational purposes only. ALWAYS conduct your own research before buying digital tokens associated with a software project during a crowdsale.

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