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What is Poly­math? Beginner’s Guide

polymath

What is Poly­math?

Poly­math sim­pli­fies the legal process of cre­at­ing and sell­ing secu­ri­ty tokens. It makes a new token stan­dard, the ST20, and enforces gov­ern­ment com­pli­ance. Only a “list of autho­rized investors and their Ethereum wal­let address­es” can hold ST20 tokens. There­fore, token issuers don’t need to wor­ry about the legal impli­ca­tions of your secu­ri­ty falling into the wrong hands.

In order to launch a legal­ly com­pli­ant token, the Poly­math plat­form brings togeth­er issuers, legal del­e­gates, smart con­tract devel­op­ers, KYC ver­i­fi­ca­tion, and a decen­tral­ized exchange. All trans­ac­tions on the Poly­math plat­form take place using the native POLY token. Due to the con­tin­u­ing gov­ern­ment crack­down on ini­tial coin offer­ings, Poly­math hopes to instead pro­vide legal Secu­ri­ty Token Offer­ings.

ICOs

In 2017, ICOs raised over $1.2 bil­lion in fund­ing by sell­ing either util­i­ty or secu­ri­ty tokens. Util­i­ty tokens, such as Wal­ton­chain, give you access to a token’s net­work and are far more com­mon than secu­ri­ty tokens. Secu­ri­ty tokens, how­ev­er, pro­vide equi­ty or a claim to div­i­dends from a com­pa­ny. As a result, secu­ri­ty tokens, like any secu­ri­ties, are sub­ject to gov­ern­ment reg­u­la­tion.

Polymath’s new stan­dard for blockchain secu­ri­ty tokens aims to embed the nec­es­sary reg­u­la­to­ry require­ments into smart con­tracts and com­ply entire­ly with gov­ern­ment secu­ri­ty reg­u­la­tions. Con­se­quent­ly, Poly­math believes finan­cial secu­ri­ties would func­tion bet­ter on a blockchain and wants to replace the term share­hold­er with token hold­er.

Secu­ri­ties

Gov­ern­ment reg­u­la­tions “require investors to receive finan­cial and oth­er mate­r­i­al infor­ma­tion con­cern­ing secu­ri­ties being offered for pub­lic sale.” The goal is to “pro­hib­it deceit, mis­rep­re­sen­ta­tions, and oth­er fraud in the sale of secu­ri­ties.” It seems like a noble goal giv­en the fre­quen­cy of ICO scams and 46% of 2017 ICOs already fail­ing.

For pub­lic offer­ings, com­pa­nies must reg­is­ter their secu­ri­ties with the gov­ern­ment. Unfor­tu­nate­ly, this is an increas­ing­ly expen­sive and com­pli­cat­ed process. Secu­ri­ties are then “bought and sold on sec­ondary mar­kets such as stock exchanges with fees rang­ing from 0.25% to 3%.” Poly­math thus believes there is val­ue in help­ing peo­ple legal­ly reg­is­ter­ing their token while simul­ta­ne­ous­ly pro­vid­ing a decen­tral­ized exchange with low­er fees.

Poly­math Secu­ri­ties Token Plat­form

The token plat­form involves three lay­ers, an appli­ca­tion lay­er, a legal lay­er, and the pro­to­col lay­er to ensure your token is com­pli­ant and stays com­pli­ant. These lay­ers aim to reduce the legal com­plex­i­ty and ambi­gu­i­ty sur­round­ing secu­ri­ties while also min­i­miz­ing fees and improv­ing the liq­uid­i­ty of assets.

Polymath Layers

Launch­ing a Secu­ri­ty Token

Poly­math asks for the fol­low­ing infor­ma­tion to instant­ly cre­ate your ST20 stan­dard secu­ri­ty token.

  • Legal Name:
  • Legal Enti­ty Type:
  • Type of Secu­ri­ty:
  • Project Descrip­tion:
  • Logo:
  • TOKEN CHARACTERISTICS
    • Vot­ing Rights:
    • Div­i­dend:
    • Div­i­dend Fre­quen­cy:
    • Cor­po­rate Gov­er­nance:
    • Gov­er­nance Inte­gra­tion Part­ner:
    • Addi­tion­al Fea­tures:
  • TOKEN ALLOCATION
    • Tokens to Cre­ate:
    • Per­cent­age of Tokens Held by Com­pa­ny:
    • Per­cent­age of Com­pa­ny Equi­ty Dis­trib­uted With Tokens:
    • Price per Token in USD:
  • LEGAL DETAILS
    • Issu­ing Juris­dic­tion:
    • Offer­ing Secu­ri­ty To:
    • Investors Must be Accred­it­ed:
    • Investor KYC Need­ed:
    • KYC Inte­gra­tion Part­ner:
    • Tokens Freely Trad­able:
  • CONTACT DETAILS
    • Con­tact Name:
    • Posi­tion at Com­pa­ny:
    • Con­tact Phone Num­ber:
    • Con­tact Email:
    • Per­mit Con­tact from Poly­math:

Choos­ing a Legal Del­e­gate

After cre­at­ing your new token, it’s still non-trans­ferrable until a legal del­e­gate con­firms “that the steps have been com­plet­ed for the token to be issued.”

You’ll receive sev­er­al bids from legal del­e­gates, lawyers, but it’s up to you to per­form due dili­gence and com­pare their fees. Once you choose a legal del­e­gate, you send POLY for their fee to a smart con­tract and begin work­ing togeth­er on the Poly­math plat­form by secure­ly send­ing nec­es­sary doc­u­ments and work­ing through the com­pli­ance process.

Part of the process entails del­e­gates work­ing with devel­op­ers to build a smart con­tract specif­i­cal­ly for your token. Then, the smart con­tract enforces investor require­ments such as juris­dic­tion of investors, type of offer­ing, hold time before tokens can be resold etc. After the nec­es­sary doc­u­ments are sent and the smart con­tract com­plet­ed, the legal del­e­gate will set the address of your ini­tial offer­ing con­tract. You’re final­ly ready to start trad­ing.

Becom­ing an Investor

If you’d like to pur­chase a token on Polymath’s plat­form, you first need to have your iden­ti­ty and accred­i­ta­tion sta­tus con­firmed by a KYC (know your cus­tomer) provider. You can search and choose a KYC provider on the Poly­math net­work. Next, you’d send the required num­ber of POLY tokens to escrow until your KYC process is com­plet­ed. After sub­mit­ting the nec­es­sary doc­u­ments, the KYC provider can send infor­ma­tion to a Poly­math smart con­tract spec­i­fy­ing details on your abil­i­ty to buy secu­ri­ties. The infor­ma­tion stored in the smart con­tract will also deter­mine the amount of mon­ey you can invest in secu­ri­ties and where you can trade them.

Secu­ri­ty Tokens

While most tokens are eas­i­ly trad­able on exchanges, secu­ri­ty tokens fol­low dif­fer­ent rules due to numer­ous legal impli­ca­tions. It’s impor­tant to know who owns a secu­ri­ty token at all times due to secu­ri­ties poten­tial­ly pro­vid­ing vot­ing rights, div­i­dends, or oth­er income with tax impli­ca­tions. Exchanges cur­rent­ly avoid list­ing any token poten­tial­ly con­sid­ered a secu­ri­ty to avoid secu­ri­ty reg­u­la­tors.

How­ev­er, with a token cre­at­ed through Poly­math, the smart con­tracts ver­i­fy who can buy and sell the token. Only investors autho­rized under Polymath’s KYC providers will be able to hold the token. This could, in the­o­ry, elim­i­nate the fees asso­ci­at­ed with cen­tral­ized exchanges that ensure secu­ri­ty com­pli­ance.

Polymath Platform

Polymath Platform2

Poly­math Tokens (POLY)

All pay­ments on the Poly­math net­work require POLY, an ERC20 token. Here are some exam­ples of its uses:

Issuers

An issuer can post a boun­ty in POLY tokens to “encour­age legal del­e­gates and devel­op­ers to bid on pro­vid­ing ser­vices.” The more com­pli­cat­ed your secu­ri­ty, the more POLY you’ll like­ly need to pay.

Devel­op­ers

Devel­op­ers earn POLY for cre­at­ing STO smart con­tracts.

KYC Providers

KYC providers pay in POLY to join the net­work and then earn POLY from ver­i­fy­ing investors.

Investors

To join the whitelist of poten­tial investors for a secu­ri­ty token, investors must pay KYC providers in POLY tokens for their ser­vices.

Legal Del­e­gates

Legal del­e­gates earn POLY by being select­ed to issue a new secu­ri­ty token.

Using POLY

Poly­math Team

The team is led by Trevor Koverko, a vet­er­an in both Sil­i­con Val­ley and cryp­tocur­ren­cy. He’s also the founder of DAI, a pri­vate equi­ty firm. There’s a say­ing in busi­ness that you want to skate where the puck is going, not where it has been. Giv­en that Trevor was lit­er­al­ly draft­ed by the New York Rangers of the Nation­al Hock­ey League, it’s like­ly he knows where the puck is going. He’s shown this skill in the past, buy­ing into BTC when it was 20 dol­lars and Ethereum when 1 BTC would score you 2000 ETH. Along with Trevor, there are more than 30 ‘builders’ and advi­sors involved with Poly­math.

Polymath Team

Token Sup­ply and Sus­tain­abil­i­ty

Over­all, there are one bil­lion POLY tokens that will ever exist. Users could sign up for the Poly­math air­drop before Jan­u­ary 10th, 2018. Sub­se­quent­ly, air­drop par­tic­i­pants received 240 mil­lion tokens.

At this point, the Poly­math team retains the rest for future use. If you missed the air­drop, then you’ll need to trade for POLY on an exchange.

Future Projects and Roadmap

Once the Poly­math plat­form launch­es, the future will depend on bring­ing peo­ple into the ecosys­tem and issu­ing secu­ri­ties on the ST20 stan­dard.

Polymath Roadmap

Part­ner­ships

To be sure, the suc­cess of Poly­math is depen­dent on part­ner­ships. Specif­i­cal­ly, they need to bring in legal del­e­gates, KYC providers, devel­op­ers, buy­ers, and issuers.

With this in mind, they part­nered with Iden­ti­ty­Mind to bring KYC providers aboard. Soon there­after, they con­firmed thou­sands of iden­ti­ties in the POLY air­drop.

Both Self­Key, a dig­i­tal iden­ti­ty sys­tem, and Bnk­ToThe­Fu­ture, anoth­er com­pa­ny asso­ci­at­ed with KYC, will part­ner with Poly­math to pro­vide thou­sands of accred­it­ed investors.

To demon­strate, Poly­math advised tZE­RO on their ICO, which raised $100 mil­lion in just 12 hours. tZE­RO aims to also build an exchange to pro­vide liq­uid­i­ty for legal secu­ri­ty token hold­ers.

Most note­wor­thy, in 2018, Corl Finan­cial Tech­nolo­gies, SeriesX, and Ethereum Cap­i­tal all plan to have secu­ri­ties tokens cre­at­ed on the Poly­math plat­form.

Com­pe­ti­tion

tZE­RO is also build­ing an exchange for reg­u­lat­ed secu­ri­ty tokens. How­ev­er, it’s like­ly that their plat­form would pro­vide more syn­er­gy than a com­pe­ti­tion. The more peo­ple involved with devel­op­ing legal­ly com­pli­ant secu­ri­ty tokens, the bet­ter.

Polymath’s main com­peti­tor is the tra­di­tion­al method of reg­is­ter­ing a secu­ri­ty with the SEC. How­ev­er, you can see it is quite rig­or­ous to file by look­ing at DropBox’s recent request for an ini­tial pub­lic offer­ing here.

Trad­ing His­to­ry

Poly­math air­dropped its token on Jan­u­ary 24th, 2018. It start­ed with a val­ue of US$0.789. How­ev­er, it soon  reached an all-time high of $1.64. Ulti­mate­ly, the price of POLY will depend on the util­i­ty of the Poly­math plat­form. If you see more coins launch­ing on the ST20 stan­dard, keep your eye on the price of POLY.

Where can you buy it?

The major­i­ty of trad­ing vol­ume for POLY takes place on Kucoin and Idex.

Where can you store it?

Since POLY is an ERC20 token, you can use MyEther­Wal­let for stor­age. The Poly­math team also pro­vides a resource of how to view your POLY tokens here.

You can also use pop­u­lar hard­ware wal­lets, like the Ledger Nano S, to store your POLY.

Final Thoughts

In Polymath’s ide­al world, all forms of secu­ri­ties become pro­gram­ma­ble tokens. As a result, busi­ness­es of any size have access to cap­i­tal.  Investors also have access to trans­par­ent infor­ma­tion and can avoid scams. The Poly­math team iden­ti­fied the inef­fi­cien­cies of present-day secu­ri­ties. The plat­form per­haps offers a bet­ter alter­na­tive. Now, the ques­tion is, can they bring investors into their ecosys­tem?

Accord­ing to the whitepa­per, “the glob­al secu­ri­ties mar­ket is com­posed of three major instru­ment types: equi­ties, debt, and deriv­a­tives. In 2016, these three mar­kets had total notion­al val­ues of US $67 tril­lion, $99 tril­lion, and $1.2 quadrillion, respec­tive­ly.”

Over the com­ing years, it will be inter­est­ing to see what per­cent­age of the mar­ket Poly­math can cap­ture.

Arti­cle first Appeared on Coin­cen­tral

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