To date, more and more crypto projects strive to solve real-world issues. More and more projects allow tokenizing real-world assets such as precious metals, oil, and more. Some of the advanced states are even considering creating their own national cryptocurrency. However, for issuers of securities, a lock is currently hanging on the doors leading to the blockchain market. After all, in this case, issuing your token is not only a difficult but also an expensive undertaking. The Polymath platform was created to solve this problem and provide convenient tools. It is this project that will be discussed in today’s article.
What Is Polymath?
The Polymath project was created to digitize securities and add them to the blockchain. The project's main goal is to create a legal basis for securities turnover, which will be based on blockchain.
Such a solution will allow users to access unhindered stock trading using the decentralization protocol and the privacy module.
The latter (before opening the possibility of participating in securities transactions) obliges the users to have an identity authorization company and provide a place of residence and accreditation status.
If we talk about the main task of the platform, it is to make the blockchain available to issuers of securities. Before the creation of the project, it was challenging to tokenize shares and vouchers of companies. After all, this area falls under the control of regulatory authorities. As a result, cryptocurrency exchanges are unwilling to place such coins in order not to face penalties. To solve this problem, the Polymath platform was created.
How Does Polymath Work?
According to the developers’ idea, security tokens will allow real business owners to have opportunities comparable in importance to Ethereum smart contracts for developers. Speaking of Ethereum, the Polymath project utilizes Ethereum smart contracts to provide programmable and automated issuance, turnover, and management of security tokens. In addition, all security tokens are based on a specially developed ERC1400 standard.
However, to ensure greater privacy, KYC/AML compliance, cross-jurisdiction, and other capabilities, Polymath developers have also launched a specialized Polymesh blockchain. The Polymesh blockchain is actively used for issuing, managing, and distributing security tokens. Polymesh provides two products (also available on Ethereum): a Capital Platform and a Token Studio. The Capital Platform allows users to digitize real-world assets and issue them as security tokens. In turn, the Token Studio provides opportunities for token ticker symbol reservation, configuration, and distribution of security tokens. All calculations within the framework of Polymesh are made using the internal POLYX token. Users wishing to rely on the Ethereum blockchain use the POLY token for calculations.
Issuers, investors, and developers use the token not only to access the system’s functions but also to use/create their own security tokens on the platform. To create and issue security tokens, issuers must deposit a small amount in the form of POLY/POLYX tokens. Investors pay them a commission for transactions, KYC/AML verification, and work within the Polymath ecosystem (buying, selling, trading). Further, the created security tokens can be distributed via ICOs. Holders of tokens (and, accordingly, shares, vouchers, etc.) receive a part of the company’s income. It is worth noting that only approved investors who have passed the KYC/AML procedure can become token holders.
Polymath ($POLY) Tokens
As already mentioned, the project has two tokens: POLY on the Ethereum blockchain and POLYX on the Polymesh blockchain. According to the developers, the specially developed Polymesh blockchain is better suited for minting security tokens, as it includes additional features related to identity, compliance, confidentiality, and governance. However, all Polymath security tokens rely on the ERC1400 standard.
Both POLY and POLYX tokens are used to pay all fees related to digitization, distribution, trading, and other operations with security tokens.
Users who want to take advantage of Polymesh can bridge their POLY tokens and get POLYX on a 1:1 basis. This exchange is unidirectional, resulting in POLY's circulating supply gradually decreasing. POLYX will also be minted as a block reward. According to the developers, the number of newly minted tokens will be 14% yearly.
The Polymath platform has several advantages if we talk about the main ones.
- Polymath allows companies to control the release of their capital using programmable code;
- The project allows you to attract new investors increasingly interested in switching to crypto;
- The platform makes it possible to trade around the clock. In this case, the location does not matter at all;
- Polymath eliminates intermediaries and financial structures that create obstacles to capital placement, turning this process into a costly procedure.
In general, the developers’ ideas can be called exciting and unique. They may even be ahead of time.