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Crypto Conversation: Polymath Sees Good Math in Security Tokens

Flipside Crypto discusses how this project could change the financial services industry.

What's hot in crypto this week? 

Polymath (POLY). Polymath is creating a global blockchain platform for issuing and investing in security tokens. (Remember, security tokens in the crypto space are defined as digital versions of financial securities like stocks and bonds. So these security tokens are backed by tangible holdings such as assets, the company's revenue or profits.) 

Currently built on top of the Ethereum blockchain, the new protocol aims to simplify the process of creating and selling security tokens by integrating the necessary legal requirements directly into their smart contracts. It also established a new token standard -- called ST20 -- and enforces compliance by giving special "whitelist" privileges to authorized investors and their Ethereum wallet addresses. 

The POLY token is used for payments on the platform, and to facilitate exchanges between issuers, investors, service providers, and developers. 


The team said earlier this month it was closing in on the launch of its new blockchain, Polymesh, which is designed to bring new safeguards for financial institutions working with security tokens. The new blockchain was co-designed by Cardano founder, Charles Hoskinson. Its testnet is said to go public on June 23. 

Cryptocurrency of the week: Polymath

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How has POLY’s score changed? 

POLY’s FCAS increased 32-points (4.67%) in the past week, driven by a 67-point (13.87%) spike in User Activity. Developer Behavior and Market Maturity also climbed 9-points (1.05%) and 37-points (5.72%) respectively. 


What’s Flipside’s take? 

While financial systems today could greatly benefit from using blockchain technology to streamline processes and reduce costs, their specific requirements around finality of transactions, user privacy and regulatory compliance have prevented mainstream adoption. 

Polymesh is bridging that gap with an impressive new protocol, known as nominated proof-of-stake (NPoS). It will address four areas of concern for financial firms dealing with blockchain securities: 1. by providing governance, including removing the legal complexities of blockchain forks; 2. by ensuring that all parties have passed due-diligence checks; 3. by allowing users and trading data to remain private; and 4., by using automation to ensure regulatory compliance.

By focusing only on securities and financial assets, Polymath is straying away from the current wave of general purpose blockchains that aim to cover as many use-cases as possible. That’s because financial institutions are a completely different breed of customers. They are generally risk-averse and require transparency to enforce regulations, while maintaining confidentiality for market participants and auditing. All in all, they need their own type of blockchain and Polymath is on the right track to delivering it.

The Flipside Crypto Asset Score Tracker provides institutional and sophisticated retail investors the ability to track over 500 cryptocurrencies' fundamentals. FCAS Tracker is currently free to a select group of new users as it continues to develop the product. Visit Flipside here to gain access to Flipside Analytics.