2. Business Model
4. Roadmap & Technology
Polymath Business Analysis
Polymath is building a platform that is issuing security tokens on the blockchain. It has created a standardized token protocol, called ST20. Through the Polymath Platform, previously illiquid assets will be tokenized which provides broader access and liquidity to investors and issuers.
2. Business Model
Polymath is focusing on the securities industry, including real estate, equities and VCs. The business is mainly B2B and B2C.
The POLY token is a utility token. POLY will be used primarily for:
⁃ Paying to KYC providers for validation and accreditation services
⁃ Paying to legal delegates for legal claims and credentials
⁃ Paying to smart contract developers for STO (Security Token Offering) creation and review
It is mentioned in the WP that POLY will be more valuable if more people are holding and transiting it. But from the above-mentioned use cases, there are no strong incentives for people to hold POLY long-term. We can expect that in the future, security token exchanges will have trading pairs of BTC and ETH, which will probably become the preferred trading pairs, compared to POLY. There is no token burning mechanism as well. In addition, the WP does not mention how the platform itself will generate profits after token launch. Cases, such as ICO projects dumping ETH into the market, have made me concerned whether POLY will end up the same way in the longer term or not. Therefore, I'm in doubt if POLY will maintain to be valuable in the future.
The consumer traction is not very strong. There are three types of participants on the Polymath platform in terms of issuing securities tokens: legal delegates, KYC providers and developers.
There's no info on how the project is going to attract and stimulate these service providers to participate. It’s stated that service providers are able to bid their services - what if in the early stage of the platform when there are only a few service providers, they charge very high rates?
Polymath is partnered with tZero, which is an exchange for security tokens. So, the market adoption of Polymath will highly depend on the exchanges for security tokens. The liquidity that Polymath wants to achieve will depend partly on the exchanges as well. Security tokens exchanges are highly restricted by regulations and no one can guarantee that exchanges like tZero will work globally in the future. Community sentiment towards Polymath will also be influenced by the development of these exchange platforms.
4. Roadmap & technology
There's no detailed roadmap available at the moment. What can be found online is rather vague and it does not provide any timeframes whatsoever.
So far this year, Polymath has had an airdrop, it launched Polymath-core and Polymath.js. It has made some solid partnerships in the fintech and blockchain area, including with Crowd Machine, Kaitipult, and Corl. Polymath does not have lots of innovations in terms of technology. It is basically doing the same as Ethereum's token generator but making it comply with regulations. Github is open to the public. So from a technical standpoint, Polymath is a realizable project.
There was no public sale. Polymath raised $58,719,888 in private sales. 10 million POLY tokens were distributed for free by airdrop in the official Telegram group and Polymath did KYC for each participant.
There's great market potential for Polymath since ICO regulations and restrictions of cryptocurrencies make them risky investments. Half of last year’s token startups have failed and according to TokenData, so-far this year, 50 out of 340 completed ICOs have failed.
The social sentiments towards ICOs are not very positive as well: The U.S. Treasury Department said some startups that issue tokens may be deemed to be money transmitters and will need to comply with bank-secrecy and know-your-customer guidelines; SEC Chairman Jay Clayton said in February that “every ICO I’ve seen is a security”; Twitter joined Facebook and Google in banning ICO ads. Under such conditions, many investors would shift to purchase security tokens, which are linked to equity or other assets as a way to reduce regulatory surprises since the regulation in the security market has been well-established. Therefore, Polymath’s market adoption depends on how many institutional investors and hedge funds will participate and will be willing to shift from the security market to the blockchain one and if it launches its token on exchanges.
Firstly, the exchange for tokenized securities is at a risk to be restricted by regulations. So, Polymath’s success is bidding on the success of the exchanges. Asset liquidity highly depends on these exchanges as well. Without a matured exchange offering security token trading, Polymath cannot state to be truly providing liquidity to security issuers and investors.
Secondly, the business model of Polymath is not entirely clear. There is no incentive for holding the POLY token and it seems like the platform has no plan on how to generate profits. If the value of POLY is low or not stable, service providers like lawyers and developers will not use the platform.
Thirdly, there is no info on how the team is going to use the raised fund. How will the fund be distributed and where would it be kept? Will the token value be manipulated?
To sum it up, Polymath can be good for speculations but it can be defined as rather risky for long-term investment. I suggest watching closely into the regulation changes on the securities market and the development of the exchanges for tokenized exchanges.