Topic: Thoughts on Polymath ICO??? - page 4. (Read 2656 times)

Polymath is one of those projects that shifts the whole landscape of an industry. interested to see how they execute. other than that, I'm all in

Big project where I see a lot of momentum coming from them. Lots of news and partnerships forming. The shift from wall street onto the blockchain will be the easiest through them.

Raising in the U.S. through Reg A+ requires registration with the SEC.  Is Polymath registered with the SEC?  If not, then it falls under Rule 501 Reg D.
The ST-20 token in itself doesn't provide the additional liquidity - it is the second hand market that does that, whether it be an exchange or other medium to freely trade the tokens.  Having the token by itself with no market to trade in, is the same is having a piece of paper with shares of ownership.

I think in addition to the above, the many other things I've highlighted need to be addressed in order for Polymath to see wide-scale, meaningful adoption.  That doesn't mean the company will not have the ability to generate value in the token from hype or marketing, just look at Tron.

Looks like they were quite the buzz at the bitcoin conference in miami. Big things ahead for Polymath especially with tZERO.

people are already receiving their Poly token. Thoughts?

Edit: sorry wrong thread 

Your passport if floating around from person to person, across the internet, and you guys are actually doing this?  NEVER send your passport to anyone over the internet guys.  The people who are sending in theier personal documents to strangers over teh internet are the ones we read about in the news losing everything from identity theft or even worse if the passport gets in terrorists hands. 

Use your brains guys and do not send in your passports.

When 50-70% of the projects are scams your going toget burned after a few times of being this careless.  THINK

Their KYC having a passport-only requirement instead of using the scores of other legal ID available (such as driving licenses) is ludicrous.

Valid companies and entities can also check other countries' databases (such as the UK's DVLA) for ID confirmation (transnational companies for things such as driving, freight, and gambling do this regularly), so not being able to access these databases isn't a valid excuse.

This either reeks of laziness or incompetence, but I'm betting on the former since one of the messages in their Telegram involved the ease of using one company that exclusively uses passports.

They're also actively censoring their subreddit against criticism, especially regarding their botched airdrop.

They're not a scam: I genuinely believe that Polymath is legit, and they've got a lot of potential, but frankly this recent episode just poured whatever confidence I had in them being entirely competent down the drain.

i cant understand why every one is copying DRP idea

Great project! Thank you Polymath team for answering those concerns. very excited for what's to come for Polymath! Keep the stampede coming. 

"WHO IS POLYMATH?
Polymath is a decentralized network operated on the Ethereum blockchain, it is powered by individual participants such as legal delegates, KYC providers, issuers, investors, and regulators who are incentivized through POLY tokens to enforce bad actors." - faq

Got to enforce those bad actors. Is that a Freudian slip?

Hey fearless, we love the feedback and the thought process. Securities tokens are definitely a new and novel space and education is definitely needed for everyone.

I will clear a few things up:


This is not necessarily true. Depending on the type of offering, investors may not need to be accredited. For example, look at Reg A+ offerings in the United States. Accreditation status is not required to participate.


This is one of the problems Polymath is trying to solve. Right now private equity and vc funds are extremely illiquid. ST-20 tokens will provide added liquidity for these otherwise dormant 'markets'.


You are right. Traditional exchanges do not list securities. They are not an ATS, broker-dealer or licensed securities dealer. New exchanges and avenues are being created to tackle this. Polymath is the on-ramp for securities token issuers and these new exchanges can provide added liquidity. If old exchanges want to add securities it would be in their best interests to follow all regulations and licensing. See this article: https://www.crowdfundinsider.com/2018/01/126977-interesting-tzero-partners-polymath-initial-coin-offering/



The KYC/AML provider does not have this information. The issuing entity does. If an issuing entity uses or particular KYC provider, or does it in-house, it is the issuing entity that is able to verify who everyone is that holds their security token, based on ether address. No one else is able to see this information...the only thing that is transparent is the "whitelist" but there is no information to the public about who controls each ETH address in the whitelist.

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In general, there are many different types of offerings and regulations. The 99 investors you mentioned is one type. Polymath is creating the protocol to allow issuers, investors, legal delegates, kyc providers and smart contract developers to interact together to create, issue and trade securities tokens. It is up to the issuers and legal delegates to determine which type of offering best suits their needs and to ensure the rules of those regulations are followed and baked in to the STO as much as possible.

I spent some time reading the deck and whitepaper as a potential investor.  I thought I would share this with the forum to help democratize access to sometimes difficult analysis or information.  

There are a few issues:

Two Token Types

There are two token classes, one for the platform user (called POLY tokens) and one for the issuance of securities in the underlying investment (called an ST-20 token).

• The ST-20 tokens can only be purchased by accredited investors and subject to AML/KYC.  In the US this means $1M net worth, and $200k income in the last two years as per Rule 501 Reg D of the CFR.
• The POLY tokens should be tradable by non-accredited investors, since they are used for payments made on the platform to service providers.

Token Liquidity and Value Problem

• The ST-20 market is expected to be fairly illiquid, because there are an extremely limited number of individuals that would qualify.
• Tokens issued to US holders are non-transferrable for 1 year, and thereafter can only be transferred to a US person, and all tokens must be transferred (i.e. cannot fractionize or retain partial ownership of ones tokens, it's an all or none deal)
• The POLY token market would be near worthless to anyone that is not a service provider on the platform.
• The whitepaper negates to discuss if these tokens can be converted to other currencies like ETH.  I assume they can, otherwise the devs that build the ST-20 tokens, would not be able to spend their earnings to pay for living wages, etc.

The Whitepaper attempts to address ST-20 token liquidity by saying they are based on ERC-20 tokens and the protocol is open therefore it can be listed on any exchange.
However the protocol also governs the exchange of tokens to AML/KYC and SEC (or other regulating body) verified addresses only.
This creates a problem with a traditional exchange, since many wallets and addresses are dynamically generated.  Even if they are prefixed, it would require a "KYC Provider" to verify each address for each accountholder, to provide the necessary permissions to allow the protocol to send the tokens.  So each wallet address would have to go through an outside approval process to be generated.  Further to this, the exchange would have to prevent trading of the ST-20 tokens until this is done.  So the UI would have to gray it out and a business rule built into the exchange to make sure they're not accidentally allowing trading of the regulated ST-20 token.
Every exchange would have to set this up for every ST-20 token company issuance, since the KYC/regulation parameters will vary based on the company location and local laws, plus the local laws of the investor.

Do you think an exchange that is accustomed to trading hundreds of millions per coin, will go through the trouble of all of this effort to open up a market to a very very small group of qualified investors for each ST-20 token out there?  And if you're a US investor, then you're out of luck, because you can't sell partial shares.  You have to sell the whole lot, so the exchange would be useless.

Other Flaws

The whitepaper says that the Polymath platform doesn't "see" who the investors are.  The KYC Provider is the one who will have access to this information.  However, for proper notices, like Change of Control or other information that needs to be conveyed to investors as per local regulation, the individuals themselves need to be contacted.  If the tokens are trading hands, who keeps track of who owns what and how many shares, especially if you have a free market of service providers, some that might come and go as they please.

Poor Use Case for Blockchain Technology

What is the advantage of creating an ERC-20 token and have the transactions recorded in the blockchain?  Blockchain is great for verification of transactions and the movement of assets or data.  But if the market is expected to be illiquid, and the protocol needs to know who each individual is for the above reasons, then the platform is almost utilizing none of the benefits of the blockchain.  In fact, a better way would be to centralize the issuance so that all investors are known, KYC/AML can be verified by a single body, and the capitalization table is always up-to-date.  

Also, for securities sales, the SEC limits the maximum number of investors to be 99 individuals.  In fact, organizations like AngelList have written about this issue.  They called the "99 Investor Problem"  You can't have more than 99 investors at any point of time in a private offering without structuring multiple entities.  So basically you need a very few people to own and trade very large amounts of money, to make this work.  


I Could Be Wrong

Despite my expertise in this field, I could still be wrong.  I could be incorrect in my interpretation of the whitepaper.  I could be incorrect on the possibility of a secondary market.  I could be wrong on the information I have to derive my analysis.  Polymath could still choose to illegally allow for second hand trading, allowing more than 99 individuals, etc.  Many companies already are operating outside the bounds of regulation in the token market.  Polymath could also ignore the regulated markets entirely, especially the U.S. and choose to only allow its platform to function for companies and investors in specific, whitelisted countries.

I really like Ethereum, ripple, stellar, LTC, and DGB. I think this is the best coin right now from other coins. This coin has a great future and a good project. every developer always gives the best update. and has a short update distance. so I believe this coin is good and this is my favorite.

I like free.

just registered and waiting for distribution date.hope it is successful.

Just looked thru whitepapers...and haven't notice the road map
Can anyone know it?

So there is no crowdsale for Polymath?
I have read through all information I can find about this project.
Very impressive! It would be a pity if I can't invest into this one.

How is this different from Quantstamp? Is this gonna provide auditing too? Saw this popping up in etherscan.io quite frequently.