As more asset classes join the cryptocurrency revolution, Polymath (POLY) stands as a pioneer in the security token landscape. The financial start-up helped solidify the concept of creating multiple shares in a single real world item. Their innovative process, referred to as “fractionalization,” allowed the new company to stabilize and succeed in the markedly gloomy 2018 crypto-market. Now, as the bear market is set to continue, Polymath is going to great lengths to prove their treasury’s stability.
Polymath announced that they would be freezing 75 million of their native POLY token for five years. This is in stark contrast to the dozens of ICOs that are slowly bleeding value due to prolonged development and suppressed market conditions. Polymath will lock 7.5% of their total supply up in a smart contract until the beginning of 2024. This act is intended to instill confidence in investors – Polymath doesn’t need to liquidate these tokens to cement further funding. Their active treasury is doing just fine.
Pioneering the Security Token
In the wake of the ICO boom-and-bust of late 2017 and early 2018, investors became wary of initial coin offerings. While mimicking the nomenclature of the more traditional IPO, they carried none of the same commitments to investors. They were merely a means to get access to promising cryptocurrencies early.
In contrast, the security tokens that Polymath created follow their own ST20 token standard. In the same way that ERC20 brought a slew of new technological developments, ST20 advances the financial aspects of cryptocurrency. Voluntarily beholden to the regulations governing securities, they operate in a much less nebulous region of finance law.
Fractionalized Ownership
Alongside security tokens, Polymath introduced another new asset class – the idea of a fractionalized asset. This type of investment vehicle allows multiple people to own shares in a single real-world object. Examples like real estate or high art that are not directly divisible can use fractionalization to create affordable shares.
This opens multiple new avenues for investing – coupled with Polymath’s security token. Where real estate has traditionally held a high price point of entry, this would drastically decrease the cost. As more investors look to enter the space, it should increase the average value of each holding – a net gain for all real estate holders across the board.
Article By: Adam Stone
