Token Picks: Polymesh Network

Polymesh, an RWA Layer 1 Blockchain

Given that I work in a TradFi context, the RWA sector has always been interesting to me as so many projects overpromise but underdeliver, underestimating the regulatory hurdle they need to overcome.

I thought it would be interesting to look into @PolymeshNetwork, as they seemed to be a mid market cap RWA chain that is aiming to do something different. Here's my rabbit hole due diligence journey summarised below.

RWA Markets Today

• Most of the RWA mindshare is dominated by debt tokenisation players, such as @OndoFinance, @goldfinch_fi or @centrifuge

• Complex financial products such as security tokens are difficult to be provided to the masses, as most either have difficulty going on-chain or are limited by regulations, being able to be sold to only those with Accredited Investor status

• Illiquidity of these complex financial products therefore remains, and is an area of opportunity that I firmly believe needs to be addressed

Polymesh, built for Security Tokens

• In comes @PolymeshNetwork, a chain that was launched in Oct 2021 that touts itself as one that is built specifically for security tokens

• As a public, permissioned blockchain built using Substrate, the chain requires ALL participants to conduct KYC

• That is right, ALL users, such as retail participants, deployers, node validators and so on are required to KYC before being able to interact with Polymesh

How’s the Ecosystem?

• As of August, @PolymeshNetwork has 24 projects listed on their ecosystem page, but a closer look reveals that only a handful are RWA projects; Others listed are a mix between self-custodial wallets or KYC providers

• To explore the ecosystem in-depth (and so that you would not have to sacrifice your credentials), I took the dive to KYC utilising 1 of the 3 service providers offered by Polymesh Wallet

  • The seamless, quick process led me to a portal that reminded me of old polkadot days, where there is heavy emphasis towards staking rather than interaction

  • A quick browse around on >5 of their RWA ecosystem projects quickly led to no avail; many required manually reaching out to the teams themselves

  • The only project that had wallet integration was TokenTraxx, an artist royalty platform that did not seem to support my Polymesh wallet

Tokenomics

• $POLYX is the native token of Polymesh, used for gas fees and the deployment of new security tokens in their ecosystem

• Currently, ~80% of the supply is floated on the market, with FDV hovering around US$200M

• Volumes remain healthy at US$11M on average, concentrated mainly across Binance, Upbit and HTX

• $POLYX can be staked to generate yields 24%, generated from built-in inflation of the network (inflation currently stands at ~10%)

  • As usual, stakers are also able to participate in the governance

  • The high yields has led to close to ~50% of the floating supply being staked natively

  • Despite the volumes demonstrated Coingecko, their block explorer showed low amounts of transactions, indicating most of the tokens are used not on-chain, but are in CEXs

Short Thoughts & Conclusions

• My initial impression was that @PolymeshNetwork would enable me to easily trade $POLYX for STOs, but unfortunately I was not able to during my play time in their ecosystem

• While ecosystem projects might be deploying their own closed permissioned STOs not available for retail to interact with, this does not seem overly apparent to me at this juncture

• The team at Polymesh recently launched Polymesh Private, a private blockchain that enables companies to build their own private environment; While this is something of appeal towards TradFi, I remain mindful that a number of larger foundations such as @zksync or @Hyperledger are also offering similar services

Personally, I do like the concept of a KYC'd only chain to access certain asset classes, as it unlocks liquidity and creates exclusivity, but at the current juncture of iteration for Polymesh it seems as though the concept is still pretty much in the early execution stage. One positive upside is that the team still seems active, recently announcing an integration with On Chains Listings Inc to facilitate real estate verification, and there perhaps could still be an opportunity for it to pick up down the road.

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