The year 2023 was turbulent for cryptocurrencies. But, The Block Pro Research’s team of analysts predict that the prices will appreciate this year.
The largest cryptocurrency in the world, Bitcoin, opened at $45,680– the highest since April 2022. Ethereum has also witnessed tremendous growth. Its price increased to $2,393 from $11. That’s a growth of 21,656%.
Purchasing cryptocurrency now is wise, but you can’t leave them up for grabs. Investors are converting digital currency into security tokens to protect them from attackers.
The evolution of security tokens minimizes the requirement for technical due diligence by providing securities-specific features to general-purpose blockchains. But, still, there are gaps in the scalability and functionality of general-purpose chains.
Nonetheless, Polymath aims to bring compliance, confidentiality, and security with the introduction of Polymesh’s POLYX. This purpose-built blockchain network alleviates the scalability and performance issues of other general-purpose blockchains. No wonder it is revolutionizing the security tokens landscape.
Here, we’ll explore the features of Polymesh’s POLYX that make it a breakthrough innovation:
1. On-Chain Governance Guides the Evolution of the Chain
When contentious hard forks occur, legal and tax challenges arise for tokens backed by real assets.
POLYX tackles governance issues by integrating governance directly into its core design. The on-chain governance of this blockchain platform guides its evolution. Built on the Substrate Framework, it allows for forkless runtime upgrades. Besides seamless upgrades, it enables on-chain recording as well as storage of governance information.
It also minimizes the risk of hard forks by depending on a Governance Council to guide the chain through potential conflicts or challenges.
Where investors and issuers don’t have a say in governance, POLYX lets users participate in the decision-making process that impacts the evolution and development of the blockchain.
As a POLYX token holder with a valid Polymesh identity, you can vote on governance proposals. Key stakeholders, comprising the Governance Council, review PIPs (Polymesh Improvement Proposals) submitted by token holders or committees. Then, they chart a route for the chain’s future development after establishing a consensus.
2. A Two-Stage Approach to Identity Verification Ensures Efficient Onboarding
Anonymity, another principle of many permissionless blockchains, makes it extremely challenging to meet compliance requirements around identity verification. Adding identity-related solutions such as layer-2 add-ons is possible, but it increases complexity in the end-to-end solution.
On Polymesh, all users who write new blocks on the chain– whether investors, node operators, or POLYX token holders– are required to verify themselves through the CDD (customer due diligence) provider. Then, attestations are attached to their identities.
This modular two-stage approach ensures a high level of security, as it wards off pseudonymous entities from entering the network to receive rewards.
Each individual or entity on POLYX can have only one identity on-chain. This minimizes the risk of a “Sybil attack,” which is a kind of cybersecurity threat. In this type of attack, an adversary makes and controls a multitude of nodes or identities in a P2P (peer-to-peer) network to gain a disproportionate power over the network.
However, that doesn’t mean you can operate only a single account on Polymesh’s POLYX. You can operate multiple accounts with distinct decentralized identifiers (DIDs), all thanks to the unique identity system of POLYX.
3. Flexibility to Set Rules Around Transfer Requirements and Ownership
General-purpose blockchains built atop proprietary solutions automate key steps. But, as users layer consecutive rules, the intricacies and the amount pushes the chain to its computational capacity. Eventually, putting compliance practice into effect becomes challenging.
Nonetheless, this purpose-built blockchain builds compliance into the chain. This results in lower protocol fees and faster processing.
POLYX token issuers can automate rule enforcement by setting flexible and extendable rules. You can do this without requiring semi-manual or manual approval of individual transfers, which eventually reduces costs. These rules can be combined and customized to match the type of asset, regulatory regime, and jurisdiction.
4. Holdings and Transfers are Encrypted and Kept Private
Holdings of token holders aren’t anonymous in public blockchains. Anyone can see them. Employing layer-2 solutions can keep balances confidential, but meeting ownership reporting demands and satisfying compliance becomes difficult.
On Polymesh, the holdings of POLYX token owners and transfers are encrypted and kept private via zero-knowledge proofs. In this permissioned blockchain, issuers can configure security tokens as confidential.
You can also grant trusted parties audit rights to view transaction details without compromising privacy or revealing other secrets, such as asset spending or crypto private keys.
POLYX users can also automate compliance checks and cap table updates while holding and transferring assets confidently. A patent-pending protocol MERCAT (Mediated, Encrypted, SeCure Asset Transfers) makes this possible.
In conclusion, Polymesh’s POLYX is a groundbreaking innovation in the world of security token offerings. This permissioned blockchain has addressed critical challenges faced by general-purpose blockchains, including compliance and governance, in an efficient way.
Despite focusing on achieving higher levels of compliance, POLYX emphasizes confidentiality more than other blockchains, such as Ethereum. By doing so it’s redefining the way investors transact in the digital realm.
