On August 20, 2021, we concluded another Reddit AMA, the second one we’ve completed on Reddit this year. AMA’s give our community the chance to pose developer and product questions to the Polymath team for a period of three days.

Here we summarize the top questions and answers from the two latest AMA’s for community reference.

Is polymesh Mainnet still on track for Q3 of this year as the roadmap indicates? (u/Weaksweakk)

Hey — yep — we are still on track to launch the mainnet before the end of Q3 — realistically it will be right at the end of Q3 though.

We have a comprehensive marketing/engineering/product plan in the weeks before the launch, so expect to hear more as we approach the end of the quarter!

Which asset classes do you expect to be early adopters of security tokens? (u/WOTEugene)

Here’s the quick answer: real estate and debt instruments.

Real estate has proven to be a powerful use case (See: Redswan Case Study) as it has historically been a illiquid investment with certain properties only available to HNW or institutional investors. Security tokens allow issuers to easily fractionalize their real estate assets, creating liquidity for a wider pool of investors.

Another interesting path for security tokens is debt instruments. From our discussions at an institutional level, there’s plenty of interest in using security tokens for debt due to the ability to pre-schedule and automate payments, potentially reduce the need for intermediaries (in some jurisdictions), and provide instant settlement for the investor.

What will be the main areas of focus, from a product maturation / continual improvement/marketing standpoint, once the Polymesh mainnet is released in Q3? Can Polymath update the Roadmap to highlight the plan for life after the mainnet release? (u/Conscious-Cellist-56)

Hey — yep — we are putting together an updated roadmap blog post to shine some light on the post-mainnet plans.

We are also getting lots of feedback on features from market participants that we’re working with on integrations, which is also helpful in informing our focus post-mainnet launch.

It has been nearly 5 months since the testnet launched yet on the face of it there have been minimal changes to the various testnet dashboards. Despite feedback from the community. Is there a dashboard update pending that we have not yet seen? Can you outline some of the main changes and improvements that have been implemented during the testnet phase? I’m interested to hear about the activities that are not in public repositories on github. What is your ticket backlog like in terms of feature requests and is there a list of items you plan to implement? Most of the time when I have made feature requests I have not received feedback on whether they were accepted or rejected or parked. (u/fran426ft)

In regards to feature updates and backlog, we’ve been focused on the current capabilities and that we have a deep backlog of tickets of UX improvements that we will implement post mainnet.

What efforts are being made to attract financial institutes and developers to build tools around Polymesh or contribute to the chain development? I’m aware of https://developers.polymesh.live/ and the Polymesh discord server however when I have seen people ask questions on discord they are largely unanswered by the Polymath team. I understand the team is busy with the upcoming launch of mainnet but the whole team ignoring questions does not give a good impression. And hopefully, there will be a lot of questions as people try to get up to speed on Polymesh to build around it and expand the use of Polymesh. Will Polymath offer a turnkey custom interface for financial institutes to expand on the functionality available in the current dashboards or will Polymath limit itself to providing an SDK/API for Polymesh? (u/fran426ft)

Regarding Discord — this is a very fair criticism. From this week we’re putting in place an internal process to ensure any questions are reviewed on a timely basis led by u/aman_polymath.

We are working closely with a number of market participants to enable their integrations with Polymesh. As part of this we’re building out our tooling around the chain to allow easier data reporting and interaction with the chain via a RESTful API — these repos are currently private as they are early stage, but our partners are actively using them.

Other than the mainnet launch, these integrations, and building a comprehensive set of tools around Polymesh to ease integration, is our top priority in engineering.

Is there anything in the pipeline (or any intention) currently with the aim of enabling interoperability between security tokens on polymesh and other blockchain networks? Thanks :) (u/sgoooders)

There are several possible routes that we are in an early exploratory phase regarding interactions with other chains. These include:

• the possibility of joining Polkadot as a parachain, and allowing tokens (e.g. tokenised assets on Polymesh, stable coins on other parachains) to be used across parachains.
• having oracle or bridge services between Polymesh and other chains to allow the movement of stable coins or tokenised assets between chains.

These are in an early stage of discussion though — a lot will depend on the success of the Polkadot parachain infrastructure, as well as where we see relevant and useful activity with respect to tokenised securities on other chains. One aspect that becomes very tough if you allow a tokenised asset to be split across chains is maintaining compliance on that asset, as no single chain has a full picture of the asset (e.g. its cap table).

Did you have a particular use case in mind?

Hey! For mainnet launch, are you planning to add a controller key option in the staking dashboard interface? Maybe in advanced mode? If no, will it be possible to use app.polymesh.live to set controller key without conflicting with the staking dashboard interface? Is there a way to optimize the processing time of “loading” and “read information” in Dashboard UI? If I create a dashboard, how can I reduce the wait time to read Polymesh blockchain information? A big issue reported by FOB, for example when transferring tokens without meeting a token holder percentage limit rule, was a transfer failure on polymesh when the UI indicated that the transfer was successful, causing a lot of confusion for the user as the transfer had not been completed. One possible cause was that the settlement was made on the next block. Have you addressed this point? (u/pressorus)

Hey — we have quite a long list of improvements we’d like to make to the staking UI but for the next few weeks need to remain focused on the mainnet launch, so I don’t think we’ll get to this ahead of the launch. You will be able to continue to use app.polymesh.live in the meantime to stake as well if you want/need the features available there.

Settlement happening on the next block is something that makes the UI complex — we do have tickets to improve these flows, but again it is likely to come after the mainnet launch.

Want more? Check out this AMA from June as well as the recent AMA from August for the full list of questions and answers.

We plan to do more AMA’s in the future, so keep an eye out on Polymath’s socials so you don’t miss the chance to participate. We’ll see you there!

Summary of Polymath Developer AMA’s 2021 on Reddit was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Polymesh is the blockchain software at the core of Polymath, and the infrastructure that we’re building for financial securities market. Polymesh must be secure, robust, and free of bugs.

As the team building Polymesh, we do many things to make sure Polymesh is secure and robust. Some of the things we do are:

• Automated Testing: We ensure that all of our features have associated unit tests, and integration tests where appropriate. This makes sure the new features we add don’t introduce new bugs.
• Independent Code Audit: To increase confidence in the security of our software, we’ve engaged the services of independent code auditors who specialize in blockchains and the Substrate stack. As per the reports of these audits, Polymesh is becoming better each day.
• ITN: Our incentivized testnet (ITN) is our key testing tool, which lets us receive lots of product feedback, helping us improve Polymesh. It also ensures and showcases that our software works at scale.

Since we can do only so much internally, we went ahead and asked our developer community to help us find bugs, and started the Polymesh Bug Bounty Program.

In this program, Polymesh developers from all around the world, get rewarded for finding legitimate security and performance bugs in Polymesh.

In this blog post, I want to highlight some issues around the management of keys, that the Bug Bounty program has helped highlight, and which we have fixed.

Primary key replaced by Secondary key

Overview

As a feature of the account management system, you can add additional secondary keys, representing other users (their identities), to your account and assign them different roles and permissions.

For example, if you want to add an auditor to your account, you can add their identity to your account, give them necessary permissions, and their keys will be added as secondary keys to your account, while you remain the holder of the primary key associated with the account.

For the sake of understanding this issue, let’s call the primary key holder as A, and secondary key holder as B.

The problem

One of the bugs that was found showed that if an authorized secondary key holder tried to rotate a primary key, they will be able to take over the account itself.

In our example, if B tried to rotate (regenerate) the primary key on A’s account, then:

• A’s primary key would be removed and become unassigned.
• B’s key (the secondary key) becomes the new primary key, while being the secondary key too.

In other words, this meant that if you had added someone to your account with their secondary key, and gave them the right permissions, they would be able to remove you as the primary holder of the account.

The Solution

To solve this, while assigning a new primary key, our code now checks that the new key is not associated with any other identity.

This fix is reflected in this PR: https://github.com/PolymathNetwork/Polymesh/pull/1006

Secondary key not being removed

The Problem

When you try to remove secondary keys, they are not removed from the DID records. This means that the permissions associated with the key are not removed, the key will also remain in the list of secondary keys.

The reason it was happening was that our code was using iterators. A set of keys to be deleted was being stored in an iterator, and the way our code was set up, it had to go through the iterator many times to delete all the keys required to be deleted, but since it was an iterator, it could only be traverse once.

The Solution

We found that the issues were with the way we were doing comparison and sorting, so we improved on that. Along with that, we stopped using iterators, and instead are now using a list of keys.

Secondary keys ending up duplicated

The Problem

Because of the issues with removing secondary keys that we just discussed, in some edge cases our users were able to add the same Secondary key more than once, ending up duplicating the keys.

Not just that, all these duplicated entries of the same secondary key would have different permissions. This would have confused our systems and would have given errors and performance issues to our users.

The Solution

We re-wrote some parts of our code to perform better checks when a key is being deleted and/or created and added, to make sure that the secondary keys are not duplicated.

This change, and the fix for the previous issue related to secondary keys, is highlighted in this PR: https://github.com/PolymathNetwork/Polymesh/pull/1018

All of the above bugs, among others, were rewarded with cash rewards, or Bounties, as per our reward tiers.

Our Bug Bounty program continues to highlight important bugs for us and is helping us make Polymesh more secure.

The Bug Bounty program is still open, and you can find about it more here: https://developers.polymesh.live/community/bug-bounty

How our Developer Community is helping us make Polymesh more robust and secure was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Settlement on blockchain does not yet exist, but not for lack of effort or interest. The reasons here are varied, but can be broken down most easily in two ways: by definition and through mechanics. By definition, settlement does not yet exist on blockchain because it is defined by the real-world processes and regulated participants involved in what constitutes a settled transfer of assets; without those regulations and counterparties, settlement can’t exist on blockchain. But we’re confident these pieces will come with time.

What we’re more concerned with and prepared to solve are the mechanics of why settlement on blockchain does not yet exist. In other words, the challenges inherent in blockchain that are roadblocks to making settlement a reality. These include:

• Pre-funding. Participants in a blockchain transfer are required to part with cash or assets in advance by pre-funding their transaction to mitigate counterparty credit and liquidity risks. This ensures a transfer is executed once the counterparties agree on the terms (i.e., price and amount). While this process does take advantage of blockchain automation, it’s far from the much-hyped instant settlement that some claim this supports
• Central bank digital currencies / stablecoins. To facilitate the instant transfer of funds, an interoperable central bank digital currency (CBDC) or stablecoin is needed. While there are many in the works from industry players, none currently exist.
• Delivery failures. On general-purpose blockchains, users are able to agree to a transfer without delivering the assets, or agree to multiple transfers with the same set of assets. This leads to greater counterparty risk, a lack of confidence in the technology, and general confusion. The solutions that do exist to solve this problem, like many solutions for general-purpose chains, come in the form of layer-2 fixes that drive up costs and reduce efficiencies. The right solution needs to build a framework with these considerations into the core of the chain.

Each of these challenges work as a roadblock to settlement on blockchain. And yet, with the opportunity to drive massive process improvements, the potential surrounding settlement on blockchain is staggering. Polymesh proposes a framework to facilitate settlement on blockchain, one that aims to mimic the traditional market approaches and pairs them with the benefits of blockchain, unlocking a potential path to instant settlement.

The Polymesh Approach

The Polymesh blockchain addresses the roadblocks to settlement through its unique, protocol-level asset transfer process that removes both the delivery failure problem and the need to pre-fund. While this is only two of the three challenges listed above, Polymesh makes the integration of a CBDC or stablecoin seamless for when they are available.

How it works

The inner workings of asset transfer reconciliation can be complicated, which is why much of it happens under the hood. For users, this means a simplified approach to transfers that relies on efficient workflows and blockchain automation. For users, the process is simple:

1. Seller and buyer agree to terms (i.e. price and quantity) on an external venue. This can happen through primary issuance, matching on an external venue like an exchange, a P2P over-the-counter agreement, etc.
2. The terms of the transfer are input (as an instruction) by the buyer and seller
3. Both the buyer and seller affirm the transfer. Once affirmed, the assets are committed and cannot be spent in another transfer. Committed assets solve both the delivery failure and pre-funding problems without the holder relinquishing control of their assets: they cannot be spent in other transactions, and assets do not need to be sent away in advanced preparation of a potential transfer that does not yet exist.
4. The compliance rules of the security token are checked to ensure the transfer meets the requirements set by the asset issuer (ownership, amount, holding period, etc.).
5. Once complete, the transfer happens atomically (it is either wholly completed or wholly rejected) and instantly . If rejected, the committed assets are immediately available to the users again.

Airdrops begone!

This approach to transfers on Polymesh addresses a nagging challenge in the security token space. Longtime blockchain users are familiar with token airdrops (tokens appearing in user wallets unprompted). At first glance these unprompted drops might seem inconsequential, but it’s an ongoing regulatory concern for several reasons including AML and taxation. To put it simply, users (in particular banks and regulators) must be sure of exactly which assets they’re holding.

Polymesh addresses this problem by prompting users to accept any asset that is transferred to their wallet in order to complete a transfer . This simple and effective approach means no more surprise assets in wallets, removing a key uncertainty and roadblock for regulators and financial institutions in the way of security token adoption.

Test Polymesh on Alcyone now

Polymesh is available for testing now through the Alcyone Testnet by:

• Creating a security token and minting to the treasury through Polymesh Token Studio
• Testing anti-airdrop prompts through the Polymesh Dashboard

If you haven’t joined a Polymesh testnet yet, learn more about how to get started here.

The Path to Blockchain Settlement was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

TORONTO— October 20, 2020: Coinbase Custody, a US-based qualified custodian specializing in digital asset custody for institutions, has been added to the Polymath Service Provider Marketplace. Polymath users now have access to Coinbase’s secure and battle-tested custody storage, while minimizing onboarding friction on all sides.

The Polymath Service Provider Marketplace brings together an ecosystem that includes custody agents, broker-dealers, legal firms, cap table management providers, KYC/AML providers, and others who can help users create and manage their token.

“Institutions adopting digital asset solutions need an ecosystem that provides a comprehensive suite of tools,” said Steven Capozza, Coinbase’s Institutional Coverage Group. “Users are looking for a balance of regulatory compliance, asset security and intuitive technology, and we are eager to continue adding new assets and growing the cryptoeconomy.”

Coinbase Custody is an independent NYDFS-regulated entity built on Coinbase’s crypto-first DNA. While their custody solution has been designed from the ground up for the unique challenges of storing crypto assets, it operates similarly to traditional custody services and is overseen by the same regulators, held to similar capital requirements, and audited in the same way as a traditional custodian.

Further demonstrating their commitment to security and oversight, Coinbase Custody was the first crypto custodian to receive the Service Organization Control (SOC) 1 Type 2 and SOC 2 Type 2 certifications.

Coinbase Custody has integrated the ERC1400 standard. Spearheaded by Polymath, ERC1400 has been widely adopted in the industry and provides a consistent framework to unite market participants. As a result, ERC1400 tokens can onboard to Coinbase Custody quickly and compliantly, without additional technical due diligence.

“Safe custody of digital assets is crucial for both institutions and individuals,” said William Vaz-Jones, Director, Partnership Development at Polymath. “We’re thrilled to add Coinbase Custody to our growing ecosystem of over 50 service providers.”

About Coinbase Custody
Launched in 2018, Coinbase Custody offers its clients access to the same secure, institutional-grade offline storage solution that has been used by Coinbase’s exchange businesses since 2012. Coinbase Custody is regulated by the New York State Department of Financial Services and is an independent entity built on Coinbase’s crypto-first DNA. All customer digital assets are segregated, held in trust for the benefit of our clients, and protected by an industry-leading insurance program. Coinbase Custody currently offers support for more than 37 digital assets. For more information, visit https://custody.coinbase.com.

About Polymath
Polymath makes it easy to create, issue, and manage tokens on the blockchain. Over 200 tokens have been deployed using our Ethereum-based solution and we are now in the midst of launching Polymesh, an institutional-grade blockchain built specifically for regulated assets. It streamlines antiquated processes and opens the door to new financial instruments by solving the inherent challenges with public infrastructure around identity, compliance, confidentiality, and governance.

Watch this 2-minute demo to see the process of issuing a token on our new purpose-built blockchain, Polymesh, in action, or visit https://polymath.network to learn more.

Media contact
Red Lorry Yellow Lorry
polymath@rlyl.com

Coinbase Custody added to Polymath’s Service Provider Ecosystem was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

If you’re new to security tokens or an experienced blockchain user, finding information tied to your keys and accounts like assets and transaction histories can be convoluted and downright confusing. For example, your typical block explorer is an excellent tool for users to monitor transactions, but only if you know what you’re looking for. Otherwise, it’s a series of meaningless letters and numbers that don’t tell you much.

With the Polymesh Dashboard, users can easily manage keys, accounts, and assets, everything related to their Polymesh IDs and on-chain profiles. By taking a design-first approach, the team at Polymath have merged the everyday usability of a social media profile with necessary account and asset details, all in one simple, easy-to-use hub.

Here’s what you can expect:

Identity Management

• Know the types of activities you can participate in by tracking and viewing your attestations
• Easily manage your keys and key delegation to ensure the right people are entrusted to manage the right things. In depth permissions customization coming soon.

Asset Management

• Accept or reject asset transfers to your ID and never worry about airdrops again
• Initiate and manage transfers of your assets
• Build asset portfolios and assign managers to those portfolios

Transaction History

• Clearly see your transaction history filtering by asset or key

dApp Library

• Explore Polymesh-supported dApps, including Staking, Polymesh Governance, and the POLY to POLYX Upgrade Bridge to take full advantage of the chain and its features

Polymesh can be accessed through the Alcyone Testnet, a testing environment to prepare for mainnet launch in Q1 2020. If you’ve already used a Polymesh testnet, you can try the Polymesh Dashboard now. If not, learn more about how to get started here.

The Polymesh Dashboard: everything you need to manage your on-chain profile was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Blockchain governance is the set of rules that outline how a chain is managed, how changes are implemented, and who the key decision makers are — simply put, it’s the constitution that guides a blockchain. Governance can be a very important and difficult topic for any blockchain, not to mention one built for security tokens, where the chain is not only the source of truth for potentially billions of dollars, but must also allow investors, issuers, and capital markets participants to fulfill their regulatory obligations.

Look no further than the challenges faced when trying to implement changes to general-purpose blockchains. Not only is a significant amount of coordination required between all nodes running the blockchain’s software, but disagreements on the changes to the chain, or how they should be implemented, can lead to forks (a split of the blockchain leading to 2 separate instances of the ledger up until that point which then continue to operate based on different rules). Who decides which instance of a security token is the right one once a general-purpose chain has hard forked? This situation has no current legal or regulatory certainty, creating an environment that capital markets participants and regulators alike will choose to avoid.

How it Works

Polymesh addresses the challenges that general-purpose blockchains face with governance by building it into the core of the blockchain. This comes to life in two important ways: the approach to upgrades and on-chain governance.

Architecturally, we chose to build on the Substrate Framework. There are many benefits to using Substrate, but key to Governance on Polymesh are Forkless Runtime Upgrades, allowing seamless upgrades on the chain rather than risk hard forks. (This is also what allows Polymesh to be governed completely on-chain, but more on this soon). Without getting into the technical details, this means the ability to upgrade Polymesh is a feature of the blockchain itself, with any changes to the chain (typically recorded IRL) being recorded directly on the chain. This enables users to create proposals and support proposed changes all on the immutable ledger. Learn more about Forkless Runtime Upgrades here and here.

The newfound ability to record and store chain governance information on Polymesh is convenient from a chain management standpoint, but more importantly, gives users of the chain a voice in how the chain is managed and run. This is done through the Polymesh Governance dApp, a user-friendly interface that allows users to submit and show support for the proposals that can guide the evolution of the chain. In our first iteration of on-chain governance we decided on a two-chamber approach familiar to key stakeholders of the regulated securities industry. The first chamber is made up of all POLYX tokenholders. Any POLYX holder can create a Polymesh Improvement Proposal (PIP) by submitting details of their change and bonding POLYX to the PIP. After a cooling-off period, a poll of support begins, where support is shown by POLYX bonded either for or against the passing of the PIP. The PIP with most support will be evaluated and voted on by the Governing Council at the next scheduled meeting. Additional community-supported PIPs may be taken into consideration as well.

The Polymesh Governing Council (GC) is the second chamber in Polymesh. The primary role of the GC is to manage, find consensus, and chart a path forward for the chain. In addition to reviewing PIPs submitted from POLYX tokenholders, the GC can fast-track proposals to deal with emergency fixes and deploy new features during Testnet.

Charting the Course

Like all blockchain projects, we know Governance is a difficult topic to get right and we hope that you can help us achieve that goal by participating in Polymesh Governance on our current Testnet. Over time some of the aspects that we hope to improve on are:

• How to show support for change on the chain
• Creating additional Sub-committees
• Potential for tokenholders to become part of the Governing Council

The securities industry has a number of existing, well-defined governance and decision making processes. In order to work together with established players and give comfort to issuers and regulators, we need to make small incremental changes in our approach to governance. We look forward to playing a role by creating a structure that facilitates open and transparent dialogue between token holders, issuers, regulators and securities participants.

The Polymesh Pillar Series

Governance is our fourth and final piece in the Polymesh Pillar Series, created to showcase how a blockchain built for security tokens could best address the challenges affecting adoption and acceptance of security tokens. Governance, Compliance, Confidentiality, and Identity all have an important role to play in a security token blockchain, removing the roadblocks that most impact adoption and acceptance by financial institutions, regulators, and issuers. That’s why each has been built into the core of Polymesh, removing challenges and bolstering security token adoption. Check out the Polymesh blog for more information on the other pillars and how they form the foundation of Polymesh.

Join Polymath

Want to join the security token revolution? We’re always looking for smart and driven talent. Apply now!

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Polymesh Pillar Series Part 4: Governance was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

An essential feature of the current capital markets ecosystem is ensuring that private transactional information (who holds a security and how much they hold) remains confidential at all times. This is where one of the key challenges with public, general-purpose blockchains comes into play — anyone can see the contents or holdings of any public address. And while users can easily have confidential transactions and balances with layer-2 solutions, they come with an unworkable compromise: to add confidentiality, they must sacrifice compliance. For these layer-2 solutions to maintain privacy of transactions, issuers are unable to configure compliance rules or report on ownership. On Polymesh, users are not forced to make the same choice.

Psst. Can you keep a Secret?

Institutions must protect the private and financial information of their clients to comply with privacy requirements and safeguard their financial interests. Today, participants are concerned about the unfair edge provided to algorithmic traders; the worry that these same firms could monitor movements of positions to infer potential trades is even more significant, and one that Confidentiality on Polymesh can protect from. Under these circumstances, securities firms may not be able fulfill large orders without revealing their intention, potentially costing their clients significantly more.

To further complicate the challenges, non-reporting issuers (a fancy name for a private company that does not have to report information to the securities regulator in their jurisdiction) do not want any information that leaks about who owns their shares or how many shares they may own. With a small pool of shareholders, many non-reporting issuers can be left vulnerable to actions affecting the control of a company should their shareholder information become public. The pseudonymous nature of general-purpose blockchains means tokenholders could be discovered and the target of unwanted attention or undue pressure by those looking to influence the security token issuing company.

With Confidentiality on Polymesh, issuers don’t have to worry about corporate information becoming public; information, like how many tokens a holder owns and when they are transferred, remains encrypted and private, the way it was intended.

How it Works

Achieving confidential transactions on a permissioned blockchain is no small feat. Neither is making Confidentiality seamless within the user experience. But for issuers on Polymesh, it’s just that; they are given the option to make transactions with their security token confidential during configuration. And for tokenholders, there’s no difference at all. What happens in the background is much more complex, with zero-knowledge proofs at the heart of technology. A blog post is not the place to try to explain the intricate details of PhD-level cryptography, but not to worry — we’ll be releasing a whitepaper in Fall 2020 that dives into all the details of confidential transactions on Polymesh.

Due to the sheer amount of work involved in creating this new approach to Confidentiality, confidential transactions are outside the scope of our Q1 2021 Polymesh mainnet release. Look out for the release of our whitepaper on the topic and in the coming weeks as well as an update on progress for a confidential transactions preview on our testnet in the fall.

The Polymesh Pillar Series

To understand how a blockchain built for security tokens could best address the challenges affecting adoption and acceptance of security tokens, we learned that it was not just Confidentiality acting as a roadblock. Governance, Identity, and Compliance were also elements that impacted the embrace of this technology by institutions, regulators, and issuers. That’s why each has been built into the core of Polymesh, removing challenges and bolstering security token adoption. Check out the Polymesh blog for more information on the other pillars and how they form the foundation of Polymesh.

Join Polymath

Want to join the security token revolution? We’re always looking for smart and driven talent. Apply now!

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Polymesh Pillar Series Part 3: Confidentiality on Polymesh was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

Today marks the release of Polymesh Testnet II: Alcyone. Much like it’s predecessor Aldebaran, Alcyone is the name of a star within the Taurus constellation, a nice nod to our Polymath brand bull.

Whereas Testnet I was predominantly user-facing, much of what Alcyone brings to life is under the hood of Polymesh, with new enterprise features to help institutional users clear the roadblocks found on public, permissionless blockchains.

Here’s what you can expect from Alcyone:

Confidential Assets Infrastructure
On public chains, anyone can see the contents of a public address. While users can easily make transactions and balances confidential with layer-2 solutions, they come with an unworkable compromise — to add confidentiality, they must sacrifice compliance. Polymesh enables users to issue confidential assets while still adhering to compliance criteria in an automated way. The Alcyone release is simply the first step to implementing confidentiality with much more on the way — look forward to a technical white paper on the specifics of how Polymesh manages confidentiality later in the fall.

Portfolios
Portfolios help users group assets in a way that makes sense for them, letting them organize large numbers of assets in a functional and reportable way. Alcyone testers can start using portfolios right away and can look forward to dashboarding capabilities in Q4.

Permissions
With the Alcyone testnet, users will be able to define granular permissions for who can perform which actions on the blockchain. When combined with the portfolios function, users are able to segment responsibilities and efficiently control access to assets.

Attestation Management SDK Documentation
Attestations are the feature that ties user identity and compliance together, allowing the issuer to automate the compliance framework for their security token. More specifically, they are the on-chain confirmation that an attribute of a user’s identity is true. Sometimes attestations are based on the token (e.g. buy or sell lockups tied to when a token was issued). Other times, they’re based on the unique identity of the user and need to be verified through third-party service providers (e.g. residency; accreditation). SDK documentation makes it simple for enterprise users and attestation providers to implement this feature.

Importantly, the move from testnet I to II marks a reset of the chain — unless absolutely necessary, it’s the only one we plan to do. For us, testnet is as much about refining our internal processes as it is about ironing out bugs in the code. We know that it’s important to quickly get new features into the hands of users, but we need to be able to do this through smooth network upgrades. From here on out, we plan to conduct regular upgrades to the chain rather than doing another full reset (of course, we’ll be launching a brand new chain for mainnet). This helps us ensure that we can deliver a seamless upgrade process once we get to mainnet, and it gives users more immediate access to new features as they’re developed.

Look out for regular new feature releases as we head towards mainnet in Q1 2021.

Head to the POLY to POLYX bridge to start testing Alcyone now. If you haven’t tried a Polymesh testnet yet, here are a few things you’ll need to get started.

Join Polymath

Want to join the security token revolution? We’re always looking for smart and driven talent. Apply now!

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Alcyone is here! Learn more about Polymesh Testnet II was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

As compliance requirements continue to evolve, participants in the space have needed to put in place increasingly complicated, often-proprietary systems to remain compliant. While these systems may add elements of automation to complex compliance rules, they still require manual intervention making them far from the end-to-end automation that’s needed to deal with a convoluted process of complying with regulations in multiple jurisdictions. The nature of this ineffective automation passes along the costs to all participants, making them inefficient as well.

In addition to a lack of automation, current approaches to compliance on general-purpose blockchains are unable to deploy a complex compliance framework due to higher and higher computing costs. For example, general-purpose chains like Ethereum rely on layer-2 solutions built on top of the chain to implement these complex frameworks. As users begin to layer on successive rules for their compliance, the number and complexity of such rules pushes the chain to its computational limits, driving up costs and processing time.

Polymesh addresses these challenges by having Compliance built into the core of the chain, providing comprehensive automation to check the rules configured into the token, enabling faster processing and lower protocol fees. Once security token rules are set by the issuer, the chain ensures they are checked, and most importantly must be met, before a transfer can be completed. Issuers no longer need to approve things like individual transfers involving their token through manual or semi-automated means; with Compliance on Polymesh, compliance management is built into the security token. Now, any action that meets the rules set by the issuer can proceed, expanding the range of activities that can occur, ultimately increasing the investor pool and liquidity available to the issuer.

Compliance on Polymesh will also apply to corporate actions in the token lifecycle like elections and entitlements, though these use cases will not be available for the mainnet launch.

Your Token. Your Rules.

Like the other 3 pillars (Identity, Confidentiality and Governance), Compliance is built into the core of Polymesh, helping issuers implement on-chain compliance rules efficiently. For users, Compliance comes to life through attestations, which assist issuers meeting the regulatory requirements of their security token, and forming the foundation for how compliance is automated.

So what is an attestation? Think of it as the on-chain evidence that an attribute of a user’s identity (e.g., residency; accreditation) is true, provided by a trusted third party. Compliance rules set by issuers automatically check that the right attestations are in place for token transfers to occur. Attestations are a two-sided coin — the issuer side and the tokenholder side. With recommendations from their advisors, issuers set the rules for their security token based on applicable regulations. The smart extension then compares the rules against the proposed tokenholders’ attestations to determine if a transfer is permitted or not. Sometimes these attestations are based on the token, needing no action on the user’s part (e.g. buy or sell lockups tied to when a token was issued). Other times, attestations are based on the unique identity of the user and need to be verified through third-party service providers (e.g. where they live). Through rules and attestations, Polymesh enables an issuer to automate the compliance framework applicable for their security tokens.

The future of Compliance

With Polymesh, investors’ on-chain attestations are linked to on-chain IDs tied to real-world identities. For security token issuers, this means they no longer need to manage the permission lists for who can own, and what can be done with, their tokens, materially reducing administrative back office costs. When distributing a security token to an investor, they can choose to rely on the attestations issued by a third-party rather than having to capture all the information about an investor and store that information centrally.

The Polymesh Pillar Series

As a blockchain built for security tokens, Polymesh needs to remove the roadblocks that affect adoption and acceptance by the industry as a whole. To do this, we’ve built Identity, Confidentiality, Governance, and Compliance as pillars at the core of the chain and its design. In the Polymesh Pillar Series, we dive deep on each of these 4 pillars, why they’re needed, and how they come to life. Learn more about Identity on Polymesh now, and check back soon for more posts in the Polymesh Pillar Series.

Polymesh Pillar Series Part 2: Compliance on Polymesh was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.

The objectives of most securities regulators is to provide protection to investors from unfair and fraudulent practices, foster fair and efficient capital markets, and contribute to the stability of the financial system and the reduction of systemic risk to facilitate capital formation. In order to fulfill their mandate, securities regulators not only require issuers to provide fulsome public disclosure and reporting but also require participants to validate customer identities through Know-Your-Client (KYC) obligations.

For general-purpose blockchains, meeting regulatory requirements, like knowing who someone is, runs counter to core aspects of blockchain ethos, particularly pseudonymity and censorship. And while identity solutions can be added, they come in the form of layer-2 add-ons, creating additional complexity in the end-to-end solution. Polymesh, on the other hand, is a blockchain built specifically for security tokens–we needed to address major concerns of regulators like identity in the foundation of our solution. Polymesh has identity at the core of the chain; this means a user’s identity on the chain can only be tied to one person, and that one person can only have a single identity. Now, participants on Polymesh can more easily satisfy regulatory standards since tokenholders cannot subvert rules by holding assets under multiple identities. It also makes the chain more resilient and less vulnerable to Sybil attacks.

Today, the most common way financial service providers comply with identification requirements is to have users provide them personal information as verification, usually in the form of government-issued ID. On Polymesh, asset issuers, and other financial intermediaries can examine the Polymesh blockchain to confirm questions about identities without the need to re-identify users. This arrangement is mutually beneficial for all participants because it streamlines the identity verification process and reduces costs for all participants. Issuers and institutions no longer need to re-identify users, and users do not have to re-submit their information to each institution they want to work with.

Bringing identity to life on Polymesh

With Polymesh, every user onboarded validates their identity through a basic customer due diligence (CDD) process, or the verification of your name, date of birth, and place of residence through a CDD provider. All users — whether issuers, investors, service providers, operators, or stakers — need to validate their identities through CDD to hold POLYX and therefore use the chain. Once complete, any accounts a user creates will be securely and confidentially connected to this identity, allowing users to create new accounts and complete transactions as needed. And most importantly, any asset held by a user will be linked back to a real-world identity.

Polymesh identity verification is modular. Issuers can enhance Polymesh’s base CDD with additional identity verification or due diligence actions to meet their desired assurance level. The potential benefits of such structures are numerous. Issuers, investors, and regulators no longer need to choreograph sequences of the “paper shuffle” with one another. Entities that are entitled to receive certain information about issuers or investors can be permitted to do so and will have the ability to query the Polymesh blockchain for identity-related information rather than re-identify users or wait for information to be submitted by agents.

The Polymesh Pillar Series

To understand how a blockchain built for security tokens could best address the challenges affecting adoption and acceptance of security tokens, we learned that it was not just Identity acting as a roadblock. Governance, Confidentiality, and Compliance were also elements that impacted the embrace of this technology by institutions, regulators, and issuers. That’s why each has been built into the core of Polymesh, removing challenges and bolstering security token adoption. Identity is the first post in the Polymesh Pillar Series. Stay tuned for more in the coming weeks.

Test Identity on the Polymesh blockchain now with the Aldebaran testnet.

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Polymesh Pillar Series Part 1: Identity on Polymesh was originally published in Polymath Network on Medium, where people are continuing the conversation by highlighting and responding to this story.