Polymath: Q2/2019 Network and Revenue Data Report

Abstract

Polymath is a service provider company in the nascent security token market. The security token market aims to facilitate the tokenization of assets, capital formation and liquidity of regulatory compliant securities via digital ledger technologies.

The services within the Polymath network, including security token contract creation, are paid for by redeeming Polymath’s POLY utility token.

This data report provides performance of the Polymath network for Q2/2019 April 1 — June 30, 2019. The report also contains reference charts for the first half of 2019 and since going into production.

This data only references network and revenue performance. It does not reference business or marketing activities.

Motivation

The motivation for this data report stems from the following:

1. End of second quarter Q2/2019.
2. Use of additional metrics including for-fee STO template and ticker count/revenue as well as module attachment rates.
3. Ongoing observation of Polymath performance vs. marketing message

It is important to mention that this report is not intended to be interpreted as financial or legal advice. It is for informational purposes only. The review is an account of blockchain activity. See the Appendix at the bottom of the report for more details.

Executive Summary

Performance since WE.R.LIVE ST-20 contract creation July 30, 2018 — June 30, 2019:

• Total amount of recognizable revenue: $41,511
• Total For-Fee Template use revenue: $25,209
• Total Ticker Symbol reservation revenue: $11,381
• Total ST-20 Contract creation revenue: $4,921
• Total number of Ticker Symbols reserved: 271
• Total number of ST-20 Contracts created: 131
• Ticker Symbol to ST-20 contract conversion rate: 48.3%
• Total number of For-Fee Templates used: 5
• Total number of POLY tokens redeemed: 282,500

Quarter ending June 30, 2019:

Revenue

• $1,652 recognizable revenue collected for the quarter ending June 30, 2019. This is -63% down from Q1/19 ($4,465).

Tickers Symbol

• $1,052 in Ticker Symbol recognizable revenue for the quarter ending June 30, 2019. This is -36.2% down from Q1/2019 ($1,650).
• 43 tickers created this quarter. This is a -30.6% difference from Q1/19 (62).

ST-20 Contracts

• $600 in ST-20 recognizable revenue collected for the quarter ending June 30, 2019.
• This is down -35.5% from Q1/19 ($931).
• 24 ST-20 contracts created this quarter. This is a -31.4% difference from Q1/19 (35).

Modules

• $0 in for fee modules attached to any ST-20 contract this quarter.
• This is a -100% difference from Q1/19 (1).

POLY Token

The POLY token reached its all time low (ATL) value of $0.075 on May 9, 2019.

As of this publication, the POLY token has a -89.44% ROI since the token began trading on February 2, 2018.

Q2/19 Analysis

Use of the Polymath network slowed throughout the quarter with June having the lowest revenue of any month since production began. The up tic in March 2019 was a helpful boost to Q1, but fizzled out by the end of Q2.

Contract creation slumped month over month. There were more contracts created in March than all the months in Q2 combined. Even the chatter in the once boisterous and speculative Polymath social media channels has slowed.

Of the recognized revenue, temporary ticker symbol reservation continues to outpace ST-20 creation by over 2:1.

The usage drought for the two for-fee STO template modules continues. Even at the consistently low POLY token prices, service users have not been compelled to pay for what appears to be Polymath’s highest priced/margin service offerings. Though, with 5 templates implemented since the service going live, it represents Polymath’s largest revenue stream to date.

Continuing from previous quarters, the circulating POLY token pool has been inflating in quantity and deflating in value at the same time. This pattern has been occurring since the production release of Polymath’s service offerings in August 2018. POLY token redemption rates cannot keep up with new POLY automatically added at scheduled intervals to the overall supply.

Although completely outside of the influence of Polymath and its services, wallet growth is a useful metric to show signs of life within the ST-20 contracts.

The numbers are still quite small with 7 of the 131 contracts containing more than 20 wallets. There are approx 4 contracts that have had consistent month over month wallet growth through the second quarter.

To date, the Token Studio and CLI are primarily servicing ticker symbol creation activities. However, overall growth is slowing following a trend that kicked off the beginning of 2019.

In Polymath’s current state, they appear to be hostage to, among others, Korean utility token speculators who set the price of the Polymath network services though speculative POLY token trading. Korean exchanges make up a large percentage of the activity. Such unpredictable and weak pricing may signal low quality/low grade services to the consumer market.

The Polymath Network Contracts

Activity reported is from the Ethereum Mainnet from both the Polymath Network Core 1.x.x and Core 2.1.0 platforms.

There are 15 contracts in the Polymath network Core 2.1.0 available on both the Ethereum Mainnet and Kovan networks. The SecurityTokenRegistry (Proxy) contract is new for v2.0.0, is the most active and is associated with contract creation.

New for Q2/2019 (April) is the v2.1.0 of the Polymath Network Core.

The basic workflow of using the Polymath network to create and manage a ST-20 contract:

1. Create an Ethereum ticker symbol reservation. This is a 60 day temporary reservation of the ticker symbol. If not used against a ST-20 contract after 60 days, the symbol becomes available for anyone to use.
2. Create a ST-20 contract.

At this point, the basic workflow is complete. However, the service user has the option to apply a number of modules to the contract. These modules are Solidity programming methods that give ST-20 contract owners more options when conduction their STO or managing their security token’s life cycle.

Ticker Symbol Reservation

Total number of ticker symbols reserved per month during Q2/2019: 43.

Total number of ticker symbols reserved per month during 1H/2019: 105.

Total number of ticker symbols reserved per month since the WE.R.LIVE ST-20 contract on July 30, 2018: 271.

ST-20 Token Contract Creation

Total number of non-test ST-20 contracts created per month during Q2/2019: 24.

Total number of non-test ST-20 contracts created per month during 1H/2019: 59.

Total number of non-test contracts created per month since the WE.R.LIVE ST-20 contract on July 30, 2018: 131.

Wallet Count Per ST-20 Token Contract

Current wallet count per ST-20 from month contract was originally created in Q2/2019.

Current wallet count per ST-20 from month contract was originally created in 1H/2019.

Current wallet count per ST-20 from month contract was originally created since the WE.R.LIVE ST-20 contract on July 30, 2018.

Total Number of Wallets

Number of wallets per contract starting at the WE.R.LIVE ST-20 contract up to June 30, 2019: .

• 60.3% of the contracts created to date have 0 wallets and 0 tokens. There are 79 total.
• 18.3% of the contracts created to date have 1 wallet with > 0 tokens. There are 24 total.
• 7.6% of the contracts created to date have 2 wallets with > 0 tokens. There are 10.
• 7.6% of the contracts created to date have between 3 and 6 wallets with > 0 tokens. There are 10 total.
• 3.9% of the contracts created to date have => 20–50 wallets with > 0 tokens. There are 4 total.
• 2.3% of the contracts with wallet counts > 50 have: 127, 175 and 440 wallets respectively. The project associated with the contract with 440 wallets issued an airdrop of a security token, which explains the high count.

ST-20 Contracts with Highest Wallet Count

POLY Token Revenue

Revenue may be recognized when the POLY utility token is redeemed as payment to access a service on the Polymath network. When users pay for a service, revenue is assumed recognizable against deferred revenue from the Polymath Pre-Sale ICO.

In this report, the token value is determined by the close of day value of the POLY token. The POLY token is removed from the circulating pool of tokens when redeemed.

Ticker Symbol Reservation Revenue

Total amount of recognizable revenue from ticker symbol reservation per month during Q2/2019: $1,052.

Total amount of recognizable revenue from ticker symbol reservation per month during 1H/2019: $2,702.

Total amount of recognizable revenue from ticker symbol reservation per month since the WE.R.LIVE ST-20 contract on July 30, 2018: $11,381.

The below chart represents the cost of ticker reservations over time up to June 30, 2019.

ST-20 Contract Creation Revenue

Total amount of recognizable revenue from ST-20 contracts created per month during Q2/2019: $600.

Total amount of recognizable revenue from ST-20 contracts created per month during 1H/2019: $1,542.

Total amount of recognizable revenue from ST-20 contracts created per month since the WE.R.LIVE ST-20 contract on July 30, 2018: $4,921.

The below chart represents the cost of a contract over time up to June 30, 2019.

Template Use Revenue

There was $0 in template revenue in Q2/2019.

Total amount of recognizable revenue from template (1 Capped STO) use per month during 1H/2019: $1,884.

Total amount of recognizable revenue from template (4 Capped STO, 1 USD Tiered) use per month since the WE.R.LIVE ST-20 contract on July 30, 2018: $25,209.

POLY Token Redemption Rates

The Polymath network requires the use of the POLY token to pay for the network’s services. POLY tokens are removed from the circulating supply of 472,089,933 tokens. A total of 282,500 have been removed since July 30, 2018.

The Polymath network fee schedule:

• 250 POLY to reserve a ticker symbol
• 250 POLY to create the ST-20 token contract
• 20,500 POLY for the ‘CappedSTO’ template
• 100,000 POLY for the ‘USD Pegged to Fiat STO’ template

Ticker Symbol Reservation Redemption

Total amount of POLY tokens removed from the circulating supply from ticker symbols reserved per month during Q2/2019: 10,750.

Total amount of POLY tokens removed from the circulating supply from ticker symbols reserved per month during 1H/2019: 26,250.

Total amount of POLY tokens removed from the circulating supply from ticker symbols reserved per month since the WE.R.LIVE ST-20 contract on July 30, 2018: 67,750.

ST-20 Redemption

Total amount of POLY tokens removed from the circulating supply from ST-20 contracts created per month during Q2/2019: 6,000.

Total amount of POLY tokens removed from the circulating supply from ST-20 contracts created per month during 1H/2019: 14,750.

Total amount of POLY tokens removed from the circulating supply from ST-20 contracts created per month since the WE.R.LIVE ST-20 contract on July 30, 2018: 32,750.

Template Use Redeemed

There were 0 POLY tokens redeemed for template use purchases in Q2/2019.

Total amount of POLY tokens removed from the circulating supply from template use purchases per month during 1H/2019: 20,500.

Total amount of POLY tokens removed from the circulating supply from template use purchases per month since the WE.R.LIVE ST-20 contract on July 30, 2018: 182,000.

Modules & Templates

Accompanying the ST-20 contract are 13 modules that ST-20 owners can apply to their security token. Use of modules demonstrates the intensity at which its ST-20 contract owners interact with their security. In effect, these modules are features that enable various types of functionality.

Of all the modules, only one appears mandatory for each ST-20 contract: GeneralTransferManager.

Of all the ST-20 contracts created to date, only 5 non-mandatory modules have been utilized. Module use can be found in the event log of each ST-20 contract.

Appendix

Change Log

The change log captures major changes to the article since publication.

• 7/1/2019 —Published

Data Sources

The data sources to conduct this analysis originate from the following:

1. Polymath Core service 1.x.x contract address.
2. Polymath Core service 2.1.0 addresses.
3. Polymath Core legacy addresses.
4. Individual ST-20 contract addresses.
5. Polymath Service Fees.

Tools

1. Etherscan.io

Constraints

1. The data may be incomplete and contain errors. It is sourced without the assistance of the ST-20 contract owner or Polymath.
2. There may be rounding errors in % of or $ value totals.
3. There may be missing ticker, ST-20 contracts, module templates from the data set thus under representing all totals.
4. The exact intention of the contract owners is unknown. Both Polymath and any third party evaluating the data may have no information describing what contract owners intend(ed) to do. Intention may be inferred from information within the contract address (dates, wallets, tokens, transaction activity, marketing, etc.)
5. How Polymath recognizes revenue is not exactly known. However, due to the nature of the network, capital fund raise and POLY utility token to pay for services, a deferred revenue model is assumed.

Metrics

This review evaluates the following metrics:

• Ticker symbol and ST-20 contract creation date

Date the ST-20 token contract was created on the Polymath Core v2.0.0 Ethereum Mainnet contracts. This includes contract upgrades from Polymath Core v1.x.x that occurred in the November 2018 time frame. This upgrade makes it appear as if there was a large number of contracts created all at once. This is not the case. Most of the November contracts were created prior to November 2018.

• Quantity of ticker symbols and ST-20 contracts

Number of ETH ticker symbols and security tokens produced on the ETH blockchain within month, quarter, etc.

• Number of POLY token redeemed

The number of POLY token redeemed demonstrates how the market is removing the tokens from the network through use of the Polymath Network.

• Number of wallets

Number of wallets in the ST-20 token contract that contains ST-20 tokens. The number of wallets represents the number of individual entities holding tokens in the wallet. A low count indicates a low number of investor participation within the security.

• Number of tokens

In this review, the number of tokens is not considered. The impact the number of tokens has in contract is difficult to gauge without having knowledge about how the issuer intends to use the tokens. This, along with closure that states a milestone has been met, like the close of a fund raise.

• Token transactions

There are few token transactions in the data set. Transactions accounting in this review is limited to the Polymath Core contracts on the Ethereum Mainnet.

• Modules

Polymath offers its ST-20 contract owners numerous modules to help better manage the security token offering and life cycle. Modules are simply code functions or methods added to the contract and executed when applicable. Modules use is derived from entries in a ST-20’s event log.

• $ revenue from contract creation

Values are a combination of the service fees published by Polymath as described here plus the Close $ value of the Poly token found in Coin Market Cap’s historical data range for any of the services on the date of creation.

Ethereum GAS costs are not factored into the revenue models or assumed costs to the service user.

The $ value of the POLY token and service costs is different on any given day.