To tackle this problem, Polymath – the company which would later engineer Polymesh – brought together 25 companies composed of key industry professionals to propose a unified standard for security tokens on Ethereum. You can see a comparison of standards here. Security tokens were intended to bring efficiency and reduce complexity, and adding this additional barrier was counterproductive.
#Polymath news code#
However, this multitude of implementations ultimately created friction for the rest of the industry, particularly as custodians, exchanges, and other participants were needing to perform extensive due diligence on the code associated with the tokens themselves, in addition to their normal business due diligence. Implementations included the DS protocol from Securitize, R-Token from Harbor, T-Rex from Tokeny and ST20 from Polymath. Numerous entities tried to overcome these issues with proprietary standards. For one thing, organizations couldn’t rely on ERC 20 to enforce KYC for secondary trades, which does not bode well for ownership certainty, an up-to-date cap table, or a recovery mechanism in the event of a lost private key.
Yet the ERC 20 was simply not designed for security tokens, ultimately creating a number of problems. The ERC 20 standard was established during the early days of tokenization and remains the foundation of most tokens to this day.
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