Security tokenization startup, Polymath has migrated Polymesh, the blockchain network used for its security token platform from Ethereum to Substrate, a platform reportedly developed by Ethereum co-founder Gavin Wood’s Parity Technologies.
Coindesk initially reported the development today, with Polymath’s head of blockchain efforts, Adam Dossa revealing the reasons for their migrating from Ethereum to a platform he believes would better accommodate security tokens and regulated assets.
Specifically, the official highlighted Ethereum’s current consensus mechanism (Proof-of-Work) as the core reason behind the decision to move despite the other great attributes possessed by the world’s second-largest blockchain network.
Dossa explained that the PoW mechanism, which Ethereum is set to replace with Proof-of-Stake (PoS) early next year, means that the network is still technically vulnerable to the much-dreaded block reorganization.
Given that inherent risk, Dossa argued that Polymath could not totally gain the trust of its client, which primarily includes institutional investors and other larger corporations.
He also mentioned Ethereum’s incentive system as another reason why staying on the platform was no longer feasible for Polymath and its institutional clients.
The fact that the processing fee goes to an Ethereum miner irrespective of their location means that institutions could face a challenge if governments go after them for paying individuals who mine Ethereum from sanctioned nations.
Regarding the newly built Substrate platform, however, Dossa noted that “when a transaction is finalized, it cannot be undone,” and there is also the chance of trying out different consensus mechanisms beyond PoW.
In a recent report about security tokens, Stmarket.co confirmed that Singapore-based security tokenization and issuance platform, iSTOX, secured $5 million in funding from Japan-based Tokai Tokyo Financial Holdings (Tokai).