Fundraising the conventional way comes with several challenges, such as a lack of transparency, inefficient fund disbursement, and difficulties attracting investors. Projects often have to rely on intermediary platforms to attract more investors, but these centralized platforms tend to charge high fees and the algorithms and settings in place can limit the project’s exposure.

One promising solution to these issues is Polimec, a blockchain-based platform that enables decentralized, transparent, efficient, and regulatory-compliant fundraising through blockchain technology. It streamlines the whole process of raising capital and is particularly efficient at optimizing the collection and allocation of resources.

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Introducing Polimec: A Solution for Modern Fundraising

Polimec was first released in late 2020 by the creators of KILT, a blockchain identity protocol for generating self-sovereign decentralized identifiers. Since then, it has steadily grown into a platform that aims to be the top decentralized, community-driven funding protocol in the Web3 space. 

Their native token is PLMC. It is used to pay Polimec’s very minimal transaction fees and can also be locked for evaluation, participation, staking, and governance purposes.

Polimec taps into the Polkadot ecosystem to guarantee security, interoperability, and streamlined cross-chain transfers. It automates fund disbursement and creates a trustless environment where projects are judged based on merit, not bias.

To participate in the ecosystem, Polimec users use pseudonymous credentials verified by a third-party KYC process. These credentials are tied to each user’s unique decentralized identifier (DID). Blockchain technology ensures that the participants meet AML compliance requirements while making sure to keep their personal information private.

Fundraising Roles

The fundraising process on Polimec consists of several key roles, namely:

Issuers: These are individuals or teams seeking to raise funds. Issuers must provide comprehensive details about their project and undergo a stringent evaluation process. To list a project, they must first get trusted third-party certification.

Evaluators: They assess the feasibility and potential of submitted projects. 

Participants: They take part in funding rounds and provide liquidity to projects they believe are worthwhile. There are three classes: retail, professional, and institutional. The category determines their access to funding rounds and the maximum amount they can contribute during the vesting period.

Stakers:  PLMC holders can earn passive income by providing liquidity to the ecosystem. In exchange for rewards, they can stake PLMC tokens to nominate collators, who are in charge of collecting and executing user transactions and generating proofs for validators.

Fundraising Process

Projects that want to raise funds on Polimec apply as issuers. After having their credentials verified via KYC, they list their project and fill out the details and parameters of their proposal, including:

• Mechanisms for allocating contribution tokens
• Contribution tokens that will be used, such as DOT or stablecoins
• Target funding goal
• Threshold for each funding round
• Expected impact of the project
• Which categories of participants get access to funding rounds

Next, evaluators are tasked with judging whether or not a project has enough merit to proceed to the funding rounds. They assess the projects against a set of predefined criteria; those that do not meet Polimec's standards are rejected. To back a project, evaluators stake or bond PLMC. A project needs to meet a certain threshold of bonded PLMC—depending on the target amount to be raised—before proceeding to the next round.

Evaluators have to be careful to choose only the projects that are truly feasible. If the project reaches the target amount, the evaluators are rewarded for their successful assessment. However, if the funding rounds are not successful, a portion of the evaluators’ staked PLMC get slashed. The amount they are penalized depends on how close the project gets to reaching the target funding amount.

Participants who choose to invest in a certain project receive contribution tokens that provide proof of participation. Upon the launch of the project, these tokens automatically get converted to the project’s tokens issued on its mainnet. These tokens cannot be transferred to other accounts. If the target funding amount is not reached, the issuer is given the option to either return the funds or accept them.

Depending on the category of the participant (retail, professional, or institutional), they can apply multipliers on their contribution spending on the amount of PLMC they staked. Professional investors can multiply their contributions to up to 10x the value of PLMC, while Institutional investors can offer up to 25x the value of PLMC. The higher the multiplier, the longer the vesting period required. The vesting period starts 7 days after the funding round ends.

Smart contracts automate the transfer of funds to and from the on-chain treasury, as well as the conversion of contribution tokens to project tokens. This process makes the allocation of capital more efficient and less prone to human error than having each investor make individual claims. 

The auction round is only open to professional and institutional participants. Afterward follows the community round, which is open to those who did not make any winning bid.

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Benefits of Using Polimec

Using Polimec for fundraising offers the following advantages over conventional fundraising methods:

Lower Fees

The good news for those who want to use this platform is that Polimec doesn’t charge participation fees. It only charges a fee if the funding rounds are successful; otherwise it gives project owners the option to simply return all the funds without hassle.

Decentralized and Transparent Transactions

Since Polimec is blockchain-based, it eliminates the need for centralized financial intermediaries like banks and venture capital firms. Transactions and contractual commitments are permanently recorded on the blockchain, allowing investors to audit the full history of a project’s funding and expenditures and determine how capable the team is at managing the funds it receives.

Fair Evaluation

Polimec uses a transparent evaluation process where projects are judged based on their merits rather than on the background or connections of the project team. Community involvement also has a bigger role to play, since the process of vetting deserving projects is done by evaluators who perform their roles by staking PLMC instead of being hand-picked based on their connections within the industry.

Reusable Credentials

Polimec uses third-party-verified, pseudonymous credentials to verify the identity of its users without breaching their privacy. The credentials are reusable throughout the ecosystem—no need to manually input them over and over again each time someone wants to participate in the funding of a new project. 

No personal information is stored on-chain, and users get to choose how much of the information they are willing to share. Polimec’s infrastructure ensures that all transactions and interactions are fully compliant with existing regulatory frameworks such as KYC (Know Your Customer) and AML (Anti-Money Laundering) to weed out bad actors and protect legitimate investors against fraud.

Access to More Investment Opportunities

It also increases the opportunities for startups to raise capital by making projects more accessible to potential investors. In line with its vision to democratize access to capital, Polimec helps project founders reach investors outside exclusive investment circles or platforms. Individuals from retail, professional, and industrial backgrounds get the opportunity to access early-stage funding rounds in a secure way.

For instance, a clean energy startup may use Polimec to attract investors from individual environmental advocates to major green funds thanks to transparent operations and project data. A community-led housing project could use Polimec to secure funds while offering backers clear insights into how every dollar is spent.

Customized Participation

The platform categorizes participants into retail, professional, and institutional investors, each with different levels of access and participation rights. This structured approach ensures that different types of investors can engage with the platform in a way that suits their specific investment capabilities.

Automated Collection and Disbursement

Project stakes are represented as digital tokens on the blockchain, which can be traded more easily than traditional equity stakes. Instead of having individuals claim their tokens, which is prone to human error, smart contracts automate the collection and allocation of funds and distribution of project tokens.

Strategic Partnerships

Polimec has formed several strategic partnerships to enhance its operations and community reach. Two key partnerships are with Deloitte for end-to-end managed KYC/AML services and Moonbeam for EVM-based functionalities.

The partnership with Deloitte allows Polimec to integrate banking-grade KYC/AML processes seamlessly into its platform. By utilizing Deloitte's established frameworks and services, Polimec can offer its users a level of security and compliance necessary for large-scale, global operations. Deloitte’s solutions streamline the verification process, reducing the time and resources required to onboard new participants. The partnership also ensures that Polimec can operate across different jurisdictions and cater to a worldwide audience while adhering to local and international regulations.

Meanwhile, the partnership with Moonbeam allows Polimec to interact with Ethereum-based apps and smart contracts thanks to its compatibility with Ethereum Virtual Machine. This way, projects operating on different blockchains can still raise funds on Polimec. Moonbeam's compatibility with existing Ethereum tools and DApps also lowers the barrier for developers to contribute to or build on the Polimec platform. It allows Polimec to support a wider range of tokens and dApps.

Looking forward, Polimec is set to expand its functionalities and ecosystem integration. The ongoing development of the platform promises to introduce new features that will further enhance user experience and expand its capabilities within the Web3 space. By aligning the interests of different stakeholders through a transparent, efficient, and inclusive platform, it sets a new standard for what fundraising can look like in the age of decentralization.

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