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Report Summary‍

Ernst & Young has provided a validation report confirming the soundness of our tokenomics  and our objective to achieve 100% self-sustainability of Compounding Rewards Yield (CRY) and up to 50% of all rewards and perks emissions. They have thoroughly reviewed our financial model,and provided their own forecasts using simplified calculations for preliminary assessments.

Plutus has incorporated a wider range of behavioural data points into our calculations, such as monthly earnings and payouts, utility redemptions, and historical DEX volumes for our Time Value of Money (TVM) and intrinsic value calculations in the whitepaper. EY has confirmed that these details, covered in the whitepaper, offer more precise outcomes that reflect actual customer behaviour.

Plutus and EY will continue to work closely to integrate these additional data points into the analysis to accurately reflect the calculations presented in the whitepaper.

Key Takeaways

• Definition of Sustainability: To simplify the model, EY defines “sustainability” as being 100% sustainable across CRY, rewards, and perks. All EY figures are based on this goal and differ from the goals in the whitepaper.
• Plutus' Sustainability Target: Plutus aims for 100% self-sustainability for CRY and 50% self-sustainability for rewards and perks.
• Model Validation: While EY's figures are based on a more stringent definition of sustainability, they have confirmed that both the tokenomics and model mechanics are sound. The model indeed supports 100% self-sustainability for CRY payouts and up to 50% for card rewards and perks.
• CRY Funding: EY confirms that CRY is 100% self-sustainable from the sales and transfer taxes (i.e., FUEL) described in the white paper. However, the 50% self-sustainability of card rewards and perks is dependent on token price.
• Simplified Valuation Model: EY’s current model is simplified and does not yet account for some customer behavioural data or the intrinsic value provided by token utilities. This omission accounts for any valuation discrepancies.
• White Paper TVM Calculations: EY has confirmed that Plutus’ white paper TVM calculations, which include the additional behavioural data and token utilities, are accurate.
• Ongoing Collaboration: Plutus will continue to work closely with EY, incorporating more detailed customer behaviour data and utility-driven value into the analysis.
• Future Refinements: The model and analysis are works in progress, and further refinements will continue to enhance the accuracy and robustness of the valuation.

FAQ

Why do Ernst & Young's and the white paper's price valuations differ?‍

The Time Value of Money (TVM) is a fundamental concept in finance that describes the idea that money available today is worth more than the same amount of money in the future. We have used TVM calculations to determine PLU’s value.

Ernst & Young simplified their calculations by assuming that 100% of reward emissions are stacked, no PLU is redeemed, and no PLU is withdrawn. With how TVM calculations work, omitting these factors greatly suppresses the valuation.

The white paper is more expansive and includes additional consumer behaviour considerations such as withdrawals, swaps, and redemptions. When these more accurate behavioural factors are included, the calculations reflect a higher Present Value. EY has confirmed that the methodology used in the whitepaper, which includes these additional factors, is valid.‍

Wouldn’t the assumption that no rewards are withdrawn and sold increase the PLU price calculations?

No, TVM calculations help determine the Present Value of money or assets, reflecting their true worth based on expected future value or benefits.

The EY report assumes that users can’t withdraw, sell, or swap their PLU, and instead stack indefinitely. The lack of functionality of the token in these calculations decreases its present value.

The white paper model more accurately reflects customer behaviours, showing that customers can redeem their tokens for real-life value and more, which is reflected in the white paper valuations. Ernst & Young have confirmed that the methodology in the white paper is valid, and once these additional behavioural factors are included, the valuation would reflect the valuation in the whitepaper TVM calculations.

Is this the final EY report or are there further updates? And will an updated report be shared with us?

Our partnership with EY is ongoing. They will continue to expand their analysis by incorporating more detailed components for our internal review and sharing them with a private group of investors. We have secured a third-party customer release and will provide more comprehensive details as the analysis progresses and as permitted.

Why was the report completed on 26th July and only distributed on 30th July?

The data analysis was finished on 26th July. However, working with a Big Four firm involves several compliance and regulatory requirements for approval processes before releasing private reports to third parties.

Will Plutus consider a more dynamic reward rate based on EY's suggestion?

Given the additional customer behavioural factors and conditions to use the product have not been accounted for in the financial model, implementing a dynamic reward rate is unlikely. However, Plutus is committed to continually evolving its services based on customer demand and new data to ensure a top-tier experience for its customers.

The EY report mentions a specific price point required for Plutus to achieve full sustainability. What does this mean?

When referring to sustainability, Ernst & Young's report defines this as being 100% self-funding for all emissions, including CRY, Rewards, and Perks. However, Plutus' target has been to achieve 100% self-sustainability of CRY and up to 50% sustainability of Rewards and Perks emissions irrespective of price. The necessary price points to ensure sustainability are as follows:

• 100% of CRY and Rewards, and Perks = ≥£7.90
• 100% of CRY and up to 50% Rewards/Perks = EY Confirmed (irrespective of price).

Note: Sustainability is influenced by FUEL collections, which vary based on token price. To cover 100% of all emissions (CRY, Rewards, and Perks), the token must be at £7.90 or higher. However, CRY remains 100% self-sustainable, and Rewards and Perks are up to 50% self-sustainable at all price points.

Why is PLU trading lower than the sustainability price point, and how does this impact the token?

PLU’s ‘current’ value in the report reflects the current model rather than the proposed whitepaper plans. The new white paper plans aim to introduce new utilities, reward levels, CRY, and other features to better align PLU with its intrinsic value. Currently, EY’s assessment is missing key utilities which they confirm will impact the token valuation and overall sustainability as outlined in the whitepaper.

For example, utilities like Plutus Gifts are expected to anchor PLU to a £10 valuation floor. Similarly, Plutus Travel provides depth for mass redemptions to sustain a high intrinsic value.

Will there be more token utilities in the future beyond what is highlighted in the whitepaper?

Yes, Plutus will continually add more use cases for Pluton - this is only the beginning.

What does EY's analysis mean for Plutus?

EY's analysis confirms our own assessments and is very encouraging. They have verified that our model can sustain 100% of CRY and up to 50% of rewards and perks emissions, even without including key supporting data points such as PLU redemptions and new utilities. This confirmation shows that our model is fundamentally sound and remains sustainable even without these additional factors. Additional validation of our TVM calculations (which is based on actual customer behaviour) confirms that the requirements for Reward Levels in the proposed model are offered below their true worth despite adjustments.

Plutus is committed to refining the model further with EY by adding more customer behaviour data points, enhancing its accuracy and closer aligning it with the white paper calculations.

What happens to the self-funding aspect if PLU price is below the sustainability price point?

The figures provided in the report are based on the financial model with simplified assumptions, representing the threshold for achieving 100% self-sustainability of all emissions.

EY’s report confirms that for 100% self-sustainability for CRY and up to 50% for rewards and Perks, both the tokenomics and the model are sound, irrespective of PLU price, achieving our original objectives as described in the white paper. The remaining tokens needed for emissions will be minted as necessary, regardless of price points, and will be correlated with tax collections rather than token value, as confirmed by EY’s assessment.

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