ICO Analysis: Pointium

On average, consumers are registered to 29 different point programs. This makes point management for them extremely difficult and causes the points to expires.

Due to the low utilization of points by customers, companies cannot maximize the impact of their loyalty points program. Such poor performance puts social costs on both customers and businesses.

To the businesses, unused points are listed as liabilities on their financial statements. As customers’ points become less utilized, the businesses’ liabilities become larger, which negatively affects their financial assessments.

The Solution

Pointium’s approach is to solve these problems by integrating all the disparate point systems.

Pointium users can manage all their points at once, and exchange unused points for Pointium tokens, and exchange their Pointium tokens for the rewards points of other memberships. Pointium can automatically convert the to-be-expired points into Pointium tokens and prevent the points from losing value.

Pointium provides partner businesses with the right to determine the exchange rate between their proprietary points and Pointium tokens so that they can effectively eliminate their debt and utilize the Pointium’s Promotion Feed to reach more customers.

In theory, Pointium effectively addresses the major issues with rewards points while providing more promotional opportunities for users and businesses.

Pointium is first targeting the travel industry before expanding to others.

Pointium Wallet: Integrated Points Management Platform

Using the wallet, both business and consumer users can manage all their rewards points from various rewards programs, including viewing the expiration date and amount of points per program.

Users can exchange their points for Pointium tokens, or their Pointium tokens for the points of other rewards programs.

Moreover, the Pointium Wallet enables the users to check the exchange rate between Pointium tokens and the points of a given rewards program in real time.

The wallet is available as both a website and mobile app. The minimum points required for exchange into Pointium tokens can be also checked.

Pointium Exchange

The exchange rate and minimum points for exchange is determined by each business participant.

As an ERC-20 token, the exchange of Pointium tokens is processed as a transaction on the Ethereum blockchain.

The exact exchange rate of each partnership will be the price of Pointium token per their point on the smart contract of Ethereum. The minimum quantities of each partnership for exchange will be also processed on the smart contract.

If the users of Pointium wish to exchange their points for Pointium tokens, the partnerships should have that amount of Pointium tokens available to exchange. The partnerships then receive the users’ points provide Pointium tokens in exchange.

If on the other hand users wanted to exchange their Pointium tokens for the points of a specific rewards program, the program in question would do the inverse.

Promotion Feed

Pointium can pass on promotion information from the partner business to the consumer through the Promotion feed.

Promotion Feed is the real-time communication channel between partnerships and users and is the main global marketing program offered by Pointium.

The feed allows users to quickly find out more special offers and partnerships which lets businesses offer loyalty programs to more customers.

Pointium Shop

The Pointium Shop is available to both users and partnerships. In the Pointium Shop, the users can purchase the products of partnerships for Pointium tokens or the points of partnerships.

The business partnerships can upload their products or services and related prices to the Pointium Shop. This provides more purchasing channels for both the users and the partnerships

The partnerships of Pointium can determine the exchange rate between Pointium tokens and their points. For example, imagine that company A gives you (the consumer) rewards points that are worth 10 % of your purchase (1 points per 10 dollars).

Let’s assume that 1 Pointium token is worth 1 dollar. If the partner business determined the exchange rate for their rewards points as 1 Pointium token per point, the company can exchange their points without any profits or losses.

However, because the exchange rate is set by the partner business, the company can essentially increase their access to capital simply by allowing their rewards points to be exchanged for Pointium tokens.

The beauty of this approach is that it’s merely subjecting rewards points to the basic economic forces of supply and demand.

Moreover, the exchange rate for each rewards program with Pointium tokens will be clearly visible in the Pointium Wallet.

This allows users can decide whether want to make an exchange with full knowledge of current market conditions.

Pointium also allows partner businesses the ability to set a minimum number of rewards points that can be exchanged for Pointium token.

In theory, this means that partner businesses could benefit from increased marketing opportunities without experiencing losses of customer loyalty.

This is a much more efficient and decentralized system than the status quo of zero liquidity.

However, this system alone might cause two problems.

First, since the exchange rate can be determined only by the companies, the companies could set the rate to one which maximizes their profits but minimizes the customers’ profits. The loss of customers that would result could eventually reduce the usability and network effects of Pointium.

Secondly, if the company set the price of points too low, the company could benefit from the marketing opportunities by Promotion Feed without any exchange transaction volume.

This might lead to a “tragedy of the commons” scenario and incentivize  the company to set the rate lower and lower.

To prevent this, Pointium operates the Promotion Incentive Model, which is as follows.

Promotion Incentive Model

According to the white paper, the Promotion Incentive Model enables the businesses to actively provide a more reasonable exchange rate.

The basic argument is as follows:

The partner businesses can reach more users in the Promotion Feed if they set the price of their points higher and the transaction volume is higher.

On the other hand, if the business set the point price too low and the volume of exchange hits zero, the partnerships’ probability of reaching potential new customer will also be zero.

Token

To recap, the point of Pointium is:

For consumers:

  1. Manage Your Points Easily
  2. Pointium Wallet allows you to manage and integrate numerous partners’ points at once.
  3. Get Promotions Quickly
  4. Promotion Feed is the quickest way to check out.
  5. The special promotion of interested companies.
  6. Use Points in Various Ways
  7. Users can exchange their points for Pointium tokens (PNT), or use their points in the Pointium Shop

For Businesses:

  1. Reaching More Customers
  2. Pointium’s partners can easily sell and market products to Pointium users.
  3. Enhance Rewards Program’s Performance
  4. Reduction of business costs and increased access to liquid capital

Pointium Wallet also provides businesses with an easy marketing opportunity through both the Promotion Feed and the Pointium Shop.

If utilized intelligently, the businesses could deliver their promotions and sell their products/services to all of the users with a Pointium Wallet.

The token distribution is as follows:

  • ICO: 50%
  • Team and Experts: 15%
  • Reserve: 15%
  • Foundation: 10%
  • Seeding Businesses: 10%

Use of proceeds is as follows:

  • Core Development: 60%
  • Operation & Admin: 20 %
  • Marketing & Sales: 15%
  • Legal & Accounting : 5%

Team

Simply put, the Pointium team is great. Pointium’s CEO has been a project manager at Dell & IBM for the past 13 years. Their COO was a decorated business operations manager at Bank of America who then worked for Amex as a business development head. Their CTO is a veteran software developer who over 10 years of work experience at both IBM and HP.

They also have some phenomenal advisers, including the director of marketing and sales at American Airlines and the executive director of the strategic planning team at Huawei.

Verdict

I want to love this project. I still like it. But it’s just shy of a slam dunk in my view.

Risks

  • The decentralized approach of the Pointium team towards onboarding partner businesses seems like a pointless shot in the foot of their own growth.
  • The blessing and curse of their business model are that it is entirely dependent on a network effect. Therefore, the intelligent thing to do would be to attempt to maximize the number of network participants by any means necessary. -4.5
  • There are many blockchain solutions to rewards points management attempting similar solutions, which limits the degree to which any of them can truly solve the issue of there being no universal rewards points exchange sans a monopoly. -2.5

Growth Potential

  • The token economics of the Pointium model is beautiful in its simplicity. The entire concept is to simply make existing rewards points an additional medium of exchange.
  • If they have a lot of partner businesses sign up, this could be game-changing. The existing connections of the team gives me hope that this could be a realistic future for Pointium. +6
  • The high token supply makes a pump and dump scheme unlikely. +2.5
  • A truly great team. +4

Disposition

We arrive a final score of 5.5 out of 10 for Pointium.

Although everything about the economics of their solution makes perfect sense to me, and the team looks great on paper, Pointium as a whole has not convinced me why their platform will become the overall winner in this space.

If you can stomach the uncertainty, this could be an interesting ICO token to hold, although the high token supply means that this would make astronomical gains unlikely regardless

Investment Details

  • Token Type: Utility
  • Platform: Ethereum
  • Symbol: PNT
  • Token Supply: 1,600,000,000 PNT
  • Hard Cap: 800,000,000 PNT
  • Soft Cap:  50,000,000 PNT
  • Crowdsale Price: 1ETH = 85,000 PNT
  • Public Sale:  May 1, 2018-May 29, 2018
  • Jurisdictions Barred From Participating: The United States, China and Singapore.
  • Website: https://www.pointium.org/
  • Whitepaper: docs.wixstatic.com/ugd/573622_a75d820df16f45ae9d6df45b61c8586a.pdf

Featured image courtesy of Shutterstock.