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Points Tracking and Financial Valuation

The Points Ledger serves an additional vital function by aiding in the tracking of points issuance, which is integral to the financial valuation strategy of points. This feature is particularly crucial for large companies, providing a robust framework for managing the financial implications of loyalty points as assets.

When activated, a ledger account will asynchronously index debit transactions. This functionality is designed to meticulously track points buckets along with their original mint dates. Consequently, when a peer-to-peer transfer or points burning occurs, the ledger intelligently decomposes the transaction into multiple buckets. This process ensures the maintenance of a direct linkage to the original transaction that minted the points, preserving the traceability and integrity of points through their lifecycle.

This enhanced tracking mechanism not only facilitates a clearer financial overview of points as assets but also supports compliance with accounting principles by providing detailed insights into the origins and movements of loyalty points. It enables companies to accurately assess the financial value of their loyalty points, aiding in strategic decision-making related to points management and valuation.

Let's create an illustrative example of a transfer between two wallets in a Points Ledger system, demonstrating how points are tracked through this process.

Example Scenario: Transfer of Points Between Two Wallets​

  • Initial State: Assume we have two wallets, Wallet A and Wallet B. Wallet A has 1,000 points issued on January 1st, 2023, and Wallet B has 500 points issued on February 15th, 2023.

  • Transfer Operation: Wallet A decides to transfer 300 points to Wallet B.

Points Tracking Process:​

  1. Pre-Transfer State:

    • Wallet A: 1,000 points (Issued: Jan 1, 2023)
    • Wallet B: 500 points (Issued: Feb 15, 2023)

  2. Initiating Transfer:

    • A request is made to transfer 300 points from Wallet A to Wallet B.

  3. Ledger Processing:

    • The Points Ledger asynchronously indexes the debit transaction from Wallet A, tracking the transfer as a deduction from the original 1,000 points bucket issued on Jan 1, 2023.
    • The ledger identifies the 300 points for transfer and prepares to track the balances accordingly.

  4. Decomposition & Tracking:

    • As the 300 points are transferred from Wallet A to Wallet B, the Points Ledger decomposes this transaction.
    • The system maintains linkage to the original mint date of these points (Jan 1, 2023), even as they move to Wallet B.

  5. Post-Transfer State:

    • Wallet A: 700 points remaining from the original bucket (Issued: Jan 1, 2023).
    • Wallet B: Now has two buckets of points:
      • 500 points (Issued: Feb 15, 2023).
      • 300 points transferred from Wallet A, with the system tracking this addition back to the original issuance date of Jan 1, 2023.

  6. Outcome:

    • Wallet B not only receives 300 points but also inherits the historical issuance date of these points. This ensures that the financial valuation and any applicable expiration strategies are consistently applied, based on the original issuance dates of the points.

Through this process, the Points Ledger ensures the integrity and traceability of points across transactions, maintaining a clear and auditable trail from issuance to current holdings, regardless of transfers or other movements. This system supports precise financial valuation of loyalty points and adherence to complex accounting standards, crucial for large organizations managing extensive loyalty programs.