Score Portfolio Methodology | DONOT Initiative

Category	Description
1.	Experiment Scope
Version	2.0 / 05.10.2026
Project Name	The Score Portfolio Experiment
Purpose	The Score Portfolio Experiment explores whether a compensation-adjusted scoring formula influences portfolio outcomes within crowdfunding and P2P investing. The experiment does not attempt to identify the best investments, predict defaults, or replace investment due diligence. Instead, the experiment observes how portfolios constructed from different segments of the Allocation Score spectrum behave throughout a full investment cycle. Particular attention is given to opportunities across the score spectrum, including the lower, middle, and upper score segments. The experiment intentionally allocates capital to score extremes in order to observe whether extreme scoring characteristics produce meaningfully different portfolio outcomes. The experiment also compares score-based allocation decisions against automated investment products provided by selected platforms. This allows the experiment to observe whether a simple scoring methodology produces meaningfully different outcomes from commercially available passive investment solutions. The experiment does not attempt to: Predict future returns. Identify the safest investments. Replace investment due diligence. Replace risk analysis. Guarantee profitability. Provide investment advice.
Capital at Risk	The experiment uses real money and publicly reports portfolio outcomes. Capital is at risk and investors may experience delays, defaults, partial losses, or total losses. The methodology is experimental and should not be considered investment advice.
Hypothesis Testing	Can a compensation-adjusted scoring formula produce meaningfully different portfolio outcomes?
Simplicity Principle	The framework intentionally prioritizes simplicity. The Allocation Score is an experimental approximation rather than an attempt to model reality perfectly. The methodology does not claim to identify the best investments, predict performance, or determine investment risk. Instead, it provides a transparent and repeatable scoring mechanism that can be applied consistently throughout the experiment. The score intentionally places greater emphasis on compensation than capital commitment while still accounting for investment duration. Investors are encouraged to challenge, adapt, modify, or replace the scoring formula according to their own assumptions and objectives. The purpose of the experiment is not to prove that the Allocation Score is correct, but to observe the outcomes produced when the score is applied consistently over time.
Scope	The experiment is limited to euro-denominated crowdfunding and P2P investments available to retail investors. The experiment focuses on primary market investment opportunities. Investments with contractual maturities exceeding the planned experiment duration are excluded. The selected investment universe may be adjusted if platforms cease operations, materially change their offering, or become unavailable during the experiment.
Duration	60 months
Starting Capital	Minimum Project Commitment The experiment commits a minimum of €2,000 in real capital across all participating portfolios in 4 portfolios each. Equal Starting Platform Allocation At inception, each participating platform receives an equal capital allocation within each portfolio. The capital allocated per platform depends on the number of participating platforms and may therefore vary. Examples: • 5 platforms × €100 = €500 per portfolio • 4 platforms × €150 = €600 per portfolio • 3 platforms × €200 = €600 per portfolio The objective is to maintain equal platform allocations within each portfolio while preserving the experiment's total starting capital commitment.
Capital Contribution	No additional contributions. Each portfolio develops naturally through repayments, recoveries, interest payments, and reinvestment decisions. However, additional capital may be allocated where it is expected to improve the quality, reliability, or meaningfulness of the experiment. Any such contribution will be publicly documented together with the rationale supporting the decision.
Reporting	Weekly portfolio updates Weekly Project Diary entries are intended to provide context, commentary, and transparency regarding the ongoing operation of the experiment. Primary topics: 1. Portfolio allocation 2. Platform experience 3. Methodology changes 4. Ad-hoc topic (if applicable) Monthly portfolio reviews Monthly Reports with focus on a consistent, data-driven view of portfolio development over time while minimizing short-term noise. Primary topics: 1. Portfolio characteristics 2. Changes since Build Phase baseline 3. Capital recovery timeline 4. Duration structure 5. Platform contribution Ad-Hoc Public documentation of any intentional framework overrides. Public documentation and versioning of material methodology changes.
Expected Outcome	The experiment aims to improve understanding of the relationship between: Compensation Capital commitment Portfolio behaviour Allocation Scores through a transparent scoring methodology. Particular attention is given to the behaviour of Low Score, Mid Score (Market Norm), and High Score portfolios and whether meaningful differences emerge between them over time.
Platfrom Exit	A Platform Exit may be considered when more than 50% of active loans across all four portfolios on a single platform are no longer in current status (e.g., delayed, defaulted, restructured, or otherwise not performing according to the original repayment schedule). The decision to exit a platform will be made based on the overall circumstances and is not automatic. If capital is subsequently recovered from the exited platform, a replacement platform may be introduced to allow the experiment to continue operating under its original design principles. This rule is intended to address platform-level deterioration rather than the performance of individual loans.
Experiment Exit	The experiment is intended to run for 60 months. As a general rule, active investments will not be sold through secondary markets solely to accelerate capital recovery or improve reported results. Early termination will only occur if continuation becomes impractical or impossible due to legal, operational, financial, or personal circumstances. Any early termination, along with the circumstances leading to the decision, will be publicly documented. Portfolio results, observations, and lessons learned up to the termination date will remain part of the experiment's recorded outcomes.
2.	Score Portfolio Construction Methodology
Disclosure Principle	This methodology is published in full as part of the public experiment. The objective of the Score Portfolio Experiment is transparency, repeatability, and independent verification. All core concepts, formulas, selection rules, and portfolio construction principles are publicly available. Future reports, observations, datasets, or supporting materials may be published separately. However, the methodology itself is intended to remain openly available as part of the experiment. The purpose of the experiment is to observe portfolio outcomes rather than individual loans. As a result, loan-level information may be omitted, aggregated, anonymized, or reported using DONOT-defined identifiers where appropriate. DONOT may assign internal identifiers such as DONOT Loan IDs and DONOT Borrower IDs to support long-term tracking, reporting, and analysis. These identifiers exist solely for experiment purposes and are used for public reporting, while platform-specific identifiers are retained in internal records. Platform-specific identifiers add limited value to the objectives of the experiment while introducing additional legal, confidentiality, and operational complexity, and are therefore omitted from public reporting. At the end, outcomes matter more than names.
Portfolio Segments and Selection Principle	The experiment consists of three score segments and one benchmark segment. Each portfolio receives an equal starting capital allocation. The initial capital is distributed equally across the selected platforms. Future allocations are determined by the methodology and the availability of eligible opportunities. Low Score Segment Represents opportunities with the lowest Allocation Scores. Select the lowest-scoring eligible opportunity. Mid Score Segment (Market Norm) Represents opportunities near the center of the Allocation Score distribution and serves as the experiment's Market Norm reference point. For each platform, the experiment identifies the median-scoring eligible opportunity among all eligible platform opportunities. Select the median-scoring eligible opportunity. If the median falls between two opportunities, select the opportunity with an Allocation Score closest to the average Allocation Score of all eligible platform opportunities. High Score Segment Represents opportunities with the highest Allocation Scores. Select the highest-scoring eligible opportunity. Benchmark Segment Represents automated or managed investment products provided by the selected platforms. Preference is given to products that require no investor-defined allocation rules and delegate portfolio construction decisions to the platform. Capital allocated to such products remains invested according to the product's operating rules until the experiment enters its Exit Phase. Where multiple passive investment products are available, preference is given to the product requiring the fewest investor decisions. Where no such product is available, the benchmark may use an automated investment product. In such cases, preference is given to the product with the longest available investment duration.
Allocation Score and Investment Selection Principle	Initial Allocation To ensure meaningful score segmentation, a platform must provide at least three investable opportunities and a benchmark alternative through an automated or managed investment product. The methodology evaluates opportunities using an Allocation Score. The Allocation Score combines: Interest Rate Investment Duration into a single value. The objective is to measure compensation while accounting for capital commitment. Formula: Allocation Score = Interest Rate % × (Reference Period / Loan Period)^0.2 × 100 Reference Period = 36 Months Interpretation Higher interest rates increase the score. Longer investment durations reduce the score. The duration adjustment is intentionally limited to ensure that interest remains the primary score driver. Important Limitation The Allocation Score is not: An investment recommendation A risk score A quality score A safety score A return prediction model The score is simply a scoring mechanism used within the experiment and should not be interpreted as a measure of investment quality or expected success. Observed outcomes may be influenced by opportunity availability, platform-specific constraints, capital deployment timing, and other factors outside the Allocation Score itself. Reinvestment Available platform cash must satisfy the platform's minimum investment requirement before a new investment can be made. When capital becomes available, the Allocation Score methodology is applied to all currently eligible opportunities available on the platform. If three or more eligible opportunities are available, the standard portfolio segment selection rules continue to apply. If fewer than three eligible opportunities are available, preference is given to the opportunity with an Allocation Score closest to the portfolio's Weighted Average Allocation Score, provided that the opportunity remains closer to the investing portfolio's Weighted Average Allocation Score than to the Weighted Average Allocation Score of any competing portfolio segment on the same platform. The objective of this approach is to preserve the portfolio's existing score characteristics when a meaningful Low Score, Market Norm, and High Score spectrum cannot be constructed from the available opportunity set. If a portfolio is unable to deploy available capital for more than two weeks, the situation will be reviewed. Possible actions may include waiting for new opportunities, adjusting the reinvestment approach, reviewing platform participation, or another reasonable course of action consistent with the objectives of the experiment. Any material decision will be publicly documented.
Spectrum Allocation Principle	The methodology intentionally allocates capital across different parts of the Allocation Score spectrum. The Allocation Score is primarily driven by interest rate, with investment duration acting as a secondary adjustment factor. As a result, low-scoring opportunities will generally contain lower compensation opportunities, while high-scoring opportunities will generally contain higher compensation opportunities. The experiment does not assume that higher scores are better or lower scores are worse. The Mid Score Segment represents the center of the score distribution and serves as the experiment's Market Norm reference point. Low Score and High Score segments represent deviations from this reference point. The experiment observes whether opportunities closer to or further away from the Market Norm produce different portfolio outcomes over time.
Tie-Breaker Principle	When multiple opportunities satisfy the requirements of a portfolio segment and have identical Allocation Scores, the following hierarchy is applied: Step 1 – Higher Interest Rate If Allocation Scores are equal, preference is given to the opportunity with the higher interest rate. Step 2 – Shorter Duration If Allocation Scores and interest rates are equal, preference is given to the opportunity with the shorter investment duration. Step 3 – First Eligible Opportunity If Allocation Scores, interest rates, and investment durations are equal, preference is given to the first eligible opportunity appearing in the platform's opportunity list at the time of selection. The purpose of the Tie-Breaker Principle is to provide a transparent and repeatable method for resolving identical Allocation Scores without introducing additional risk assessments, platform-specific metrics, or subjective judgment. The methodology is designed to provide a consistent decision-making framework. However, platform-specific constraints, operational limitations, legal requirements, or other unforeseen circumstances may occasionally create situations not explicitly addressed by the methodology. Where such situations arise, a reasonable decision will be made based on the framework's stated objectives and principles. Any material exceptions, along with the rationale supporting the decision, will be publicly documented.
Eligibility Principle	Only currently investable opportunities are considered. The methodology does not evaluate: Risk analysis Borrower quality Management quality Platform ratings Country ratings Financial statements These remain the responsibility of the investor.
3.	Portfolio Framework
Portfolio Lifecycle	1. Build (Months 0-1) Objectives: Deploy capital Build portfolios Observe implementation constraints Validate operational assumptions Refine and finalize Methodology Version 1.0 Establish reporting baseline 2. Observe (Months 1-48) Objectives: Monitor portfolio performance Apply the methodology consistently Document observations and portfolio behaviour Track portfolio metrics and outcomes Record material events, exceptions, and lessons learned 3. Exit (Months 49-60) Objectives: Stop reinvesting Manage portfolio wind-down Close remaining positions where practical Observe final recoveries and losses Calculate final results Evaluate experiment outcomes
Reinvestment Principle	No new capital contributions are added. Capital is generally reinvested on the platform where it becomes available. The experiment does not transfer capital between platforms solely to satisfy minimum investment requirements or facilitate reinvestment on another platform. As a result, cash may remain temporarily uninvested on a platform until sufficient capital becomes available or an eligible opportunity is identified. Reinvestment follows the same portfolio segment rules used during the initial allocation. When capital becomes available: Repayments Recoveries Interest payments the portfolio applies the methodology again and reinvests according to its score category.Build portfolios
Capital Deployment Principle	The objective is to allocate as much available capital as possible while remaining consistent with the methodology and available opportunities. Any remaining capital may be held as cash until additional eligible opportunities become available.
Metrics	The metrics presented below are defined specifically for the purposes of the experiment and may deviate from industry standards or universally accepted definitions. Primary Outcome Metrics: Score Portfolio Value Measures the current value of the portfolio. Used to determine the current portfolio leader. Formula: Portfolio Value = Current Cash + Active Capital Secondary Outcome Metrics: Score Portfolio Estimated Portfolio XIRR Measures the portfolio's projected annualized return based on the contractual cash-flow schedules of active investments. The metric is calculated using Microsoft's Excel XIRR function applied to expected future cash flows and scheduled repayments. The estimate assumes investments perform according to their contractual terms and does not account for future delays, defaults, recoveries, or other unforeseen events. Estimated Portfolio XIRR is reported as an observed portfolio characteristic rather than a measure of success or failure. Score Portfolio Actual Portfolio XIRR Measures the portfolio's realized annualized return based on actual portfolio cash flows. The metric is calculated using Microsoft's Excel XIRR function applied to realized cash flows, including contributions, repayments, interest payments, recoveries, and withdrawals. Actual Portfolio XIRR is intended to measure realized portfolio performance. During the early stages of the experiment, realized portfolio cash flows may be insufficient to produce a meaningful result. For this reason, the metric may be introduced at a later stage of the experiment or reported only at its conclusion. Actual Portfolio XIRR is reported as an observed outcome and not as a measure of success or failure. Score Portfolio Cash Drag Measures the proportion of capital currently not invested. Higher Cash Drag indicates a larger proportion of portfolio capital currently not deployed into investments. During the Build Phase, Cash Drag is reported as a Point-in-Time metric. During the Observe and Exit Phases, Cash Drag is reported as a Weighted Average metric over the reporting period in order to better reflect capital deployment efficiency. Point-in-Time Formula: Cash Drag = Current Cash ÷ Portfolio Value Weighted Average Formula: Weighted Avg Cash Drag = Σ (Cash Drag × Days Observed) ÷ Total Days The Weighted Average Cash Drag reflects the average proportion of uninvested capital during the reporting period and may differ from the Cash Drag observed at any single point in time. Score Portfolio Health Score Measures portfolio health by tracking the distribution of capital across: Formula: (Current Capital * 1 + Recovered Capital * 0.75 + Late Capital * 0.5 + Defaulted Capital * 0.25 + Written Off Capital * 0 ) / (Current Capital + Recovered Capital + Late Capital + Defaulted Capital + Written Off Capital ) Interpretation: Current Capital receives full weight. Recovered Capital receives reduced weight because the capital has been recovered but was previously impaired. Late Capital receives reduced weight due to increased uncertainty. Defaulted Capital receives a significant penalty due to the risk of future loss. Written Off Capital contributes no positive value to the score while remaining part of total capital. Score Portfolio Default Rate Observe permanent portfolio losses. Higher Default Rates indicate a greater proportion of permanently lost capital. Formula: Default Rate = Written Off Capital ÷ Active Capital Portfolio Characteristics: Score Portfolio Weighted Average Allocation Score (WAvg Score) Formula: Average Allocation Score = Σ(Investment Amount × Allocation Score) ÷ Σ(Investment Amount) Score Portfolio Weighted Average Interest % (WAvg Rate) Formula: Average Interest % = Σ(Investment Amount × Interest %) ÷ Σ(Investment Amount) Score Portfolio Weighted Average Duration in Months (WAvg Duration) Formula: Average Duration in Months = Σ(Investment Amount × Duration in Months) ÷ Σ(Investment Amount) Score Portfolio Number of Investments Measures the number of active investments held within the portfolio. Formula: Number of Investments = Count of Active Investments Score Portfolio Number of Unique Investments Measures the number of unique active loan positions held within the portfolio. Formula: Number of Unique Investments = Count of Unique Active Loan IDs Score Portfolio Number of Unique Borrowers Measures the number of unique active borrowers currently represented within the portfolio.Multiple investments linked to the same borrower are counted once. Formula: Number of Unique Borrowers = Count of Unique Active Borrowers where: Active Capital = Current Capital + Late Capital + Recovered Capital + Defaulted Capital Active Capital represents the portion of portfolio capital currently exposed to investment risk. Cash and Written Off Capital are excluded from Active Capital because they do not contribute to current portfolio exposure. Unless otherwise stated, return-based metrics are calculated before personal taxes and withholding taxes. Return-based metrics are reported before taxes to improve comparability between platforms and jurisdictions. Cash-based metrics reflect actual cash available within the portfolio after any taxes withheld at source. Withheld taxes are excluded from Portfolio Value, Available Cash, and Cash Drag calculations because they are no longer available for reinvestment.
Experiment Winner	The Portfolio Leader is the portfolio with the highest current Portfolio Value. The Portfolio Leader represents the experiment's primary outcome and identifies the portfolio generating the highest value at a given point in time. At the conclusion of the 60-month experiment, the portfolio with the highest final Portfolio Value will be declared the experiment winner. Secondary metrics such as Actual Portfolio XIRR, Default Rate, Health Score, Cash Drag, and other portfolio characteristics are reported to provide additional context and help explain the factors that contributed to the result. When results are reported, investors are free to interpret the significance of the observed outcome according to their own expectations, objectives, and portfolio construction preferences.

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Methodology version 1.0

Category	Description
1.	Experiment Scope
Version	1.0 / 21.09.2026
Project Name	The Score Portfolio Experiment
Purpose	The Score Portfolio Experiment explores whether a compensation-adjusted scoring formula influences portfolio outcomes within crowdfunding and P2P investing. The experiment does not attempt to identify the best investments, predict defaults, or replace investment due diligence. Instead, the experiment observes how portfolios constructed from different segments of the Allocation Score spectrum behave throughout a full investment cycle. Particular attention is given to opportunities across the score spectrum, including the lower, middle, and upper score segments. The experiment intentionally allocates capital to score extremes in order to observe whether extreme scoring characteristics produce meaningfully different portfolio outcomes. The experiment also compares score-based allocation decisions against automated investment products provided by selected platforms. This allows the experiment to observe whether a simple scoring methodology produces meaningfully different outcomes from commercially available passive investment solutions. The experiment does not attempt to: Predict future returns. Identify the safest investments. Replace investment due diligence. Replace risk analysis. Guarantee profitability. Provide investment advice.
Capital at Risk	The experiment uses real money and publicly reports portfolio outcomes. Capital is at risk and investors may experience delays, defaults, partial losses, or total losses. The methodology is experimental and should not be considered investment advice.
Hypothesis Testing	Can a compensation-adjusted scoring formula produce meaningfully different portfolio outcomes?
Simplicity Principle	The framework intentionally prioritizes simplicity. The Allocation Score is an experimental approximation rather than an attempt to model reality perfectly. The methodology does not claim to identify the best investments, predict performance, or determine investment risk. Instead, it provides a transparent and repeatable scoring mechanism that can be applied consistently throughout the experiment. The score intentionally places greater emphasis on compensation than capital commitment while still accounting for investment duration. Investors are encouraged to challenge, adapt, modify, or replace the scoring formula according to their own assumptions and objectives. The purpose of the experiment is not to prove that the Allocation Score is correct, but to observe the outcomes produced when the score is applied consistently over time.
Scope	The experiment is limited to euro-denominated crowdfunding and P2P investments available to retail investors. The experiment focuses on primary market investment opportunities. Investments with contractual maturities exceeding the planned experiment duration are excluded. The selected investment universe may be adjusted if platforms cease operations, materially change their offering, or become unavailable during the experiment.
Duration	60 months
Starting Capital	Minimum Project Commitment The experiment commits a minimum of €2,000 in real capital across all participating portfolios in 4 portfolios each. Equal Starting Platform Allocation At inception, each participating platform receives an equal capital allocation within each portfolio. The capital allocated per platform depends on the number of participating platforms and may therefore vary. Examples: • 5 platforms × €100 = €500 per portfolio • 4 platforms × €150 = €600 per portfolio • 3 platforms × €200 = €600 per portfolio The objective is to maintain equal platform allocations within each portfolio while preserving the experiment's total starting capital commitment.
Capital Contribution	No additional contributions. Each portfolio develops naturally through repayments, recoveries, interest payments, and reinvestment decisions. However, additional capital may be allocated where it is expected to improve the quality, reliability, or meaningfulness of the experiment. Any such contribution will be publicly documented together with the rationale supporting the decision.
Reporting	Weekly portfolio updates Weekly Project Diary entries are intended to provide context, commentary, and transparency regarding the ongoing operation of the experiment. Primary topics: 1. Portfolio allocation 2. Platform experience 3. Methodology changes 4. Ad-hoc topic (if applicable) Monthly portfolio reviews Monthly Reports with focus on a consistent, data-driven view of portfolio development over time while minimizing short-term noise. Primary topics: 1. Portfolio characteristics 2. Changes since Build Phase baseline 3. Capital recovery timeline 4. Duration structure 5. Platform contribution Ad-Hoc Public documentation of any intentional framework overrides. Public documentation and versioning of material methodology changes.
Expected Outcome	The experiment aims to improve understanding of the relationship between: Compensation Capital commitment Portfolio behaviour Allocation Scores through a transparent scoring methodology. Particular attention is given to the behaviour of Low Score, Mid Score (Market Norm), and High Score portfolios and whether meaningful differences emerge between them over time.
Platfrom Exit	A Platform Exit may be considered when more than 50% of active loans across all four portfolios on a single platform are no longer in current status (e.g., delayed, defaulted, restructured, or otherwise not performing according to the original repayment schedule). The decision to exit a platform will be made based on the overall circumstances and is not automatic. If capital is subsequently recovered from the exited platform, a replacement platform may be introduced to allow the experiment to continue operating under its original design principles. This rule is intended to address platform-level deterioration rather than the performance of individual loans.
Experiment Exit	The experiment is intended to run for 60 months. As a general rule, active investments will not be sold through secondary markets solely to accelerate capital recovery or improve reported results. Early termination will only occur if continuation becomes impractical or impossible due to legal, operational, financial, or personal circumstances. Any early termination, along with the circumstances leading to the decision, will be publicly documented. Portfolio results, observations, and lessons learned up to the termination date will remain part of the experiment's recorded outcomes.
2.	Score Portfolio Construction Methodology
Disclosure Principle	This methodology is published in full as part of the public experiment. The objective of the Score Portfolio Experiment is transparency, repeatability, and independent verification. All core concepts, formulas, selection rules, and portfolio construction principles are publicly available. Future reports, observations, datasets, or supporting materials may be published separately. However, the methodology itself is intended to remain openly available as part of the experiment. The purpose of the experiment is to observe portfolio outcomes rather than individual loans. As a result, loan-level information may be omitted, aggregated, anonymized, or reported using DONOT-defined identifiers where appropriate. DONOT may assign internal identifiers such as DONOT Loan IDs and DONOT Borrower IDs to support long-term tracking, reporting, and analysis. These identifiers exist solely for experiment purposes and are used for public reporting, while platform-specific identifiers are retained in internal records. Platform-specific identifiers add limited value to the objectives of the experiment while introducing additional legal, confidentiality, and operational complexity, and are therefore omitted from public reporting. At the end, outcomes matter more than names.
Portfolio Segments and Selection Principle	The experiment consists of three score segments and one benchmark segment. Each portfolio receives an equal starting capital allocation. The initial capital is distributed equally across the selected platforms. Future allocations are determined by the methodology and the availability of eligible opportunities. Low Score Segment Represents opportunities with the lowest Allocation Scores. Select the lowest-scoring eligible opportunity. Mid Score Segment (Market Norm) Represents opportunities near the center of the Allocation Score distribution and serves as the experiment's Market Norm reference point. For each platform, the experiment identifies the median-scoring eligible opportunity among all eligible platform opportunities. Select the median-scoring eligible opportunity. If the median falls between two opportunities, select the opportunity with an Allocation Score closest to the average Allocation Score of all eligible platform opportunities. High Score Segment Represents opportunities with the highest Allocation Scores. Select the highest-scoring eligible opportunity. Benchmark Segment Represents automated or managed investment products provided by the selected platforms. Preference is given to products that require no investor-defined allocation rules and delegate portfolio construction decisions to the platform. Capital allocated to such products remains invested according to the product's operating rules until the experiment enters its Exit Phase. Where multiple passive investment products are available, preference is given to the product requiring the fewest investor decisions. Where no such product is available, the benchmark may use an automated investment product. In such cases, preference is given to the product with the longest available investment duration.
Allocation Score and Investment Selection Principle	Initial Allocation To ensure meaningful score segmentation, a platform must provide at least three investable opportunities and a benchmark alternative through an automated or managed investment product. The methodology evaluates opportunities using an Allocation Score. The Allocation Score combines: Interest Rate Investment Duration into a single value. The objective is to measure compensation while accounting for capital commitment. Formula: Allocation Score = Interest Rate % × (Reference Period / Loan Period)^0.2 × 100 Reference Period = 36 Months Interpretation Higher interest rates increase the score. Longer investment durations reduce the score. The duration adjustment is intentionally limited to ensure that interest remains the primary score driver. Important Limitation The Allocation Score is not: An investment recommendation A risk score A quality score A safety score A return prediction model The score is simply a scoring mechanism used within the experiment and should not be interpreted as a measure of investment quality or expected success. Observed outcomes may be influenced by opportunity availability, platform-specific constraints, capital deployment timing, and other factors outside the Allocation Score itself. Reinvestment Available platform cash must satisfy the platform's minimum investment requirement before a new investment can be made. When capital becomes available, the Allocation Score methodology is applied to all currently eligible opportunities available on the platform. If three or more eligible opportunities are available, the standard portfolio segment selection rules continue to apply. If fewer than three eligible opportunities are available, preference is given to the opportunity with an Allocation Score closest to the portfolio's Weighted Average Allocation Score, provided that the opportunity remains closer to the investing portfolio's Weighted Average Allocation Score than to the Weighted Average Allocation Score of any competing portfolio segment on the same platform. The objective of this approach is to preserve the portfolio's existing score characteristics when a meaningful Low Score, Market Norm, and High Score spectrum cannot be constructed from the available opportunity set. If a portfolio is unable to deploy available capital for more than two weeks, the situation will be reviewed. Possible actions may include waiting for new opportunities, adjusting the reinvestment approach, reviewing platform participation, or another reasonable course of action consistent with the objectives of the experiment. Any material decision will be publicly documented.
Spectrum Allocation Principle	The methodology intentionally allocates capital across different parts of the Allocation Score spectrum. The Allocation Score is primarily driven by interest rate, with investment duration acting as a secondary adjustment factor. As a result, low-scoring opportunities will generally contain lower compensation opportunities, while high-scoring opportunities will generally contain higher compensation opportunities. The experiment does not assume that higher scores are better or lower scores are worse. The Mid Score Segment represents the center of the score distribution and serves as the experiment's Market Norm reference point. Low Score and High Score segments represent deviations from this reference point. The experiment observes whether opportunities closer to or further away from the Market Norm produce different portfolio outcomes over time.
Tie-Breaker Principle	When multiple opportunities satisfy the requirements of a portfolio segment and have identical Allocation Scores, the following hierarchy is applied: Step 1 – Higher Interest Rate If Allocation Scores are equal, preference is given to the opportunity with the higher interest rate. Step 2 – Shorter Duration If Allocation Scores and interest rates are equal, preference is given to the opportunity with the shorter investment duration. Step 3 – First Eligible Opportunity If Allocation Scores, interest rates, and investment durations are equal, preference is given to the first eligible opportunity appearing in the platform's opportunity list at the time of selection. The purpose of the Tie-Breaker Principle is to provide a transparent and repeatable method for resolving identical Allocation Scores without introducing additional risk assessments, platform-specific metrics, or subjective judgment. The methodology is designed to provide a consistent decision-making framework. However, platform-specific constraints, operational limitations, legal requirements, or other unforeseen circumstances may occasionally create situations not explicitly addressed by the methodology. Where such situations arise, a reasonable decision will be made based on the framework's stated objectives and principles. Any material exceptions, along with the rationale supporting the decision, will be publicly documented.
Eligibility Principle	Only currently investable opportunities are considered. The methodology does not evaluate: Risk analysis Borrower quality Management quality Platform ratings Country ratings Financial statements These remain the responsibility of the investor.
3.	Portfolio Framework
Portfolio Lifecycle	1. Build (Months 0-1) Objectives: Deploy capital Build portfolios Observe implementation constraints Validate operational assumptions Refine and finalize Methodology Version 1.0 Establish reporting baseline 2. Observe (Months 1-48) Objectives: Monitor portfolio performance Apply the methodology consistently Document observations and portfolio behaviour Track portfolio metrics and outcomes Record material events, exceptions, and lessons learned 3. Exit (Months 49-60) Objectives: Stop reinvesting Manage portfolio wind-down Close remaining positions where practical Observe final recoveries and losses Calculate final results Evaluate experiment outcomes
Reinvestment Principle	No new capital contributions are added. Capital is generally reinvested on the platform where it becomes available. The experiment does not transfer capital between platforms solely to satisfy minimum investment requirements or facilitate reinvestment on another platform. As a result, cash may remain temporarily uninvested on a platform until sufficient capital becomes available or an eligible opportunity is identified. Reinvestment follows the same portfolio segment rules used during the initial allocation. When capital becomes available: Repayments Recoveries Interest payments the portfolio applies the methodology again and reinvests according to its score category.Build portfolios
Capital Deployment Principle	The objective is to allocate as much available capital as possible while remaining consistent with the methodology and available opportunities. Any remaining capital may be held as cash until additional eligible opportunities become available.
Metrics	The metrics presented below are defined specifically for the purposes of the experiment and may deviate from industry standards or universally accepted definitions. Primary Outcome Metrics: Score Portfolio Value Measures the current value of the portfolio. Used to determine the current portfolio leader. Formula: Portfolio Value = Current Cash + Active Capital Secondary Outcome Metrics: Score Portfolio Estimated Portfolio XIRR Measures the portfolio's projected annualized return based on the contractual cash-flow schedules of active investments. The metric is calculated using Microsoft's Excel XIRR function applied to expected future cash flows and scheduled repayments. The estimate assumes investments perform according to their contractual terms and does not account for future delays, defaults, recoveries, or other unforeseen events. Estimated Portfolio XIRR is reported as an observed portfolio characteristic rather than a measure of success or failure. Score Portfolio Actual Portfolio XIRR Measures the portfolio's realized annualized return based on actual portfolio cash flows. The metric is calculated using Microsoft's Excel XIRR function applied to realized cash flows, including contributions, repayments, interest payments, recoveries, and withdrawals. Actual Portfolio XIRR is intended to measure realized portfolio performance. During the early stages of the experiment, realized portfolio cash flows may be insufficient to produce a meaningful result. For this reason, the metric may be introduced at a later stage of the experiment or reported only at its conclusion. Actual Portfolio XIRR is reported as an observed outcome and not as a measure of success or failure. Score Portfolio Cash Drag Measures the proportion of capital currently not invested. Higher Cash Drag indicates a larger proportion of portfolio capital currently not deployed into investments. During the Build Phase, Cash Drag is reported as a Point-in-Time metric. During the Observe and Exit Phases, Cash Drag is reported as a Weighted Average metric over the reporting period in order to better reflect capital deployment efficiency. Point-in-Time Formula: Cash Drag = Current Cash ÷ Portfolio Value Weighted Average Formula: Weighted Avg Cash Drag = Σ (Cash Drag × Days Observed) ÷ Total Days The Weighted Average Cash Drag reflects the average proportion of uninvested capital during the reporting period and may differ from the Cash Drag observed at any single point in time. Score Portfolio Health Score Measures portfolio health by tracking the distribution of capital across: Formula: (Current Capital * 1 + Recovered Capital * 0.75 + Late Capital * 0.5 + Defaulted Capital * 0.25 + Written Off Capital * 0 ) / (Current Capital + Recovered Capital + Late Capital + Defaulted Capital + Written Off Capital ) Interpretation: Current Capital receives full weight. Recovered Capital receives reduced weight because the capital has been recovered but was previously impaired. Late Capital receives reduced weight due to increased uncertainty. Defaulted Capital receives a significant penalty due to the risk of future loss. Written Off Capital contributes no positive value to the score while remaining part of total capital. Score Portfolio Default Rate Observe permanent portfolio losses. Higher Default Rates indicate a greater proportion of permanently lost capital. Formula: Default Rate = Written Off Capital ÷ Active Capital Portfolio Characteristics: Score Portfolio Weighted Average Allocation Score (WAvg Score) Formula: Average Allocation Score = Σ(Investment Amount × Allocation Score) ÷ Σ(Investment Amount) Score Portfolio Weighted Average Interest % (WAvg Rate) Formula: Average Interest % = Σ(Investment Amount × Interest %) ÷ Σ(Investment Amount) Score Portfolio Weighted Average Duration in Months (WAvg Duration) Formula: Average Duration in Months = Σ(Investment Amount × Duration in Months) ÷ Σ(Investment Amount) Score Portfolio Number of Investments Measures the number of active investments held within the portfolio. Formula: Number of Investments = Count of Active Investments Score Portfolio Number of Unique Investments Measures the number of unique active loan positions held within the portfolio. Formula: Number of Unique Investments = Count of Unique Active Loan IDs Score Portfolio Number of Unique Borrowers Measures the number of unique active borrowers currently represented within the portfolio.Multiple investments linked to the same borrower are counted once. Formula: Number of Unique Borrowers = Count of Unique Active Borrowers where: Active Capital = Current Capital + Late Capital + Recovered Capital + Defaulted Capital Active Capital represents the portion of portfolio capital currently exposed to investment risk. Cash and Written Off Capital are excluded from Active Capital because they do not contribute to current portfolio exposure. Unless otherwise stated, portfolio performance metrics are calculated before personal taxes. Platform-level tax withholding, reporting mechanisms, and investor-specific tax obligations may differ between jurisdictions and platforms. The experiment therefore focuses on pre-tax portfolio performance to improve comparability across investment opportunities and platforms.
Experiment Winner	The Portfolio Leader is the portfolio with the highest current Portfolio Value. The Portfolio Leader represents the experiment's primary outcome and identifies the portfolio generating the highest value at a given point in time. At the conclusion of the 60-month experiment, the portfolio with the highest final Portfolio Value will be declared the experiment winner. Secondary metrics such as Actual Portfolio XIRR, Default Rate, Health Score, Cash Drag, and other portfolio characteristics are reported to provide additional context and help explain the factors that contributed to the result. When results are reported, investors are free to interpret the significance of the observed outcome according to their own expectations, objectives, and portfolio construction preferences.

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