T R E E H O U S E. O N L I N E. Tuesday, June 5, whitepaper v

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1 T R E E H O U S E. O N L I N E Tuesday, June 5, 2018 whitepaper v

2 Table of Contents 1 Executive Summary Motivation and Mission Statement The Problem The treehouse Solution Blockchain Overview Why use Blockchain treehouse Tokens the ACRN (Acorn) Token and GAL (Global Asset Ledger) Token The Acorn Token treehouse s Digital Currency The GAL Token Tokenized Property Ownership Atomic Swaps & Open Source Framework for Tokenizing Assets treehouse Business Process A Note on Centralization versus Decentralization Tokenization of Property A Note on Documentation, legal or otherwise Token Dynamics & Economics Acorn Token Supply & Specification Acorn Token Valuation Considerations GAL Token Characteristics & Creation If a Property Does Not Get Funded Page 1 10 treehouse Asset Lifecycle Income Distribution Associated Costs and Periods of Zero Income Asset Delisting & GAL Token Destruction Integral On-Chain Acquisition and Delisting Off-Chain Acquisition and Delisting Process Flows Renting a Property & the treehouse Rental Platform treehouse Rental Platform Product Screenshots The treehouse Foundation The UN-REDD and REDD+ Schemes Project Timeline & Roadmap The treehouse Team... 50

3 1. Executive Summary treehouse will democratise the property investment process. For far too many, the dream of property ownership seems untenable, particularly in the majority of the world s largest and most dynamic cities. Regulation & legal complexity, high costs, time constraints, tax implications, location limitations, and the need for large amounts of available capital, make property investment an onerous affair - leaving a high percentage of willing investors unable to get onto the property ladder. What s more, the property market is dominated by real estate agencies and their poor practices, often allowing their own personal interests to interfere with yours. treehouse will change all that. With our end-to-end solution, we are facilitating a market where anyone can participate in the property market whilst removing the reliance on real Page 2 estate agents altogether. Initially, a hybrid centralised decentralised methodology will be implemented, with a view to full decentralisation as the market matures and governmental processes catch up to the innovation and practices spawned by blockchain. treehouse will allow its users to independently buy, rent and eventually sell property all in one place and without the usual restrictions. Transparency is at the heart of treehouse and we aim to empower our users in a way that has not been available to property buyers before.

4 In order to participate in the treehouse platform, you will begin by purchasing Acorns - our utility token. As an Acorn holder, you will automatically gain access to the platform. Each asset that is tokenized on our platform, we will have a unique Global Asset Ledger Token (GAL). In turn, each GAL will represent a portion of the asset to which it pertains. Users may use their Acorns to buy GALs for one or more assets as they wish, irrespective of the individual s or the asset s physical location. In this way, the user becomes an owner of a right in a property without the burdens or complexities that property ownership creates. Once a member owns a GAL, she or he will be entitled to all the benefits associated with having a stake in that property, including the respective portion of rental income which the property generates or the income from the sale of the property when it is sold. Page 3 Properties can also be rented via the treehouse rental platform, which provides a fullservice toolkit for independent landlords and tenants. As passionate advocates of democratisation and social responsibility, treehouse will also have a dedicated foundation that will offer support to NGOs and projects looking to combat the wide-spread and damaging practice of illegal logging and forest degradation, as well as vehemently supporting the re-seeding of forests in important ecosystems. Token holders will also be able to benefit by having Acorns paid from the positive externalities generated by the activities of the foundation.

5 2. Motivation and Mission Statement treehouse started out with the idea of making property ownership, and property investment, available to anyone and everyone by leveraging new advancements in technology and sharing economy developments blockchain. Free of bureaucracy, regulatory hurdles, yet offering low transaction costs and absolute security, treehouse is one of a handful of start-ups which will revolutionize the way people transact property, or even think of property in the years to come. In recent times, especially among the younger generation, our generation - millennials - for many the chance to own a home seems almost unrealistic and unattainable. This is not only a problem in the UK, but in many countries around the globe. Property Page 4 markets have heated up in numerous locations, having left the majority of people behind; there are many young professionals who would like to have some involvement in the property market but find the high costs of entry and complexity a limiting factor. With treehouse, anyone anywhere would be able to own a right in a property, or indeed, many properties, in many different cities around the world. While developing the idea, it became obvious that there is another problem permeating the real estate sector, which treehouse will address. Ask anyone on the streets what their opinion of estate agents is, and more often than not that opinion is a negative one. This is not helped by the fact that many agents have provided a sub-standard service at a premium cost for far too long to both tenants, and landlords.

6 It is an industry that is predominantly archaic, in need of disruption and ripe reintermediation. This is across the full spectrum of transactions from renting, buying & selling to investing. treehouse will be able to solve a lot of the inefficiencies currently present in the established system. We are making the process smoother, more efficient, transparent and secure, and aim to introduce a number of elements and experiences that people have come to expect from the connected, 21 st century way of doing business. One aspect is the creation of treehouse as a platform where tenants and landlords are serviced by a number of providers, on demand, to solve any property related issues. Indeed, this can be extended to the provision of services that have to do with your home and lifestyle provision of cleaning, insurance, moving, gardening, furniture assembly, rent processing, utility switching, council tax payments and many more a true living services platform. Page 5 We genuinely set out to make a difference and make things better; as part of that commitment, we want treehouse to have a social impact. All of the founders feel particularly passionate about the environment, and we want treehouse, through its treehouse foundation initiative to contribute to the fight against deforestation and ecosystem degradation. One such region is in the Carpathian ecosystem which has sustained heavy degradation due to legal and illegal logging. Not only is it the original home of some of the team, it is also the home to Europe s last remaining native populations of brown bears and wolves. The platform will work with local NGOs, charities or foundations to combat ecosystem degradation to further the work done through the UN-REDD and REDD+ programme, where applicable.

7 We are at the dawning of a new age for the internet and all that it entails. The potential of the blockchain will facilitate the transition to a new way of doing things, where members of the network reap rewards in equal measure. treehouse is going to be one of the many pieces in what is becoming the sharing economy 2.0. While planting some trees at the same time. As an end goal, treehouse will work with governments, initially the UK government (early conversations have already begun), to fully digitize government property registry on the blockchain via distributed ledger. Currently, there are a number of blockchain real estate registry pilot projects already in place specifically in Ukraine, Sweden, Georgia, Ghana, Dubai, Japan as well as Chicago and Delaware in the US with many other jurisdictions looking to add to the list. Page 6

8 3. The Problem The aim of many people is to be able to purchase a property, for a wide array of reasons ranging from the desire to settle down, to a store of value and as a method for utilizing existing capital better than simply keeping it in a savings account (in the process benefitting the bank more than themselves). The low interest environment since the financial crisis has certainly made the last option a rather unappealing one. However, more than before we find ourselves in an environment where fewer and fewer are able to set that first foot on the real-estate ladder. Arguably, wealth distribution and inequality are at a worse point than at any other in modern times. Again, this was chiefly as a result of policies instituted globally to attempt and stop a catastrophic meltdown of the global financial system following the credit crunch a decade ago. Page 7 The advent of the sharing economy, and what is now developing into the sharing economy 2.0 as well as technological innovations, like blockchain, offer us the ability, opportunity and indeed duty, to tackle some of these problems. In regards to property, we are faced with a number of issues: Affordability a relatively high barrier of entry in terms of capital requirements. Property ownership usually requires a big financial commitment, out of the reach of many people.

9 Liquidity property is not the most liquid market, with both buying and selling the underlying physical asset taking a long time. Localized market many opportunities are currently contained within very localized jurisdictions with their own laws and regulation, and a true overseas property portfolio is impossible for the average individual. Diversification for the vast majority of people, the issue of diversification, and lack thereof, applies to both the number of properties one may own and also to the physical location as a result of large capital requirements and disparate geographies of these assets. On top of that, each jurisdiction is subject to its own set of rules and regulations, further adding to the problem of diversification. Page 8 Convenience & Complexity the administrative processes involved in real estate ownership and transactions are by no means straightforward or simple. When it comes to multiple owners, the process is even more complex with a proportional increase in costs. It s clear that a new model is required. Trust making a property purchase requires trust; trust that the owner is who they say they are, trust that capital is available and trust that all documentation and legislation is as it should be. Simply put, there is a need for a new model that re-intermediates and democratizes property investment, ownership and transacting. There is a need for treehouse.

10 4. The treehouse Solution treehouse is being created as a solution to all the problems listed before, as well as problems permeating the rental sector it is a fully integrated toolkit built from the ground up to maximise the advantages offered by blockchain technology. As far as we can tell, we are the first to be in development, and certainly first in the UK having started work on the initial idea in December 2014, shortly after it became apparent the Ethereum network would be able to facilitate the realisation of our ambitious plans. By employing smart oracles, Ricardian contracts, and smart contracts based on the Ethereum blockchain we are tokenizing the real estate market, allowing distribution to Page 9 virtually anyone, anywhere in the world to participate in the property market within the parameters of local legislations. We are democratizing and commoditizing the real estate market. The underlying physical asset has an ERC 20 corresponding token, and all transaction details, documentation and any other relevant information is stored on the distributed ledger. The asset tokens can then be traded in a trustless peer-to-peer market. In addition, we have created a fully functioning rentals marketplace complete with all tools required for letting out a property. Everything from listing, advertising, certification, legal and any other requirement can be taken care of through the platform, in a direct peer-topeer ecosystem.

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12 5. Blockchain Overview The innovation of public economic consensus, by the cryptic Satoshi Nakamoto in 2008 is perhaps one of the most significant developments since the creation of the internet itself. We are talking about the blockchain, of course, and its first application Bitcoin a peer to peer electronic cash system 1. Fundamentally, blockchain is a technology that permanently records transactions, making the records themselves immutable in the process. Data can be added sequentially to create a never ending historical, and auditable, trail. This seemingly simple property is the second layer to the internet a trust layer. Page 11 This creates the opportunity for assets and value to be exchanged in a fast, inexpensive way without the need for unnecessary intermediaries. To paraphrase Satoshi Nakamoto s paper, we are presented with: Cryptographic proof instead of central trust Trust in the network not the entity No unnecessary intermediaries Peer-to-peer electronic interactions & transactions From a technical point of view, a blockchain is a database that can be inspected openly and maintains a distributed ledger of transactions (or other relevant information). From an operational standpoint, blockchain is a validator of transactions, replacing the need for 1 Bitcoin: A Peer-to-Peer Electronic Cash System -

13 previously trusted entities. And from a business perspective, blockchain is an exchange mechanism and network for moving value, assets or transactions between peers without the need for a large array of intermediaries. A very simplistic representation can be found below which shows the difference between the prevalent, centralised method of record-keeping versus the decentralised approach that is now possible. Page 12 In a centralised network, each party has to keep its own individual records, and relies on a third party to ensure those records are congruent. In a decentralised network however, a single digital ledger of transactions is shared among network participants, accessible to all.

14 5.1 Why Use Blockchain There are a number of reasons why blockchain is suitable for the development of the platform and indeed the functioning of the platform. Near instantaneous transactions (as compared to the current process) with drastically reduced costs and fees is another significant reason for the use of blockchain for the creation of a fractional investment platform. Chief among these is the need for security by having assets, transactions, documentation and more stored on blockchain, it immediately creates a degree and level of trust. In the case of a platform that offers fractional investment in an asset like real-estate, having trust that one owns what they thought they do, is paramount. By using blockchain, you don t have to trust the platform; you have to trust the network. Page 13 Blockchain offers a degree of transparency and access to truth that can prevent breaches of trust. It is essentially a state machine, meaning information is stored at a specific point in time. A state machine remembers the status of something given certain inputs at a specific moment. Based on inputs, this state may change and a resulting output is implemented. Keeping track of these state transitions is what blockchain does exceedingly well, and it does so in an immutable fashion. A centralised database can be re-written and audit trails could be modified. On a blockchain network, state transition history is persistent. The implication is simple yet profound: if A owns Y, then A definitively owns Y. A rather key requirement for an investment platform, especially in a field such as real-estate.

15 Key to the application of blockchain technology is a set of functions like smart properties and smart contracts. Prior to Satoshi Nakamoto s paper we had digital assets and digital files but the mechanisms for dealing with double-spending or double-ownership were not in place; meaning fraud could easily happen. A digital asset is a digitized version of something that includes specific usage rights and usually has a value. A digital file is something that has no rights. Smart property takes the digital asset concept further and it links the asset to a blockchain so that it can never be double spent (or double sent) and most importantly, it cannot be double owned. When dealing with property, it is important that the ownership and control is yours and yours alone. The only way to undo the binding of these rights or ownership, is if the individual decides to transfer or sell them. Page 14 Therefore, blockchain can be used as a public auditable database linked to your specific cryptographic signature and your smart property becomes linked to a singular digital fingerprint. Suddenly, an illiquid, immobile asset like real-estate, becomes flexible and portable. Another key pillar of blockchain technology is the smart contract. A concept first introduced by Nick Szabo in , it wasn t until the advent of Ethereum that smart contracts became a basic element of blockchain innovation and development. 2

16 A smart contract helps make the breach of agreement expensive because it controls the real world valuable property via digital means. A smart contract can therefore enforce a functional implementation of a particular requirement and records proof that any number of conditions were met or not met. For example, if a tenant has caused damage to the property, smart contracts could be used to automatically deduct from the security deposit after an evaluation. It is important to mention that smart contracts are not Ricardian contracts 3 a Ricardian contract is a method of recording a document as a contract at law and linking it to other systems. Though smart contracts and Ricardian contracts can certainly interact 4. Page 15 3 I. Grigg. The Ricardian Contract. In Proceedings of the First IEEE International Workshop on Electronic Contracting, pages IEEE,

17 6. treehouse Tokens the ACRN (Acorn) Token and GAL (Global Asset Ledger) Token At its core, treehouse is a customized decentralised system with a few off-chain, centralized functions that will be migrated to a fully decentralized methodology once adoption rates and technical requirements are satisfactorily reached. The platform is built upon the Ethereum network making use of two types of tokens: Protocol Token the Acorn (ACRN), is fundamentally a currency token/unit that is used to purchase services, reward network participants and is representative of membership certificates in the treehouse platform. It is also required to purchase the asset token, described below. Page 16 Traditional Asset Token the Global Asset Ledger token (GAL) represents ownership of the underlying asset and provides a number of rights to its owner. These underlying assets are still dependent on traditional financial and legal systems. 5 The underlying asset of a Traditional Asset Token is typically a real world asset which can be governed by one or more centralised parties, however it exists independently of the token s presence on a blockchain. Both tokens are ERC 20 compliant and created on the Ethereum network. On the following page we will delve deeper into each token and explain exactly what purpose they have, along with their uses, rights and technicalities. 5

18 6.1 The Acorn Token treehouse s Digital Currency The Acorn token facilitates membership on to the treehouse platform and is essential for participating in property buying and selling. As described previously, it is fundamentally a currency unit, and most importantly, allows the purchase of tradeable units of ownership in an asset. Acorns are minted via a token sale Smart Contract and can be held in any Ethereum ERC20 6 compatible wallet. The token will not have ownership rights until converted into the specific traditional asset tokens (GALs), but it does have economic value and incentives. In addition to being used for the purchase of services offered by our partners through the platform, the token will also facilitate the transfer of value between ecosystem members and from the platform to all token holders 7. Page 17 It provides the following rights and benefits to Acorn owners: Tradeable on listed exchanges after launch the token does not necessarily have to be used on treehouse, though it is designed to be. It can be traded freely as any other ERC 20 compliant crypto-token on a myriad of exchanges See section on The treehouse foundation

19 Returns revenue generated from the environmentally beneficial activities of the treehouse foundation via the sale of carbon credits & emissions. Can be used by network participants to purchase services and rent properties should they wish to do so. Paid out as rewards / bounties to platform members for certain activities (for example, if a property is rented via a recommendation made by a member). Rental income may be paid out in Acorns as well, should individuals wish to receive the payment in digital currency format versus fiat. It is important to note that the individual will always have a choice which to receive; fiat or Acorns, in this sort of transactions. Overall, the purpose of the Acorn token is to ease transfer of ownership, simplify fractional holding without minimal constraints, alleviate tax inefficiencies and make cross-border transactions less complex through its interaction with the traditional asset token. Page 18

20 6.2 The GAL Token Tokenized Property Ownership The most important function of the traditional asset token, dubbed the GAL (Global Asset Ledger) token on treehouse, is to facilitate the purchasing of a right in the underlying physical asset in this instance, a property. The token can be purchased through the platform by using Acorn tokens, when and if someone wants to buy a right in a specific listed property. Unlike the Acorn token, it will have ownership rights and represents the amount, or shares, that an individual possesses in a particular property. Like the Acorn token, the GAL token comes with a set of its own benefits and economic rights: Page 19 It is backed by a real-world physical asset, so the GALs track the value of the underlying perfectly, ensuring no mismatch of value between the currency unit (Acorn) and the real-world value of the asset. It is tradeable on the platform s secondary market, meaning that sellers do not necessarily have to wait for organic maturity before selling. Entering and exiting the process can happen at will, unless explicitly stated otherwise. Provides voting rights pertaining to the underlying meaning that a user can trigger a vote to decide if the property should be sold off or not. This is a truly democratic process where the majority decision is implemented.

21 It pays an income derived from the rent that the asset generates, proportional to the percentage ownership of the underlying asset. Capital gains generated, if any, are transferred to the token holders when the property is sold off; either off-chain to a 3rd party or on the platform s on-chain secondary market. Page 20

22 6.3 Atomic Swaps & Open Source Framework for Tokenizing Assets We envision a future outcome where similar asset tokens can be traded among various members of different platforms. treehouse is not the only platform looking to tokenize assets in this manner and will most definitely not be the last. We do believe however, that the ability to freely trade between platforms (and assets) is essential to the success of the ecosystem and as such, we are looking to provide the ability to perform Atomic Swaps. An atomic swap is the exchange of one crypto-token to another crypto-token, without the need to trust a third-party. Via atomic cross-chain trading, treehouse is looking to revolutionize the way in which users Page 21 transact with each other and in the process turning competitors into allies. At the same time, in order progress towards this more connected asset trading future, treehouse will be creating and releasing the general framework for tokenizing assets, or things to the wider Ethereum community. We hope that through this work, and others involvement, we can create a standard similar to the ERC 20 token standard, but for the tokenization of things.

23 7. treehouse Business Processes The treehouse platform s aim is to facilitate young professionals to get exposure to the real estate market and create a wide, diverse portfolio of assets that are generally safer, yield more, and are as liquid if not more so, than many other traditional investment vehicles. It also creates a fantastic shop window for developers to list their properties, particularly those off-plan. Individuals looking to sell their property are more likely to achieve a sale quicker with the pool of potential buyers exponentially larger. And finally, treehouse operates what is fundamentally a fully integrated lettings market platform with all the tools necessary for safely and efficiently letting out properties, free of the high costs and poor service associated with traditional estate agents 8. Page 22 In technical terms, treehouse is part of the Ethereum ecosystem, making use of: Smart contracts to tokenize ownership, provide automated payment, rewards, incentives and facilitate the transfer of value. Smart oracles which contain real-world representations of information such as identity, address, certificates and financial information (eg. BlockOne IQ). Ricardian contracts where applicable legal documentation and digital signatures are stored. 8

24 Initially, there will be some elements that are centralized such as the sourcing of properties for listing, and instances where off-chain collaboration is necessary (at present) to facilitate the functioning of the platform. treehouse will hold the legal title on behalf of the share owners and would need to interact with legislative elements in the traditional way. At present the UK government does not recognize digital or blockchain enabled deeds, which is something that the platform will pursue heavily as it is a key requirement for the exponential future growth of such ownership activities. A massive leap is being taken recently by Dubai and its Dubai Land Department that shows the way forward 9. The platform will facilitate the payment of income generated by the underlying asset[s] to their respective token holders who will have all the rights associated with owning property in the traditional way. This is net of costs incurred for managing and administrating the property. Page

25 7.1 A Note on Centralization versus Decentralization The ultimate premise for blockchain technology is that we are building systems in which agents interact and behave honestly and efficiently. So why even consider the notion of having a hybrid centralised-decentralised process? It may be possible to take a stepwise path where some centralized elements remain at first (for instance, ones that demand throughput right now that is not yet achievable on blockchains) with a view to decentralizing those elements in the future. Many governments are still not partial to the idea of decentralized record keeping such as property deeds and other legal documentation or identification. Page 24 The end goal, naturally, is for a fully decentralised system, but the major challenge with all decentralised systems is that they require a critical mass before the benefits can be reaped and the network is secured. While the Ethereum is highly secure, in initial phases the treehouse ecosystem may not be large enough to secure proper curation and provide a disincentive to bad actors. We are still very early in the cycle and adoption, or indeed education, of the sharing economy 2.0 way of doing things, which will require time to reach maturity. Letting the platform centralise ownership, documentation and other elements such as sourcing, will allow for a smoother transition to a fully decentralised, self-governing system in the near future.

26 Curation and ensuring that properties offered to participants on the platform are of high quality can be done via a crowd-sourcing approach which rewards good actors and provides a negative incentive to bad actors. But again, this requires a critical mass, of sometimes skilled individuals, who are able to provide the analysis and documentation needed without oversight. We feel that letting the platform, in its initial iteration, handle this aspect is a more effective way of solving this issue at the onset. This approach also reduces complexity and increases robustness in what is a simple complex system. Compliance matters relating to risks such as KYC (know your customer) and AML (antimoney laundering) would be substantially reduced with a centralised process, and trust or security is increased if platform participants know that there is an entity treehouse Page 25 which is responsible for the properties offered. While the renting aspect of the platform and services offered are essentially decentralised and on a peer-to-peer basis.

27 8. Tokenization of Property Once a suitable property has been identified, the platform will create the listing and provide all necessary documentation. Off-chain, treehouse will work with reputable legal & advisory firms to verify, document and ensure legitimacy of the suggested property (as well as compliance). Upon signing by the respective jurisdiction, the documents will be hashed and recorded on the Ethereum network creating a tamper proof, immutable record. We anticipate the need for amendments to some documents and will be using IPFS 10 versioning protocol to ensure that all changes are documented and auditable. Page 26 The platform will issue the specific Global Asset Ledger token unique to that property, which is bought with the Acorn token. Via smart contracts, the funds are then released from the treehouse escrow account to the seller, and the platform will hold the deed on behalf of the token owners. As mentioned before, initial sourcing of properties will be treehouse s remit by making the most of our relationships with a number of property developers in the UK we are at various stages of conversation and partnership. The project began nearly 3 years ago, and a large portion of this period was spent on developing the necessary relationships with both developers as well as service providers, which will help alleviate the seeding problem prevalent in most platforms in the beginning at least from a supply side. 10

28 In the eventuality that a property does not get funded, the smart contracts will simply return all funds to current participants in the property fund, free of charge. Page A Note on Documentation, legal or otherwise It is important to highlight that while some activity happens off-chain, all documentation is digitized and hashed. This is pushed to the IPFS blockchain, creating an auditable and immutable record as previously mentioned.

29 9. Token Dynamics & Economics We are creating a finite number of Acorns at genesis, meaning that the token is by its nature deflationary. In the long run, this will add to the value of the token, though it is more of a by-product of design, rather than its intended design. As mentioned before, the primary aim of the Acorn token is to facilitate the functioning of the platform. This means using it for GAL purchases, bounty rewards on the rental side of treehouse and to reward participants in the ecosystem through various mechanisms (such as the redistribution of profits gained through the treehouse foundation projects). Services can be purchased and rental payments could potentially be made in this currency unit should individuals opt to do so. Page 28 Excluding the deflationary aspect of the token, as traction grows in the ecosystem, fewer Acorns will be in circulation meaning that availability of tokens will be lower every time an purchase is made; this having a positive impact on the value of the token. 9.1 Acorn Token Supply & Specification Name : Acorn (ticker: ACRN) Total Supply : 600,000,000 Token Sale Supply : 400,000,000 Token Value at Sale : $ 0.1

30 9.2 Acorn Token Valuation Considerations Global real estate transactions are estimated to top 1 trillion USD by 2020 according to a recent publication by Jones Lang LaSalle 11 - put into this context, if treehouse captures even 0.5% of the global transactions by 2020, that equates to around 5 billion USD in revenue. Considering a transaction fee of say 0.5%, it would imply 25,000,000 USD in transaction fees alone, annually. The platform can redistribute these proceeds to ecosystem members along with other mechanisms for redistribution. Another benefit of holding Acorn tokens comes from the work done by and through the treehouse foundation, where projects funded that generate carbon credits (and products such as sustainable lumber, solar energy etc.) generate income. This income is directly funnelled back to ecosystem members in proportion to the amount of Acorn tokens they are holding at the point of redistribution. Page 29 Token holders who have used Acorns to purchase assets will also periodically receive a supply of Acorns from the original pool of 200 million tokens that was kept in reserve and was never released during the token distribution event. 11

31 9.3 GAL Token Characteristics & Creation The GAL token is specific to the underlying asset. This means that for every property added to the platform, a unique GAL token is created. Each GAL has a 1 to 1 relationship to the unit of value of the underlying and represents the shares in an asset on the platform. This represents the unit of ownership of that asset. Once Acorns are put to work by using them to purchase GALs, their value is pegged to the value of the individual underlying asset that spawned that specific GAL. The GAL token is a generic name for the tokens which are representative of ownership in the asset. It does not mean there is a single GAL but rather, there are as many GALs - all unique- as there are assets. A good way to think of the GAL is like an envelope that contains the asset s DNA; unique attributes, financials, ownership and so on. Page 30 Let s take an example and see what it means from a financial point of view: Property A is worth 500,000 GBP 1 GAL = 1 GBP so that Property A has 500,000 GALs Property A is tokenized using GAL A Property B is worth 250,000 GBP 1 GAL = 1 GBP so that Property B has 250,000 GALs Property B is tokenized using GAL B

32 A member could purchase 10% of the GALs available in Property A and 10% of the GALs available in Property B. This means that GAL A is worth 50,000 GBP and GAL B is worth 25,000 GBP for a total portfolio value of 75,000 GBP comprised of 10% ownership in each of Property A and B. Now suppose that Property A goes down in value by 10%, so it s now worth 450,000 GBP the GALs for Property A are now worth 45,000 GBP. But Property B has gone up 50%, so it is worth 375,000 GBP, the GALs for this asset are worth 37,500 GBP. The total portfolio value is 82,500. treehouse allows for property exposure to specific properties, not just exposure to the property market. Page 31 There is a need for a token that tracks the underlying value of the asset as well the ownership. This allows for the trading of property shares on the secondary market, and avoid problems relating to fluctuations in the currency token. Having only Acorns is not feasible from the point of view of value protection should we have only one token, the following scenario can easily occur: a property actually increases in value, but for whatever reason, the value of Acorns decreases. When the property is sold off, despite having actually increased in value, the Acorn owner could be worse off.

33 Our vision is for a global property platform with freely tradeable shares in property, not only on a global scale, but also in any number of currencies. By introducing a second token that tracks the individual asset, we can assess exactly the value of each property, and if people want to, they can also exit their properties on the exchange (the secondary market) before the property is sold off and proceeds are returned to token holders. Suddenly this makes it a true exchange for property shares. Going back to the previous example, we ll explain the need for the second token. Let s make the following assumptions for illustrative purposes: Property A (P a ) = $100 GAL = $1.00 meaning 100 GAL available for P a Page 32 Acorn = $0.1 meaning 10 Acorns required for 1 GAL John Smith has purchased 50% of GALs, for 500 Acorns and the value of the shares in the property is 50 USD. Jane Doe has also purchased 50% of GALs for 500 Acorns and 50 USD notional value. Should P a increase in value from 100 to 110, the property has appreciated by 10%. Since there is a 1:1 relationship between the actual price of the underlying asset (P a ), 1 GAL = 1.1 USD now. But, assume that Acorn is no longer 0.1 USD but rather it depreciated to 0.05 USD.

34 Should there be no GAL token, both Jane and John, despite seeing the value of their shares increase from 50 USD to 55 USD, would receive back 550 Acorns. But 550 Acorns are now worth 27.5 USD and not the 50 USD that was the initial stake. By introducing the GAL mechanism, the value increase is still captured. Since we know the original amount invested in Acorns, despite the currency token dropping by 50%, we can compensate Jane and John by a proportional amount, so instead of getting back 550 Acorns for a value of 27.5 USD, they receive back 1100 Acorns, for a value of 55 USD each. This is true in the opposite scenario as well. Value, once the token is invested, is then directly tied to the underlying asset price and not simply to the gyrations in the currency token s value. It also allows for a true, cross-border property exchange. Page If a Property Does Not Get Funded If for whatever reason a property does not get funded or is not made, the members who have already made a contribution towards the funds required will simply receive back their funds in full.

35 10. treehouse Asset Lifecycle Once tokenization is complete and individuals have exchanged Acorns for the GAL tokens specific to a property, the token holders are the collective owners of that asset. This provides the right to receive rental income and capture capital gains. If individuals wish to exit the property before a collective decision has been made to do so, they can list their property shares (their holdings of GALs) on the platform s secondary market as per a traditional exchange subject to price discovery, bids and offers Income Distribution Page 34 Any revenue generated by the underlying asset is distributed among the token holders in a proportional manner. In simple terms, if the property makes 1000 USD per month after costs, and John Smith II has 25% of the GALs, he will receive 250 USD of the monthly rent. As treehouse has a working rental platform, the property will be listed and tenants sourced by us. Smart contracts will handle income distribution on a monthly basis to token holders, as of the recorded payment distribution date. If individuals transfer their token rights to another member, we will take into account the number of days that the first token holder is due in rental income and the remainder will be attributed to the new owner of the GAL tokens.

36 As the platform is managing the property, a Maintenance Fund is being created which is going to represent approximately 10% of the annual income for the property 12. This fund will be used for maintenance costs and any other related property expenses. As such, income generated by the property is first funneled to the Maintenance Fund and excess funds are paid out after that. The balance of the fund is always available and fully auditable by GAL token holders at any point in time. Page Associated Costs and Periods of Zero Income Any relevant associated costs (such as repairs) are going to be deducted from the Maintenance Fund. In many cases, token holders will be able to vote which service provider to use should 12 This value may change as more data is collected and allows us to better gauge the level required. An increase is just as likely as a decrease in the value required.

37 they need or want. For example, if there is a plumbing issue; use Plumber A, B or C etc. All costs will be displayed to token holders on the property portfolio dashboard and always visible. In periods when the asset is not generating rental income, for instance, should a tenant not be found for a month after the previous tenant moved out, the property will not be generating rental income so no rental income distribution will be made. The asset still benefits from capital gains, if there are any, and individuals can always exit their property at any point by listing the property GALs on the secondary market for other members to purchase Asset Delisting & GAL Token Destruction Page 36 An asset will be delisted from the platform given a number of scenarios these are essentially when a member has acquired 100% of the GALs, thus the entirety of the shares, or rights, in the property and when there has been an off-chain disposal of the asset Integral On-Chain Acquisition and Delisting An ecosystem member has purchased all of the property GALs pending all relevant costs and legal documentation, the property deed is transferred to the individual that has made the integral acquisition. GAL tokens are automatically destroyed by the smart contract governing ownership.

38 Proceeds are transferred to the Maintenance Fund, from which the individual token holders are rewarded in a proportional manner Off-Chain Acquisition and Delisting In this instance, the vote was initiated by the GAL token holders. The majority (51% or more) of the holders decided to sell the asset; the sale could be on-chain or off-chain. Here, the sale happens off-chain, with a third party purchasing the property. Any legal documentation, registrations and applicable transaction fees are dealt with by the platform and proceeds are deposited into the Maintenance Fund. Once the profits are distributed by the smart contract to all token holders proportionally, the asset will be delisted and associated GALs are destroyed. Page 37 The property title deed is transferred off-chain to the new owner.

39 10.4 Process Flows ASSET TOKENIZATION Page 38 INCOME DISTRIBUTION

40 11. Renting a Property & the treehouse Rental Platform While developing the idea, it became obvious that there is another problem permeating the real estate sector, which treehouse could address. Ask anyone on the streets what their opinion is of estate agents, and more often than not that opinion is a negative one. This is not helped by the fact that many agents have provided a sub- standard service at a premium cost for far too long to both tenants, and landlords. It is an industry that is by and large archaic, in need of disruption and ripe for reintermediation. This is across both rentals and buying or selling of properties. With the platform we are building, treehouse will be able to solve a lot of the inefficiencies currently present in the established system. Page 39 We are not only making the process smoother, more efficient, transparent and secure, but to also introducing a number of very useful elements that people have come to expect from the connected, 21st century way of doing business. One aspect is the creation of treehouse as a platform where tenants and landlords are serviced by a number of providers, on demand, to solve any property related issues. Indeed, this can be extended to the provision of services that have to do with your home and lifestyle provision of cleaning, insurance, moving, gardening, furniture assembly, rent processing, utility switching, council tax payments and many more a true living services platform.

41 11.1 treehouse Rental Platform The technology behind treehouse is designed so that the whole ecosystem when renting a property is serviced from beginning to end. This means bringing together tenants, landlords and service providers in our innovative marketplace that is packed with features; finally bringing property into the 21st century: Property listing & marketing - To make sure a property is seen by as many people as possible, we have integrated our listing process with the major portals out there like RightMove, Zoopla, SpareRoom and GumTree. Tenant screening - We've made tenant screening a super easy, cost effective Page 40 process that only takes a few clicks and a bit of typing. We currently use one of the major providers to build a comprehensive picture of each applicant and the information is displayed for both parties to see once a check has been done. In the future we plan to switching to a blockchain based digital identity process. Digital contract tool - Contracts don t have to be scary or complicated. We ve partnered with one of the leading property law firms to design a contract tool that lets landlords tailor contracts as required and provide complete transparency. Deposit & rent processing - Rent and deposit payments can be a pain, so via treehouse these can be processed easily and securely. Many first-time landlords

42 forget about the legal requirement to insure the deposit with a protection scheme, opening themselves up to a huge penalty, so treehouse makes this an impossibility. Unique negotiation tool - We understand that sometimes people disagree on things so we built our unique negotiation tool that lets tenants and landlords work things out; making sure the final deal is fair, simple and transparent. Real-time communication - It wouldn t be treehouse if you couldn t contact people in real-time, potentially going through the whole process of renting a property in just a few minutes and by flexing your clicking finger a couple of times. But since it is treehouse, that s exactly what can be done. Page 41 Property management tools - We not only built a property search marketplace, but also an incredibly powerful, yet simple CRM system for real estate, which can be used by anyone. The synergy between both components allows us to modernize the way people transact property. Simple and intuitive layouts mean you ll never fall behind or miss an important notice, renewal date and anything in between. User profiles - treehouse is as much a community as it is a marketplace or a proptech endeavour. One of our core values is being responsible. By having access to peoples profiles, you can not only see who you are dealing with, so you can put a human face to each name, but you can also see how they behave over the long run.

43 Optional services - We wanted to make the whole process of renting a property not only transparent, easy and fair but also to put the freedom and control back in peoples hands. To serve that purpose, we designed treehouse so members can select as many or as few of the services they want, all designed to make life easier. The renting platform has been in development for over 24 months and has been in a closed alpha test stage for over 9 months. We on-boarded a small number of properties and landlords in order to test hypotheses then iterate the product accordingly over the period. We registered the first transaction with a 3 rd party on the 17 th of May Product Screenshots Page 42

44 Page 43 Landlord dashboard Contracts and contract versioning screen

45 Page 44 From top-left, clockwise: the initial offer screen. Offer Accepted screen and the offers section under the landlord s dashboard showing current offers available. A screenshot of the user profile page is in the bottom right. RENTING PROCESS

46 12. The treehouse foundation Since we want to contribute positively to society, beyond the main activities of the platform, the treehouse foundation will be our initiative designed to make that positive impact. Roughly 10% of the platform s profits will be directed towards the foundation, though this may change as operational experiences dictate. Primarily, we will look to combat deforestation, degradation, logging and ecosystem destruction and work with entities that further that goal. Our aim is to provide funding and support through the foundation and in turn capture economic benefits that will be passed onto the Acorn token holders as a result of these environmentally friendly projects which generate positive externalities. Page The UN-REDD and REDD+ schemes The United Nations Programme on Reducing Emissions from Deforestation and Forest Degradation (or UN-REDD Programme) is a collaborative programme of the Food and Agriculture Organization of the United Nations (FAO), the United Nations Development Programme (UNDP) and the United Nations Environment Programme (UNEP), created in 2008 in response to the UNFCCC decisions on the Bali Action Plan and REDD at COP-13. The overall development goal of the Programme is "to reduce forest emissions and enhance carbon stocks in forests while contributing to national sustainable development". The UN-REDD Programme supports nationally led REDD+ processes and promotes the

47 informed and meaningful involvement of all stakeholders, including indigenous peoples and other forest-dependent communities, in national and international REDD+ implementation. REDD+ is a voluntary climate change mitigation approach that has been developed by Parties to the UNFCCC. It aims to incentivize developing countries to reduce emissions from deforestation and forest degradation, conserve forest carbon stocks, sustainably manage forests and enhance forest carbon stocks. Page 46 As mentioned before, the treehouse foundation will work with entities to further the goals laid out by the UN-REDD and affiliated schemes. In essence, this means providing funding, and in exchange the scheme generates carbon & emissions credits that are sold to realize an income. Profit from the sale of carbon & emissions credits (as well as any other goods generated as a result of the project s operation) will be redistributed to the Acorn token holders.

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49 13. Project Timeline & Roadmap 1. June 2016 Concept. 2. July 2016 Technical Specification 3. October 7 th 2016 First treehouse Baby is Born [Arbella Maria] 4. November 2016 Rental Platfrom Closed Beta 5. May 2017 First 3 rd Party Transaction Happens on Beta Platform 6. June treehouse Platform Concept Prototype 7. August 1 st 2017 Second treehouse Baby is Born [Alexandru] 8. May - July 2018 treehouse Funding Round 9. October 2018 treehouse Platform MVP Launch Beta 10. November 2018 Public Token Release Page Global Coverage % of Global Real Estate Transactions 13.1 A Note on Activity Focus The paper details the broad, long term plans of treehouse. To avoid confusion, we would like to make it clear that initially, the firm will operate in the United Kingdom, with the aim of expanding to mainland Europe within the next months, once we begin operating. The treehouse foundation will begin activity 12 months after the platform comes online and is operational.

50 13. Project Timeline & Roadmap Page The treehouse Team

51 14.1 Core Raz B. Iordache Raz is the founder of treehouse having started work on the project in late 2014, after identifying the potential and scope for applying blockchain technology to the real estate sector. He started working in finance over 10 years ago, with Bloomberg LP. Founder & CEO A few years later he left to join a commodity trading hedge fund and worked as an oil trader for 5 years. He joined Thomson Reuters after that, with a view to developing treehouse from an idea, to a truly disruptive and game changing enterprise. Raz moved to London in 1998 along with his parents, who were diplomats and is originally from Bucharest, Romania. He is driven by the desire to leave his mark on the world and is constantly questioning the status quo. Alexander Barnes Cofounder & CMO Inspired to restructure and democratise the way property is purchased and rented, Alex is a co-founder of treehouse and has been working on it since its initial inception in He brings to the team six years of experience driving sales growth and taking products to market in the financial sector, primarily focusing on enterprise software and trade execution platforms in foreign exchange assisting customers to navigate the FX trading and financial regulatory landscape. Page 50 Alex has a passion for building upon and surpassing previous sales records as well as working to structure new solutions that will shape the world. Comfortable motivating and coordinating both global and local teams towards achieving their objectives, Alex is currently working to develop the business, engage new partnerships and optimize company strategy. Alex is originally from Brighton, England, has an interest in all things disruptive, fitness and psychology as it relates to self-improvement and peak performance.

52 Emile Dubié Emile is an entrepreneur, investor and blockchain strategist driven by how innovation can help building an alternative society. Cofounder & CIO He began investing at the age of 18, soon after the financial crisis. Emile has always been passionate about investing in new technologies. After his studies, he joined the buy side industry as an Equity Research Analyst with a specific focus on the US Information & Technology sector. In 2014, Emile founded Pylarck (Nextube) in order to provide a single platform for influencers video content. The project aimed at changing the way this content is discovered and consumed and helping brands to find relevant influencers for their online campaigns. After his roles in finance and technology he joined the fintech firm Bloomberg as a product specialist and later moved to Thomson Reuters. Emile brings his experience about the blockchain ecosystem, the technology sector and the investment world. Andrei Mateescu Page 51 Andrei has been supremely passionate about technology and entrepreneurship for as long as he can remember. Cofounder & Developer CTO In the early 1990s, he started one of the first Internet Service Providers in his hometown of Bucharest, Romania, before finishing high school, which quickly developed into a full-time job, handling nearly a thousand customers in just a couple of years. He later sold that business to one of the largest providers of internet access in Eastern Europe. His self-taught programming experience and a strong passion for the open source philosophy eventually led to finding a place in the Drupal community, where he is now an active maintainer of several Drupal core subsystems. Naturally, he recognized the blockchain technology as a ground-breaking innovation with an immense potential to transform society.

53 Romain Rétière Developer & comms Soon to be graduate from a top 10 engineering French school (IMT Atlantique), Romain is a young tech-savvy entrepreneur who believes blockchain, AI and IoT form the triptych which can create a more transparent, fair and people-focused society. He is very interested by disruptive technologies, social interactions and how to share knowledge in an efficient way. Romain got on board mid-2018 to provide technological insights and to spread the word that treehouse can help to build an alternative economy Contributors & Advisory Board Electra Japonas Electra is a commercial contracts lawyer with 10 years of experience working in-house on large scale technology projects. Page 52 Legal Counsel She started her career at the European Space Agency where she negotiated, drafted and managed contracts for major satellite builds for space launch. After four years in the space industry, Electra decided to move into large scale technology and systems integration projects for large corporations such as British American Tobacco and Disney. Her understanding of the technology sector and how it is rapidly changing the face of the law, makes treehouse a very exciting challenge for her. treehouse is a combination of a highly regulated sector (property) and a new, almost completely unregulated sector (Blockchain). This provides a very interesting opportunity to create the legal foundations for a highly innovative platform which will change the way in which people, value and ultimately perceive property. Electra is originally from Cyprus, has an interest in social psychology and is also a Pilates fanatic.

54 Patrick Colas Patrick brings to the team his commercial acumen and understanding of environmental finance and sustainable development. Ecoinvesting Project Adviser Having operated in the European Union emissions trading scheme and the voluntary carbon markets, Patrick can advise on integrated impact assessment, applicable financing mechanisms, and the global regulatory framework for sustainable energy, land, and resource management, and ecosystem protection projects. Patrick holds postgraduate qualifications in economics and is a postgraduate candidate in the field of sustainability. He is a French citizen, currently residing and working in Oxford, England. Marine Varlet Marine is a branding designer and after two years of living and working in New York, decide to be a Digital Nomad and went on a world tour working as freelancer while traveling the globe. Page 53 She jumped on the treehouse project early 2018 to collaborate with the team and create a winning visual identity. Designer Her passion for great causes such as ecology and evolution through technology made her immediately want to join the team and to be part of this great adventure. Marine is originally from France and is currently living in the Netherlands.

55 Alin Iacob Alin is a self-taught full-stack developer with more than 7 years experience in frontend and backend technologies. Developer Driven by his interest in start-ups and the belief that there is always a better solution for any given task, he first joined Cynny in 2013 to build Morphcast, a new way of visualizing media where the viewing experience changes by analysing viewers facial expressions. In 2015 he worked at Pentalog as a full-stack developer on fintech projects for major players in the financial market, including HSBC, Santander and Barclays. He joined treehouse as a co-founder and developer after seeing the challenge and impact potential of the project. Alin is originally from Iasi, Romania and enjoys spending his time reading about Blockchain, tech related articles, travelling and playing the electric guitar. Bastiaan Don Bastiaan is an entrepreneur, building different businesses since the age of 15 and has been passionate about the crypto world since Page 54 Strategic Advisor Having worked in the real estate market for over 11 years, where in his last positions, he was the founding partner and management member of renowned (global) serviced apartment companies. Bastiaan brings the necessary know-how in how to tackle and solve the current market problems by using blockchain technology as envisioned by treehouse and will be working to establish the platform s presence in the European market, among other things. He also brings vast project management experience having overseen the development of a large scale, enterprise software solutions over the last couple of years. Bastiaan is living near Zug, Switzerland, also known as Crypto-Valley and therefore in daily contact with the vibrant crypto world, he speaks four languages and is a fervent sailor.