The following article was written without compensation, and addresses the Ideals, Individuals, Financials and FUD of the Spankchain project. Yes, it’s exactly what you think it is. As fair warning, the article below will be wholly work-safe, but the links will not.

Ideals

Periodically in crypto circles we talk about Satoshi’s vision of the future: financial privacy, financial freedom, and immune to the ills of centralized power. However for many westerners, it’s difficult to see the need for such a future, as the major issues of centralized financial power like seizure, or currency devaluation aren’t wholly relevant.

another sex worker getting screwed by the man

Sex Workers such as webcam models, exotic dancers, and adult film actors are in a unique position. Theirs is a revenue source that few banks want on their books. In spite of the questionable practices of fractional reserve lending, mortgage-backed securities, and collateralized debt obligations, the largest banks in the world would never want to be forced to answer the question: “Pornography?! Is this what your company stands for?”

USBank took its stance when it shut down adult film star Brenna Sparks’ bank account, revoking access to funds which she obtained through wholly legal means. Were it not for her active twitter fanbase, she likely wouldn’t have been able to garner the attention needed to demand action. A lesser known personality would likely just have to give up and open an account elsewhere. This kind of discrimination is commonplace in sex work.

Given the strained relationship with traditional banking, someone has to step up, right? Historically, webcam streaming sites act as a liaison into the finance world for the most common entry point into the field: camming. The sites themselves pay the models such that banks never deal with them directly. Unfortunately (for the performers at least), the limited number of service providers leads to a centralization of power. This enables business practices such as a minimum payout amounts, streaming software that prohibits streaming to competitor sites, and exorbitant administration fees which usurp up to 50% of a model’s tips. In contrast, Spankchain offers the lowest rate in the industry at 5%.

the standard cut. take it or leave it

Spankchain is poised to deliver a revolutionary alternative to all sex workers, and actually needs the blockchain to do so. With a distributed ledger, payments go directly from viewer to performer. There is no middleman. Even the smallest tip is received instantly. Once received, cashing out via exchange or crypto-friendly sites are both options.

Furthermore, the practice of deceptive viewer chargebacks is quashed. Previously any consumer fee could be disputed easily by saying “it wasn’t me” to a credit company. The consumer would be reimbursed, and the producer (a model) would be charged fees for the reversal. With the immutable nature of the blockchain, this swindle becomes moot.

In short, the target demographic doesn’t just want this platform, they need it.

Individuals

CEO Ameen Soleimani is a ConsenSys alum, and fittingly served as their “micropayments guy” before founding Spankchain. For the uninitiated, ConsenSys is arguably the most profound U.S. incubator for blockchain startups. Effectively, it is a Y Combinator for crypto. The knowledge sharing and resources available to their projects are paramount. Ameen is a vocal and visible leader that actively engages with the community via discord, twitter, and fairly regular livestream AMAs via the Spankchain site.

they like pink

While there’s likely a strong overlap in the two user bases, the challenges of Crypto are quite different from those of the adult industry. To better understand the key issues concerning the field, Spankchain has established relationships with key figures in the adult industry.

Kayden Kross is an award-winning adult actress, business owner, and Spankchain Advisor. She lends her knowledge and image to the project, giving it far more credibility and inroads than the team would be able to acquire on their own.

The larger community team has experience in adult entertainment, as well as cryptocurrency projects. They cultivate an active and friendly discord community, as well as a private community for models new to Spankchain or crypto in general.

Spankchain devs are among the best at what they do. What they’ve done — Level 2 State Channels and extremely low latency WebRTC video streams — sits on the cutting edge of technology. In particular, state channel technology is part of what allows Ethereum to scale and ultimately remain relevant in the face of all the new Blockchain v8.1.0b hype.

At the time of this writing there were only 3 teams in the world with a working implementation of Level 2 State Channels.The best explanation I’ve heard is that it is akin to walking into a bar and opening a tab. Once initiated, you can buy whatever you want, but it’s not until you check out that your bill is tallied up and paid out. This meshes well with the a la carte nature of live shows, and is a Unique Value Proposition to say the least.

Financials

In October of 2017, the dutch auction for the Spankchain ICO issued 30% of the 1 billion total SPANK supply to the public. The initial sale price amounted to $0.02 cents, or 7740 Gwei.

Presently, the coin sits at $0.053 / 823 Satoshis / 24508 Gwei, with an all-time high of $0.705 / 10840 Satoshi / 321000 Gwei.

All things considered, the price of SPANK doesn’t really matter. This is because SPANK is a staking token with a model similar to the one developed by Gnosis. SPANK holders stake their coins by submitting them to..

wait for it…

The SpankBank.

TL;DR: promise to not sell your crypto and get more crypto

Each month, this Ethereum smart contract rewards users that stake their tokens. The contract prints enough to ensure that 20x the fees taken in by the site exist in token form at the time of printing. Stakers receive payment in the form of a USD-pegged stablecoin aptly named BOOTY. Lockup periods range from 1–12 months, with longer lockup periods yielding a greater ratio of BOOTY per SPANK.

The SpankBank runs counter to the common staking models in cryptocurrency. Proof-of-Stake models typically reward whales disproportionately, especially when implemented with low or nonexistent maturity times. Typical masternode coins have the dichotomous behavior where as the number of established nodes increases, the overall payout for each node reduces.

Spankchain is unique in that the output of the SpankBank contract is directly tied to the fees received by the Spankchain platform. In this way a large portion of SPANK valuation is directly determined by the success of:

Spank.live (streaming site)

Red Light District (future clip site)

SpankPay (APIs/SDKs allowing external integration into the platform)

Come.Swap, a crypto exchange (say it three times fast, but not out loud)

…and anything else implemented further along the road. Investing in Spankchain is investing in the success of the platform overall, and it will only grow as it becomes unavoidably acknowledged by both the adult and crypto communities.

FUD

No article of mine would be complete without a bit of objective criticism. The kids nowadays call it FUD. In moderation, I feel it’s a necessary evil that steers us away from the worst ideas ideas and towards the best ones. With dApps, the biggest potential pitfalls tend to be Adoption and Engineering challenges.

Adoption

The typical issue with any utility token is whether anyone will actually use the dApp and thereby provide value. This isn’t an issue for Spankchain as just about anyone would leap at the opportunity for a 50% raise. The 400+ content producers that have already signed up pretty much rule that out.

As I see it, the actual adoption hurdle comes down to the users. To a random consumer, Spankchain is a complication of the familiar. Ethereum, public keys, finney and the like are effectively speaking Greek to users which are only used to entering their credit card info. The leadership has stated plans to make the site more cryptonoob-friendly. I’m uncertain how far down the road that is, or whether it will be in time to make an adequate first impression.

The second issue relating to adoption is that there is no apparent relative value for the consumer. From a game theory perspective, a performer has no reason to pass on the savings their users. It seems just as likely that models would work fewer hours to receive the same income, rather than letting the savings trickle-down in the form of lower prices for content.

Engineering — SpankBank Contract

The initial technological obstacle was State Channel implementation, but that problem has been irrefutably solved. The remaining challenge is the staking contract; while a novel feature it is also not without risk.

To date, one bug has been found in the contract. It was quickly addressed and patched well before the issue would have affected users. Published updates from the project’s Medium lead one to believe this was the result of intellectual hubris. Ameen exercised humility in taking responsibility for the critical issue (instead of blaming Q/A), but I feel like that could’ve been avoided.

Once you get past the name, it becomes apparent that the SpankBank is complex technology. Issuing 20x the fees of the platform is bold, but creates a dynamic where the outputs of one month of business are inextricably linked to the inputs of the next. To my knowledge this has not been done before.

Honoring BOOTY as 1$ USD toward all Spankchain services is stabilizing, but is it enough to keep the valuation of the issuing SPANK consistent? How does this hold up in the hyperinflation scenario cryptophiles are anticipating? Various plans have been laid out with thorough detail, including “Booty Calls” which prompt stakers to sell back BOOTY to the project in order stabilize value. However, at this point all solutions are simply theories that are yet to be put into practice.

Even as a fairly technical person much of this is well over my head. The team seems confident, but they were before as well. Having an advisor which was a founding member of Gnosis (a project which de-prioritized a feature similar to this) is only slightly reassuring. I know this is a solvable problem, but I can’t say how wild the journey will be before arriving at its destination.

Conclusion

What you’ve read today is the result of roughly a year spent following and musing over Spankchain.

I’m of the opinion that this is one of the best kept secrets in cryptocurrency to date. It addresses all the familiar touchstones of decentralization, technology, and utility that I look for in a crypto project. The team consists of public and private personalities well-versed in their field, with significant prior successes.

I cannot help but think the reason the token and project have been under the radar is because it’s porn. There’s a certain overlap between scams and vice-related industries (pot, porn, gambling) that aloof investors instinctively avoid.

No one wants to be the guy that bought the porno coin, but no one wants to be the guy that passed on the next Amazon when it was still 30$. Since I’m totally not a financial advisor, I’m not qualified to tell you which bucket Spankchain falls into. Rather, I can only share my findings and let you decide for yourself.