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SpankChain CEO Details Company Downsizing on Reddit

Distributed Summary:

  • SpankChain CEO wrote that team downsizing reduces burn from $200k to $80k
  • Wrote that blockchain-based adult entertainment site “raised $6.5M when ETH was at $317”
  • Detailed project’s fiat/crypto treasury

The CEO of the blockchain-based adult entertainment site SpankChain, Ameen Soleimani, recently announced a drastic reduction in company employees via a Reddit thread.

Soleimani, writing under the Reddit username “ameensol,” explained that the project had downsized to a team of eight so that it could focus on its “SpankPay product development and sales.”

Soleimani went on to state that this had reduced the company’s cash expenditure from $200,000 to $80,000, so that SpankChain can survive for two years, even if the value of ether completely plummets and about three years if it stays stagnant.

The company has shown progress, and it is still functioning now despite the cuts, but the recent slaughter in the price of ether has taken its toll. Soleimani claimed that SpankChain has $2 million in fiat cash reserves, but that its “crypto holdings were punished over the last few weeks” and it has “$1M left in crypto, for a total of $3M.”

What Is SpankChain?

SpankChain hit the cryptocurrency space in early 2018 and has caused quite the stir for a variety of reasons. Indeed, there have been several attempts to make a startup that somehow fuses the interest in blockchains and cryptocurrency with interest in the online adult entertainment industry. What makes SpankChain noteworthy, however, is that its code takes a much more serious approach to the endeavor at hand and has created a novel and well-respected technological approach to carry out this project. The implications of its code, however, might leave something to be desired.

As detailed in the startup’s white paper, SpankChain’s payment system is based around micropayments. Through its multitoken model, SpankChain elegantly handles the concern that Ethereum charges users gas whenever they open or close new payment channels, and SpankChain’s wallet system involves only a single payment channel over the Ethereum network.

Tokens that are then used to pay fees over this platform are issued to users based on their staking of SpankChain’s own third token, which is where the complications start to arise. The system is the result of a ridiculous consensus protocol that it has dubbed “proof of spank,” which the white paper details thusly:

“Every 10 minutes, one performer doing a live public show will be selected at random for spanking. Using a source of randomness (e.g. a recent blockhash) the performer will be presented with four numbers between 1-20, recite all four, pick one, and then spank themselves live that many times. Everyone staking SPANK on the SpankBank contract will have the opportunity to participate in a token vote on whether the current performer matches their profile — if they vote that the performer is actually an imposter, the performer’s account will be revoked.”

The usage of this micropayment system allows performers to take in a significantly higher percentage of the revenue generated by their shows than competing websites and offers many distinct advantages, provided that the proof-of-spank actions still happen every 10 minutes.

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