ICO Overview
Sharpay sits somewhere between social media marketing and passive mining.
Passive mining can take any form of activity for earning coins, from playing in-game tasks to clicking captchas. Sharpay is ‘social mining.’
ICO Proposition
Ticker: SHRP
Token Type: ERC20
Token Price: 1 SHRP = 0.00003 ETH
ICO Soft Cap: $3 million
ICO Hard Cap: about $32 million
Total Tokens: 4 billion
Tokens for sale: 1.42 billion
2.1 Investor Proposal
Sharpay is a utility token, which means its function is to allow access to services and CRM within the Sharpay ecosystem.
The project has already reached its soft cap, unloading 80 million tokens and raising $3 million during the pre-sale. This is an excellent indicator for investors.
Sharpay has a very low minimum investment (0.1ETH = $0.71) and an affordable token price, making it a good choice for first-time investors.
As the company states, “Investors who buy Sharpay tokens can either sell them on the exchange market or sell them back to Sharpay.”
Nowhere does the white paper detail what Sharpay means by ‘’exchange market’’ as it has not declared any intention to list on external exchanges or to build its own in-house exchange.
BuyBack program
However, Sharpay will run a quarterly buyback program, using up to 90% of its revenue. It aims to start the buyback in the third quarter of 2018, with the exact month to be confirmed as it first needs at least one month’s worth of trading figures.
The price of the buyback will initially be 0.00003 ETH/ $0.01 (approximate value as of November 2017).
Token value impact on buyback scheme
If the token rises steadily in value, how will that affect Sharpay’s buyback scheme given that the price is fixed at $0.01?
Let’s say you have 1,000 tokens, and then assume the token price has risen to $0.50. Your 1,000 tokens would be worth $500, which becomes a mere $10 at Sharpay’s buyback price.
How many people would be willing to sell tokens back to Sharpay under this model? And if the buyback scheme is a non-starter, what then?
2.2 Startup Proposal
Sharpay is a tool that targets social media marketers and content owners. It works by embedding a content sharing button on any page of a website. Clicks on this button spread the content to various social media channels and users are rewarded with tokens for sharing. The aim is to reduce the price of CPV (cost per visit) that website owners pay to attract new and existing users.
How it works
- Website owners buy a package from Sharpay by using tokens. This package includes a bundle of tokens and the code for the share button.
- The owners then define the target profile and reward rules for users against the package bought.
- Website owners proceed to install the Sharpay button on their site.
- Users arrive on the website and click the share button on the content page.
- Sharpay auto creates a new (opt-in) account and wallet for sharing users. The content is then shared to multiple social accounts belonging to those users.
- Sharpay tracks and rates the quality of shares based on a range of criteria, among them number of friends, quality of subscribers, and user activity level.
- The company then calculates the cost of the share for the website owner based on the assigned rating and the number of further click-throughs.
- The payment owed by the website owner is held in escrow for 24 hours. During that period, Sharpay checks whether the shared content is still visible on the user’s social pages.
- When the 24 hours elapse, Sharpay calculates the amount (in tokens) due to the user for sharing and what the website owner needs to pay for that share.
- Sharpay then performs payment reconciliation for all parties.
One of the advantages of the system is that every time users share on sites owned by any of the included brands, all of their token earnings get deposited in their single Sharpay account.
The Sharpay button will allow users to share simultaneously to Facebook (NASDAQ:FB), Twitter, LinkedIn (NYSE:LNKD), VK, Reddit, Telegram, and Tumblr.
What’s in it for website/content/app/brand owners?
- Increased traffic
- Higher conversions
- Longer sessions
- Rising sales
And all of these are achieved with lower expenditure.
Feasibility of Idea/Business Model
Overall, the feasibility of this concept is very high. While we would recommend it for its investment potential, we need to point out a few chinks in Sharpay’s White Paper.
- Prevention against bots and fraud
The project claims its system safeguards against bots and fraud by limiting the number and size of multi-sharing paid per day/week/month to stop cheaters.
We don’t think this eliminates the threat of bots or fraud, but it might limit commercial damage.
- Mixed message on benefits of multi-sharing
In the same diagram, the project creators state that using multi-sharing increases sharing conversions by 1.5x and 3x. So which is it - 1.5x or 3x?
- Is using OAuth for wallet login a security risk?
Sharpay will launch with open authorization (OAuth) so that ‘’users can access their wallet without the need to enter a login/ password.’’
OAuth is intended for delegated authorization only and does not attempt to address user authentication concerns. As such, it leaves Sharpay open to four types of problems:
- Lack of data confidentiality and server trust
- Insecure storage of secrets
- OAuth implementation with flawed session management
- Session fixation attack with OAuth
I will skip the boring details, but let me note that if, for example, Sharpay suffers an XSS attack and its access token gets stolen, the attacker could use that token to make fake requests for all users’ data.
- Competitors
Sharpay seems to have underestimated who its competitors are. The list features legacy share aggregators such as AddThis.com, ShareThis.com, AddToAny.com, and Pluso.ru.
According to Sharpay, these players have not updated their share technology in the ten years since the sector emerged. However, it fails to mention all the incredible startups that have launched in the last couple of years. Some of them are pre-building the crypto reward function into the hard wiring of their networks/platforms.
STEEMIT: a blockchain-based blogging platform allowing publishers to monetize content and rewarding users with crypto.
APPICS: a project that pays social users 25% of social marketing revenue generated by liking a post.
BOUNTIESALERT: a site that lists all online companies offering crypto rewards for performing marketing tasks on social channels like Telegram, Linkedin, and Facebook.
BTCCLICKS, EARN, BITSFORCLICKS: microtask websites that allow users to get paid in crypto for completing tasks like writing, editing, taking surveys, transcription, watching a video, clicking ads, doing online research, and more.
GOLEM, SIA, PRESEARCH, STORAJ: ventures allowing users to rent out hard drive space or CPU power and get paid in their network-based currency.
KIK: this huge legacy messaging app in Asia with 300 million users recently launched its own cryptocurrency reward system inside its messaging platform
STORMPLAY: an Android-based app that offers opportunities to earn free crypto based on gamified micro-tasks.
SELFELLERY: a photo-sharing platform using blockchain technology to reward its members for their contribution.
ONG.SOCIALl: a blockchain-based social dashboard that rewards users with cryptocurrency based on social interaction.
ONZ: a blockchain for social networks with a shared transferrable currency.
SAPIEN: an Ethereum-based democratized social news platform that allows Sapiens to reward millions of content creators and curators without any centralized intermediaries.
SOLA: a media-social network hybrid governed by AI.
- Is Bitshare the best transaction route?
Sharpay says it has opted to utilize Bitshare because of its low blockchain confirmation time and the number of transactions per second per day.
Bitshare can support 3,300 transactions per second. However, we recently reviewed Quarkchain, which is aiming for one million transactions per second. It also uses highly efficient sharding technology and will have incredibly low processing costs. Maybe there are better solutions out there now for Sharpay.
- Token value impacting commercial competitiveness
“Due to the free circulation of the token outside the service, its price is unlimited and will be determined by the market based on demand and supply,” Sharpay says.
In the sort of viral ecosystem Sharpay has created, it is highly likely this token will rise in value. This raises the question of what impact it will have on website owners who need to buy this token to obtain Sharpay packages. Does Sharpay fix the value of tokens sold to website owners to ensure the concept remains cost-competitive?
Feasibility of the Business Model
Sharpay is the only ICO we have seen with a revenue forecast, a break-even scenario, and an exit valuation in its White Paper. For this alone, it should be congratulated.
- Good viral growth idea
The project states it will send push notifications to users of new targeted content, encouraging them to share this content on behalf of the website owner. We think this is a great viral growth strategy.
- Limited business model for launch
“Sharpay is being updated at present. In the basic version of the project, the tokens can only be charged for sharing. In the updated version, the tokens can be charged for both sharing/multisharing and click-throughs,’’ the paper says.
This is a business model limitation for Sharpay. If it can’t charge for multi-sharing at launch, the implication is it can’t track multi-sharing yet.
- Undefined business model for ICO
Sharpay explains (very badly) in its White Paper how it intends to charge for its services. It will sell a package of 100 bundled tokens to each website owner, the cost of a package (100 tokens) being $1.
The value of the tokens inside the package will then dynamically change depending upon the number of shares the website owner gets.
Examples
- Website generates 28 shares = website owner pays $0.03 per ‘share’
- Website generates 1,000 shares = website owner pays $0.001 per ‘share’
Clearly, the more shares a website owner can generate using Sharpay, the lower the CPV becomes.
Here’s where it gets unclear.
Sharpay then states it charges the website owner a different amount depending on the quality of the share. So, that $0.03 per share for 28 shares might increase if some or all of these shares are deemed of ‘high quality’ by Sharpay. It is unclear what that increase looks like because the company has not defined it.
- Patent pending
“Since 2012, the project team has filed multiple patent applications describing the possibility of multi-sharing and stimulating the distribution of content tokens, money, points, etc. Currently, the patent technology is covered by the patent priority for the Eurasian international application. There are no existing direct equivalents. All project intellectual property rights belong to Sharpay Inc.”
OK…But the roadmap contradicts this by highlighting that Sharpay did not begin to pivot to blockchain until 2017. These previous patents, to my mind, are redundant. This means the patent applications filed in 2017 at an international level, which the project is now scrambling to capture at a ‘national’ level, are its key protection.
We need to ask then if a national patent is in place for China because the skills and speed with which Chinese tech entrepreneurs can reverse-engineer are staggering. I think they will want to copy this. Sharpay needs China, which is the biggest internet market in the world, with India quickly coming up the ranks.
ICO Team
The trouble with reviewing Russian teams is that these guys are awful at providing traceable, credible professional backgrounds. In this case, we also have the names of both the CFO and CTO spelled wrong in the white paper.
Sharpay does not list its founders- these people have no detailed data in their LinkedIn profiles.
Senior management team
CEO: The bulk of his experience is a 12-year stint as a management lecturer. He lists three CXO roles prior to Sharpay, but only one of these companies could be validated, turning out to be a freemium blogging platform. His career starts (weirdly) in 2012 with him jumping straight into a CEO role. He claims to be an IT professional, but he has held no CTO positions and no founder credits to his name. I could find no supporting evidence of his tech knowledge anywhere.
CBDO: This is another management team member who seems to have no normal career path progression. His LinkedIn profile says he started out as a vice-president for business development. However, this guy clearly has a lot of business development experience in corporate, startups, and the ICO space.
CFO: Warning bell! This guy is currently the CFO of two ICOing startups - Sharpay and Arround (an augmented reality advertising platform). This is not good because every nascent business needs to the undivided attention of its senior team. That detail aside, he has a very solid financial background.
CTO: For me, this guy lacks the hardcore tech chops to be a CTO. He is clearly a seasoned web developer, but I would expect Sharpay’s CTO to have been a head or VP of engineering to be able to build a private blockchain. I believe the person filling this role should have some sort of DevOps experience, possibly DevOps Architecture.
SWOT
Strengths:
- 30-minute integration for website or app owners;
- Commercially a win/win for all parties;
- ‘Pushing’ new content directly to users to share is rocket fuel for Sharpay’s ecosystem.
Weaknesses:
- Outstanding patents at a national level;
- Buyback program where if the token value rises, no one will want to sell back to Sharpay at the stipulated price.
Opportunities:
- Existing legacy media channels desperate for monetization solutions;
- eCommerce giants keen for their customers to share their purchases on social media channels.
Threats:
- Existing legacy competitors leapfrogging Sharpay’s in-house build to use STEEM or another existing blockchain rewards platform to roll out a competing button;
- Google (NASDAQ:GOOGL), WeChat, Baidu building their own in-house button.
Conclusion
This is a highly investable idea but with an element of risk due to the potential for duplication by competitors and clients.
Score (0 – 5)
- Idea/Business Model - 5
- Scope/Potential - 5
- Team/Advisers ????
- Token Economy - 5
- Marketing - 4
- Community/Communication - 4
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