https//workWhite Paper - SMOKE.NETWORK Prepared for Community. August 30, 2017 White Paper Version 1.2 of 1 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workDISCLAIMER This document is for inational purposes only and shall not constitute an offer to sell or any type of solicitation or investment advice. We do not accept responsibility for any omission, error, or inaccuracy in this document or any action taken in reliance thereon. Full disclosers are part of a set of legal offering documents available at https//Smoke.Network. of 2 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workCONTENTS I. ABSTRACT 5 II. INTRODUCTION 6 III. ABOUT THE PROJECT 8 How did Smoke.Network Begin 8 Our Current User Base 10 IV. THE DECENTRALIZED APPLICATION DAPP 11 A Familiar User Experience UX 11 A Foundation For A Cannabis Database 11 Target Users 12 V. INFRUSTRUCTURE 13 Why We Built On The EOS Blockchain 13 Technical Motivation 13 Smoke.Network Design 14 VI. WAYS TO CONTRIBUTE 16 Capital Contributions 16 Smoke Cryptocurrency SMOKE 16 Vesting Smoke - Smoke Power SP 16 of 3 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workVII. TOKEN DISTRIBUTION 18 Distributing New Tokens 18 Voting On Distribution 19 Limited Voting 19 Payouts 19 IIX. ALLOCATION AND SUPPLY 20 Rewards Distribution 20 IX. THE MAIN BLOCKCHAIN BENEFIT EXPLAINED 21 Censorship Resistant Network 21 X. CONCLUSION 22 of 4 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workI. ABSTRACT Smoke.Network is an incentivized, distributed social media application for the cannabis community, that rewards users in cryptocurrency for reviewing strains, interacting, creating content and engaging others. The rewards are self funding and the application is completely decentralized and owned by the users with an incentive to grow the network together. Users are able to post images, review strains, share stories as well us up vote, follow and curate content created by others via a simple up vote or flag system. Users are pseudo anonymous and reputation is based on social trust. Rewards are issued to users who make a subjective contribution to the community. Unlike other popular social networks, Smoke.Network in not controlled by a central authority. There is not a single person that can modify the applications rules or governance, or censor any user/s from accessing the application. The network is instead owned by all users and token holders in a distributed manner. of 5 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workII. INTRODUCTION Currently, user generated content companies such as Facebook and Instagram have allowed large communities to interact, and share their love for cannabis. These plats, though, are controlled by central authorities that manage the networks rules and content flow, usually resulting in legal cannabis users and businesses being censored or kicked off the plat [The Cannabist Co. 2016]. 420Smokers.us was started when cryptocurrency and decentralized applications were still a relatively new concept, and any blockchain with enough transactions per second to pull off a decentralized social network did not exist. Since then we have grown our fan base to over 500 000 passionate cannabis users and blockchain technology has evolved to allow our vision to come to reality. In 2016 Steem was launched and distributed 1.3 million dollars to its users [Bitcoin .com News], only months after launching. We expect similar growth within the cannabis niche due to restraints on cannabis content creators as well as the estimated compound annual growth rate of 16 [New Frontier Data] within the legal cannabis industry. of 6 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workSome key principles Smoke.Network is built on is 1. Everyone who contributes to a venture should receive pro-rate ownership or payment. 2. All s of capital are equally valuable. I.E. Your time is just as valuable as cash. 3. The community will produce products to server its members, incentivized to grow their own wealth by growing the network’s value. We live in an attention based economy, and as such it is largely unfair we do not get rewarded for our contributions to existing social networks, while founders cash out billions [Market Watch]. Any contribution or third party products built on these networks have to find alternative means of revenue to monetize their applications such as through ads controlled by the networks [Facebook Developers]. of 7 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workIII. ABOUT THE PROJECT How Did Smoke.Network Begin Smoke.Network began as a proof of concept for rewarding cannabis users for engaging and reviewing cannabis strains. The plat was originally implemented as a NodeBB forum on a subdomain of 420smokers.us , where we used a gamification system to reward users. In 2016, after 2000 signups and an engaged community, we shut down the forum and started focusing on our review site and social groups, growing them to over half a million active fans and engaged readers. of 8 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workAfter getting the site and community to a self sustaining rate of growth we started working on the concept for a decentralized social network, based on the EOS technology [EOS Software By Block.One]. A UX prototype was then built, that was based off the mechanics of with an economy driven off social interaction and a cryptocurrency rewards system. We then built an alpha version of the application, that is running on the Steem blockchain and rewards users in Steem for their posts. The demo is running and has received great reviews from the wider community. of 9 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workThe next implementation [Scheduled due date Q1 2018 ,see roadmap] will include a running decentralized app on the EOS test-net with a web app to access the application. Users will be able to post images, reviews and blog posts. Curators will be able to up vote and flag contributions. Following the initial test net application, we will begin building additional functionality such as geo location dispensary reviews and the strain database into the Alpha. Once the application is launched on the EOS main-net, contributors will be able to earn and cash out the cryptocurrency, Smoke, and exchange it for other blockchain based coins through an exchange. Our Current User Base The team behind Smoke.Network is an innovative news and media company [420Smokers.us] based in Germany. Most of the application development is implemented in Europe with experienced consultants, content creators and experts located worldwide. Our purpose is to provide a comprehensive eco-system built around cannabis education, legalization and entertainment. 420Smokers.us manages to reach well over 100.000 readers a month with over 450 000 social users. On track to grow by 200 in 2017, 420Smokers is becoming an authority in the cannabis niche. Being well attuned to the wants and needs of real world stoners, we feel capable of driving adoption of Smoke.Network beyond the scope of speculators and crypto traders. of 10 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workIV. THE DECENTRALIZED APPLICATION DAPP A Familiar User Interface UX The Smoke.Network app was built for users in mind, that do not necessarily understand how crypto currencies work. The familiar on boarding experience borrowed from apps such as Instagram and Medium go along way in allowing the user to sign up and use the app freely, without the need for unwanted ads or paying any premium fee to use any features. Users are able to post, review and communicate with their friends while earning a cryptocurrency they can later cash out, or use to gain more influence on the plat. The Foundation For A Cannabis Database We plan to add more advanced features such as geo locating and reviewing dispensaries as well as building a database of cannabis strains. The value proposition for other developers in the cannabis space is that they can tap into a growing cannabis network that is self funding and has no central authority. Users and developers are incentivized to actively grow the network through the cryptocurrency rewards. Because Smoke.Network runs on the EOS blockchain, the application will be free of the burdens of cost payments or latency. For services to be provided for the Smoke.Network community it is a simple case of using the EOS software to communicate with the nodes running the application. of 11 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workTarget Users The target for Smoke.Network users is split into 3 groups. Namely cannabis users, those that want to earn on the plat no matter what niche it may be in, and investors. - Cannabis users mainly want a censorship resistant plat that rewards them for reviewing strains, dispensaries and interacting rather then selling their private ination to advertisers. North American marijuana sales alone grew by an unprecedented 30 in 2016 to 6.7 billion [Arcview Market Research]. - Those that just want to earn money on the plat are most likely freelance bloggers and photographers that may not necessarily use cannabis. It took roughly 3 months for Instagram to go from 150 million daily users in January to 200 million [Business Insider] in April of this year. - Investors are those that purchase Smoke tokens expecting a positive ROI on their investment. More than 1.2 billion in cryptocurrency was raised through ICOs in the first half of 2017 [Token Mania]. We believe we can tap into each of these markets and align all three target users so that the outcome is net positive for all investors and users. of 12 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workV. INFRASTRUCTURE Why We Built On The EOS Blockchain Smoke.Network will operate on the EOS blockchain, currently in development, as a decentralized application. The EOS blockchain promises [EOS Documentation] an easy environment to run decentralized applications that can scale to millions of users, can handle thousands of transactions per second as well as second tier benefits such as account recovery, free transactions for users, upgradable contract ability, bug recovery and an account name system. Decentralized application on EOS represent contracts whose terms are recorded in a computer language; they can be automatically processed by computer systems. It is economically viable to these contracts, as there are low contracting, enforceable and have low compliance costs. of 13 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workTechnical Motivation EOS is a public blockchain-based distributed computing plat, featuring smart contract functionality and scalability with near zero fees. We see three main approaches for building advanced applications on top of cryptocurrency - building a new blockchain. - using scripting on top of an existing blockchain. Building a new blockchain allows unlimited freedom in building a feature set. Still, there is a considerable security risk with new blockchains; for example, if there aren’t enough miners in the very beginning, the network is vulnerable to a 51 attack [Bitcoin.org], or if there is not enough compute or data storage the network would become backlogged. of 14 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workSmoke.Network Design By using EOS as the abstract foundational layer, we are able to implement all the features and rules on Smoke.Network directly into the smart contract, while allowing EOS to handle complex computations such as accounts, recovery and blockchain scalability issues. Smart contracts on EOS are deployed and processed by the EOS network. By using the EOS infrastructure with the purpose of validating transactions, accounts, and providing compute, we minimize any possible failure of the network. EOS allows for - Built-in smart contract compilation, linking, deployment and binary management - Configurable build pipeline with support for custom build processes. - Network management for deploying to many public private networks. - Deploying decentralized applications on the blockchain. - Managing accounts, transactions, data storage and compute. The communication between the EOS blockchain and the web-applications is managed using the EOS software API. The frontend application is implemented using React [ReactJS]. This application is located on a different server and communicates with the Intermediate Layer using Web Sockets and a REST API. Anyone will be able to build a front-end application calling from the nodes running our application on the EOS blockchain using standard web technologies [W3C]. of 15 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workVI. WAYS TO CONTRIBUTE Capital Contributions In the Smoke.Network community capital is offered in return for ownership in the network. Those who purchase ownership profit from the community’s growth and rewards. Capital contributions are an important part of a valuable growing economy and the value of Smoke Tokens SMOKE. There are two ways ownership can be held, namely Liquid Smoke and Vesting Smoke. Vesting Smoke cannot be sold for a period of time, but allows voting rights in the reward system. The Smoke.Network refers to these assets as Smoke Tokens SMOKE and Smoke Power SP Smoke Cryptocurrency SMOKE Smoke Tokens are the primary token of the Smoke.Network. Capital contributions to the Smoke.Network will come from those buying SMOKE. To exit the network users will be able to sell SMOKE on an exchange or store them on an external EOS wallet. Users can convert SMOKE to SP at any time to gain more influence. SMOKE are never destroyed but locked in a separate contract upon conversion. of 16 22SMOKE.NETWORK WHITE PAPERVERSION 1.2https//workVesting Smoke - Smoke Power SP To encourage long term participation SP is non-transferrable and can not be traded on exchanges. SP is required for voting on posts, images and reviews but is not required for using the application. To incentivize participants to grow the network and vote for long term prosperity over the network, those who contribute capital should not be able to exit as new capital is entering the ecosystem, thus SP can only be converted back to SMOKE over 8 weeks via 8 equal payments. Users and Investors are equally incentivized to vest their SMOKE in SP over the long term to gain voting rights on the plat. of 17 22SMOKE.NETWORK WHITE PAPERVE