Dear APEX Community Members

Recently at a finance / tech TV station

I am thrilled about all the questions the community management team received, and I would be happy to answer them in all of my ability — although we did receive many questions that were overlapping. Hence I thought a better approach was to categorize the questions and address all details and developments by category/area of interest.

First, I would like to share that mid-February I made it back to Shanghai after a one month trip to Silicon Valley, which was a meticulous process as all direct flights were cut off. I had to stay a couple of days in Seoul, South Korea, and hopped on a plane to Shanghai right before the outbreak in Korea. By the time I reached Shanghai parts of the team the team were already back to work after an extended Chinese New Year break due to the coronavirus. We were able to leverage WeChat’s enterprise collaboration and messaging platform to maximize productivity.

The coronavirus and how it has affected us

• From late January to late February, it has largely slowed all teams and functions, including but not limited to: tech, product, blockchain team, HR, business development, and marketing.
• There are quite a few tech team members that are from Wuhan and unfortunately are stuck there and quarantined — but the good news is that they’re safe and working from home.
• Half the employees of the company have returned to the office (mostly those whose jobs require access to internal servers and need to be there), the rest are working efficiently from home.
• At least a one month delay is expected for all tech teams. As of now tech development has reached 70% efficiency (benchmarked according to the situation before the pandemic)

All in all, it has hit the macroeconomic environment quite hard — during this period many companies (including tech companies) have closed down due to cash flow problems. Fortunately, we are not only up and running close to normal status, we have positive developments and news during this period as well.

Updates — Technology and enterprise pilots

We are on track to have 4–5 enterprise pilots this year that will use APEX Network in production mode. Currently we cannot yet disclose the names of the enterprise pilot users but there are three piloting enterprises from two different industries that are well into the process and already beginning to see value:

• One previously announced budget Chinese airline (similar to Southwest in the US)
• One top 5 Chinese car brand (Tesla competitor)
• One high-end Chinese airline

We are expecting first experimentations of pilots on the official APEX Network mainnet as soon as 1–2 months after launch. We are also in the process of experimenting with a hybrid model where user data is stored on a private or alliance chain version of APEX Network, but cross-enterprise transactions occur on the main network.

Pilots are actively pushed by the partnership development team if they assess the enterprise to be a good fit. At least 70% of our enterprise base are aware of our blockchain technology offerings.

Federated Learning, of which an early introduction was given by the team, is one of the latest blockchain technology features we are developing, and it will eventually be available for use both on the main network as well as private/hybrid chains. As previously stated, the goal is ultimately to have it run on the public chain. Indeed, FL at scale only makes sense at the public chain level, though to ease adoption and reduce hesitance I’m sure certain enterprises would like to test it at the private level first.

• Federated Learning, in brief, is a cutting-edge machine learning mechanism that utilizes distributed rather than centralized data and computation. It fits the current use case and technology of APEX Network quite well because we have already designed and developed distributed consumer data storage mechanisms — it is only natural that we have the ability to convert this distributed data to distributed insights and computation.
• Federated Learning will be offered as a portion of an APEX Network enterprise pilot. There will be some technical implementation required as each enterprise’s machine learning needs may be different. FL will not be available for all types of AI models and use cases (think subset).
• It will ultimately use the main network credit CPX — enterprises may opt to acquire the CPX themselves but more likely a managed acquisition of CPX by APEX Core Development is the most practical approach.

Updates — Team

• Robert has left his position on good terms within the last couple of months because of subpar collaboration and communication with other functional teams, namely business development and tech teams (you can call it lack of chemistry). He still regularly keeps in touch with the management team and has now joined a quantum computing startup as an early employee. His prior duties with regards to blockchain product development have been taken over jointly by Jude and Jet.
• Currently 10 full time team members and 12 part time developers work on APEX Network — this is expected to grow in Q2 and Q3 (we are currently in the process of hiring additional employees).
• Community members are welcome to visit us in Shanghai after the pandemic completely clears — currently the office building has stringent controls on entries.
• The product management and development team uses SCRUM management principles.

Financials/CPX/MM

• Due to the market maker, we have incurred an approximate $1M loss on initial funds, certainly a significant number but it will not affect operations. We are in the process of finding ways of holding them liable.
• Blockchain technology services itself (including pilots) provide cashflow, so we expect at least $1–2M additional revenue from that this year which will go towards tech and ecosystem development.
• We are in the process of applying for multiple blockchain technology government grants in the size of over $1M USD each, which will be used solely for tech development.
• Under the current market conditions and also with regards to the recent developments in the global economy some may be worried about the financial situation of APEX Network. Regarding funding for the project and future development, we have ensured that the cashflow of the project is healthy and will remain so for the foreseeable future.
• The previous Genesis wallet transactions have mostly been due to payments to marketing/community management partners globally that have been bound by contract as well as other preexisting distribution arrangements. Since those have been completed, there will not be any more of those.
• Once we receive more funds from blockchain services and other routes throughout this year, we plan to use these to seek partnerships and channels that would increase liquidity of CPX.

Government & Regulations

• We have discontinued running the Chinese community due to regulatory sensitivities within mainland China.
• Given the point above, it is much more effective for us to apply for government grants and subsidies. Currently a blockchain license does not seem to be needed for that to happen.
• We are currently in the process of applying for a brand new local blockchain technology entity for the purpose of obtaining the license.

News & Marketing

• The Tencent AI Accelerator has provided us with extraordinary resources in terms of cloud computing, blockchain node infrastructure, and a wider enterprise network. Tencent has also indicated that they will provide capital / investment level support (there will be a separate announcement / news regarding this, wait for it), bringing our cooperation to the next level. Additionally, our products and systems have undergone deep technical and API level integration with Tencent’s Wechat, which opens up an additional large ecosystem with a lot of consumer data to us.
• I am very much open to the idea of having more talks and interviews with Blockchain Brad, and will look forward to do so given the opportunity.
• We are planning for the right strategic timing and format to do the token swap. There may also be impending strategic partnerships that are potentially linked or related to the token swap itself (details cannot currently be disclosed, stay tuned). As we are just now becoming fully operational again we are still assessing tech timelines, and would rather not give any prematurely.
• After the pandemic clears we also expect to resume updating new code on Github.

Other/Personal

I am no longer actively a part of managing Ledger Capital and only manage matters relating to exiting previous investments.

In summary

• It’s an exciting year for APEX and to be in China’s blockchain scene. Looking at the macro environment — and also with regards to government regulation — it has effectively tipped to pro blockchain rather than the previously cautious attitude. This does not only mean opportunities in capital and financing from the government, but more importantly, indirectly changing the enterprise landscape and adoption speed, which is highly dependent on the regulatory tone.
• The other aspect to look forward to is APEX tech and ecosystem development — we are particularly interested in our new development of federated learning (FL), which basically enables distributed AI applications on the blockchain. This is a natural extension of existing use cases for consumer data such as blockchain based loyalty programs and decentralized consumer data storage. The combination with laser focused use cases in the fields of AI+blockchain will give APEX Network a unique long term competitive advantage in the space.
• Additionally, we will be expanding the ecosystem and exploring various types of partnerships this year. This covers everything from growing the existing enterprise ecosystem to liquidity partners to strategic partners that we work with on new innovative token business models. We’re at a stage where a proliferation of truly strategic partnerships start to make sense, as we have a much clearer picture of what we need compared to last year.

That’s an overview of the current situation for APEX Network based on the questions submitted through the community management team. I look forward to being able to share more updates and news with you all on a regular basis as development, partnerships and other aspects of the project progress — either in video format (with the assistance of Blockchain Brad for example) or in written format. Thanks for reading — we appreciate all of you being part of this journey with us!

Jimmy Hu,
CEO, APEX Network

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