Letter to the BlockCAT Community, from Eric Huang, BlockCAT CEO
The crypto community has been enduring a long winter. Bitcoin is -75% from all time high. Ether is -85% from all time high. Most altcoins and tokens are experiencing similar markets. While the price of crypto doesn’t impact blockchain usability, it does put many crypto users into hibernation.
CryptoKitties was one of the hottest DApps at the close of 2017, peaking at 15,000 concurrent users, but has now fallen to a mere 400 current users today. On DappRadar, 85% of DApps receive less than 10 daily users. This speaks volumes about the overall adoption of smart contracts today.
At BlockCAT, we’ve always believed smart contracts will become an integral part of the future of financial applications. For this future to happen, we need to remain focused on building core technology that allows Blockchain to scale and become vastly more accessible. This has been part of our vision from the very start, and remains a key part of every decision about the work we do each day.
In addition to the crypto winter, we recently suffered a financial loss from the unexpected shutdown of the Canadian exchange QuadrigaCX. Until their shutdown in January 2019, they were the largest volume Canadian exchange and provided high liquidity and trading volume for over 100,000 active users. As one of Quadriga’s long term customers, we have been using them to liquidate Ether into fiat as part of our ongoing business expenses. We never stored any crypto on the exchange. Our crypto would be traded into fiat and immediately marked for withdrawal.
Unfortunately, Quadriga experienced problems in delivering withdrawn dollars. At this point we had a significant, multi-million dollar fiat balance owed to us. When the money failed to arrive in our company account, we retained the legal services of Osler, Hoskin & Harcourt LLP, one of the best law firms in the country, in order to pursue the options we had against Quadriga. After a lengthy legal process and our demands for immediate payment, they announced the death of their CEO and their insolvency. This came as a shock to us all. We had no indication prior to their shutdown that the exchange would be unable to eventually meet their payment obligations. We continue to work with legal counsel on the Quadriga investigations and their ongoing CCAA filing, but we only expect to recover pennies per dollar owed.
Last winter we attempted to reduce our overhead by restructuring non-essential staff and sought to mitigate some of our monthly burn by bringing in some revenue on the side through contract work, leveraging our expertise to build blockchain solutions for other companies. While these measures have extended our runway and helped to tide us over during a period where Quadriga owed us the majority of our balance, we’re ultimately still a long way from being profitable through our underlying smart contract infrastructure.
Given the loss and the state of the adoption, it has become necessary to make significant changes to the development process currently active on the BlockCAT platform. We have made large structural changes to our staff as part of a significant cost reduction process.
BlockCAT will remain committed to our original vision in delivering user-friendly smart contract infrastructure that solves real problems. Tabby Rewards will be released as originally planned, and critical security and maintenance work will continue on both Tabby Pay and Rewards to ensure the continued safety of our users. Additionally, we will continue working towards releasing the remaining tooling as planned, but on a delayed timeline due to downsizing of our development team.
We will also be revising our community communications strategy to be more focused on achievements, adoptions, demonstrations and marketing activity. This means you can expect more focus on product related updates, but on a more irregular schedule.
I want to sincerely thank our supporters in the community for their continued encouragement throughout our entire journey. It’s been a rollercoaster ride over these few years, yet just like the crypto industry itself, BlockCAT remains resilient as we push even harder towards a decentralized future.
- Eric Huang.