Dear supporters and friends of Capdax,
Today I have some important news to share with you relating to both the product and future direction of Capdax.
This month our external development partners — responsible for delivering the Capdax matching engine, a key component of our platform’s back-end — submitted their work and the results were incredibly disappointing. After extensive testing, our team has concluded that — in its current form — the Capdax back-end is not, and never will be, fit for public release.
Another full rebuild would be required to produce a working Capdax back-end and we have lost confidence in our development partners’ ability to deliver this solution. Being the second setback of its kind (in January we outlined a similar experience with our previous partners) and with our financial runway ending in early-2020, this challenge calls the future direction of Capdax into question.
At this stage, selecting a new partner and overseeing the development of a new Capdax back-end would mean launching in August at the earliest, leaving very little time to generate our required revenue. Additionally, although we’ve made strong progress toward every other aspect of the Capdax launch, our exchange is now many months behind schedule and the market has shifted. Today, it’s extremely challenging to run a successful exchange, let alone launch a new one, as highlighted by the rate of exchange shutdowns and hacks over the past 6 months.
The Capdax leadership team and I see it as our responsibility to reassess the direction of our company. Specifically, pivoting the business toward an opportunity with more-immediate revenue potential.
This update will serve as the first of two that I’ll be publishing in the next 30 days. Here, I will highlight the challenges faced in the development of our most-recent Capdax back end, summarise our progress since the Capdax TGE (Token Generation Event) and briefly outline our plans moving forward. In my next update, I will provide a more comprehensive explanation of what you can expect to see next from Capdax.
Challenges in developing the Capdax back-end
Although we’re incredibly disappointed by the broken promises and poor performance of our development partners, the Capdax leadership team and I ultimately take responsibility for what has happened and remain committed to keeping Capdax moving forward. In the interest of transparency, the following summary describes the issues faced with our development partners over the past few months.
Late last year we appointed our most-recent development partner, who had a 20-year track record serving some of the world’s largest financial institutions. Prior to our partnership, we were promised a ready-made solution, encompassing a large part of Capdax’s back-end. This turned out to be false and significantly increased the scope (and timeline) of our partnership.
In November, our development partners underwent a change of leadership that severely impacted the performance of their team. We were assured that their new leadership would on-boarded quickly and, faced with the decision between another minor delay and the 6 months required to select a new partner and start again, we stood by them. Shortly thereafter, their team was reorganised and appeared to be back on track. However, their output ultimately didn’t meet expectations.
Inability to deliver
Most recently, our partners submitted a subpar release of the Capdax back-end for our team to implement. The results were incredibly disappointing and we’ve now lost confidence in their ability to deliver a reliable and scalable solution. For this reason, we will no longer continue to work with them.
Our progress since the Capdax TGE
On a number of occasions the community has questioned the legitimacy of our progress, and understandably so. I want to assure you that despite numerous launch delays, we’ve made strong progress toward every other aspect of Capdax’s release. I’ve summarised four of our most important actions below.
Completing the Capdax front-end
We’ve always viewed the front-end with equal importance to the back-end. It’s our key to providing a seamless experience to both new and advanced traders. Our BETA front-end experience has been implemented, following multiple design iterations and extensive user testing, with very positive feedback. Below I’ve included two previews of the intended Capdax front-end. The first, how the final product would have looked, had our partners delivered a working back-end. The second, our current product (without the backend).
This was the intended look & feel of the Capdax exchange
In contrast, this is today’s product with broken back-end integration
Without a smoothly working back-end, the user experience is unsatisfying and the technology unreliable.
Establishing a legal and regulatory foundation
Throughout the past year, we’ve successfully completed Capdax’s foundational legal work, gained preliminary authorisation to facilitate fiat-to-crypto transactions throughout Europe and made strong progress toward obtaining a securities license. Whilst many global jurisdictions are still establishing their frameworks for digital assets, we chose to be part of the Malta Sandbox programme, a fully regulated environment.
Creating a community to support the Capdax launch
To ensure Capdax’s successful launch, we have built a large community across Telegram, Facebook and Twitter. Additionally, our leadership team has developed a strong presence and partnership pipeline within the European cryptocurrency space.
Building scalable growth and support channels
To deliver the top-tier support promised to our users — one of our key USPs — we hired and trained a small but experienced customer success team and developed a series of scalable support processes. Additionally, with plans to leverage customer referrals as a key user acquisition channel, we designed a Binance-style referral program and a bold new website, with clear product positioning and an intuitive user signup flow. I’ve included a preview of this new site below.
A preview of the new (intended) Capdax website
Additional director investment
Following the departure of multiple early-stage partners in 2018, the Capdax leadership team used their personal funds to acquire and retain control of the project. To date, both my co-founder and I have each contributed 7-digit amounts each toward the success of Capdax and are yet to sell a single token, because we truly believe in the potential of this project.
Our plan moving forward
We have used this most recent bad news as an opportunity to review the status quo and realistic potential of our exchange business. When our launch was only weeks away, the choice was obvious. However, given that we are now at least 6 months away, we are now assessing pivot opportunities with more-immediate revenue potential and a better fit with the current market conditions.
Potential company pivot
For some time we’ve been assessing potential business models that Capdax could move into instead of the exchange business. Today, we are looking more seriously at a handful of these options as opportunities for a company-wide pivot. These ideas are being analysed, but you can expect to hear about a new direction in our next community update.
Reducing monthly burn
To adjust for Capdax’s delayed launch, we are keeping our outgoings as lean as possible. This means scaling back front-office roles (such as customer support and community management) and minimising all non-essential expenses. It’s also worth noting that although not included in our consolidation plan, one of our prominent Community Managers, Emil, has decided to move back to Sweden with his family and will be leaving Capdax next month.
What to expect next?
Put simply, we see two options for Capdax: A refund of our remaining funds, or a pivot that leverages our team, knowledge and resources to tackle an opportunity with near-term revenue potential. Within the next 30 days, we will be releasing another community update outlining our plan. To assure our interests are aligned with the community, we will be seeking the advice and opinions of our Capdax’s largest external token holders.
Like you, the team and I were hoping to see Capdax released this quarter and are extremely disappointed to once again be sharing bad news. We take full responsibility for the results of our latest development efforts and want to assure you that we had and still have the community’s best interests at heart. Right now, we’re fully focused on seeing Capdax through this challenging time and on finding a new direction to share with you in our next update. In the meantime, please don’t hesitate to reach out to us on Telegram to ask questions or discuss anything that I’ve just covered.
For further information, questions or to speak with a member of the Capdax team, please join us on the Capdax Telegram channel.