Community Update (May)
Dear supporters and friends of Capdax,
In our last update, we thoroughly laid out our rationale for our proceedings on the future of Capdax. We were seeking a pivot solution which would ensure revenue generation by the end of 2019, and have the potential to become a major international success. Today I am happy to announce that three weeks ago we were able to narrow down the two options we mentioned last time to one very promising opportunity. We have since begun thoroughly investigating this option: a crypto derivatives exchange.
Why a derivatives exchange?
- Derivatives are the next step towards the introduction of crypto as an investable asset class for institutions. For equities, the corresponding derivatives market is 10–15 times larger than the market of the underlying asset (by notional value). A well-functioning derivatives market drives liquidity into the underlying asset, which is an important requirement for institutions to enter the market.
- Furthermore, the derivatives market in crypto has been seeing a rapid growth (>30% in the last quarter alone) indicating the huge market demand for these products.
- We are in the process of securing promising partnerships with immediate revenue potential upon launch, which would guarantee excellent prospects for the success of the venture.
Before proceeding on implementation, we are taking various steps to ensure that the project has a strong foundation for success.
Firstly, as mentioned in the last update, we have strengthened our team with two new partners, who have the skills and expertise to drive both the technical and operational development of the project. The first is a former managing director of a major corporate VC player, and has ten years of experience in scaling businesses from start up to successful exit, as well as negotiating with corporates. The second, who will take over the technical product, is a successful entrepreneur and mathematician with a PhD in Finance, and sold his most recent data science company to a US-based corporation. We are confident that with this newly strengthened team, we have both the expertise and capacity to develop the core product in-house, thus avoiding the external dependencies which have caused problems in the past.
Secondly, we are working hard to ensure that the necessary partners are in place to bring the product into the market efficiently and with regulatory compliance. We are working closely with two major financial institutions, and have already signed an LOI with one. Both companies have significant exposure to the crypto space, and even more importantly have access to large institutional clientele seeking access to the crypto market. Furthermore, these banks have displayed their willingness to make the product a compliant derivatives exchange by leveraging their banking license. We are further working to secure partnerships for market entry and on the legal side, to ensure a strong foundation for this unique and much needed product.
The finalisation of these agreements is essential to the success of this promising project, and we are working to negotiate solutions which align the interests of the banks, the management team, and the Capdax community. The key conditions for the success of the project include: a clear regulatory framework provided by our partner banks; guarantees by future clients; and certain trading volumes as well as further funding options, should this become necessary in the near future.
As founders, we see it as our duty to you, the Capdax community, to proceed with the project only having secured the conditions for its success, and in the meantime to operate only on a minimum cost basis. We take this duty very seriously, and have therefore decided that should we not be able to finalize the necessary agreements, we will immediately refund the community. We are expecting the negotiations to be concluded within the next 8 weeks, and will make a final decision at the end of this period.
I will publish a progress update at the beginning of July with a final decision on the future of Capdax. If we decide to continue with the venture, I will also introduce the two new partners in more detail and elaborate on their executive roles.
As always, we genuinely appreciate your input and welcome your ideas, concerns, and opinions. For further information, questions or to speak with a member of the Capdax team, please join us on the Capdax Telegram channel.
