The last 72 hours were tumultuous on the cryptocurrency markets. Bitcoin fell 30% from its all-time-high and Bitcoin Cash, in the same period, saw a 500% rise before retracing and (seemingly) stabilizing on a lower level. This is unprecedented for a large asset, even in the crypto markets. It would equal to Bitcoin running up to $30,000 in the next 72 hours.
We know many of you feel Exodus has failed you at this crucial moment. We truly apologize. Let us give you a bit of a background on what has happened, why we made the decisions we made, and what we’ve learned from this weekend.
What happened over the weekend
The parabolic rise of Bitcoin Cash had a serious impact on the Bitcoin network. Seeing the price surge, many of the miners abandoned the Bitcoin network and started mining Bitcoin Cash. BTC transactions were grinding to a halt. Bitcoin transactions normally take 5–20 minutes to go through, but this weekend we’ve seen transaction times up to 12 hours.
Fewer miners on the Bitcoin blockchain also made transactions more expensive. It’s a bit similar to how Uber works: when there are many passengers (people who want to transact in Bitcoin) but few available cars (miners), surge pricing kicks in. Exodus does not control these prices, and we never keep any of the transaction fees. They are paid to the miners, in full.
Technical details (safe to skip)
The Bitcoin blockchain is maintained by miners, computers, or rather high-performance, specialized computer farms. They process all the Bitcoin transactions and keep the machine running, taking a tiny cut as a reward.
Normally about 20% of miners work on Bitcoin Cash and 80% on Bitcoin, but this weekend BCH had more than two-thirds of the mining power. At the time of writing this update, there are still 135,000 unconfirmed transactions on the Bitcoin blockchain, about five to ten times the usual. This is the second worst Bitcoin network congestion of 2017, and it’s not over yet.
How this impacted you
Many of you wanted to ride the wave and exchange Bitcoin to Bitcoin Cash. Technically, this means sending Bitcoin to ShapeShift, our exchange partner, and receiving Bitcoin Cash. As the Bitcoin network slowed down dramatically, we started seeing these exchanges fail, and at the height of the congestion, one-third of all exchanges were unsuccessful.
At Exodus, we are continuously running tests making sure every feature of the app works as expected. Seeing the exchanges failing at an unacceptable rate, we decided to suspend the exchange feature for BTC trading pairs on Sunday 1:40 am Eastern Time (6:40 am UTC).
This was a painful decision for us, as we were fully aware of the market situation; but at the same time, we couldn’t risk your funds getting stuck in the worst Bitcoin traffic jam. It’s worth noting the only income stream of Exodus is a small commission we get after ShapeShift exchanges, but we decided to prioritize user safety over commercial interest.
Some of you simply wanted to send your Bitcoin to an online exchange, but these transactions were incredibly slow to confirm, and the transaction fees were exorbitant.
The situation understandably made many of you deeply uncomfortable: we’ve received over 1500 support tickets over the weekend, about 2 weeks’ worth. With all hands on deck, we were able to solve about two-thirds of your requests, but there are still 341 tickets unanswered, and 198 tickets where the solution has not been reached yet. We agree this is unacceptable, and we are truly sorry for the long wait.
We would like to emphasize that your funds were (and continue to be) safe.
Technical details (safe to skip)
Exchanges on the BTC currency pair failed because the network was so congested your Bitcoin deposit simply did not reach ShapeShift in time. If this happens, ShapeShift immediately sends the funds back to your wallet; but these refunds also got stuck.
Funds got stuck in this limbo for a very long time — it took hours to reach ShapeShift, and hours to get returned to you.
What’s going to happen next
- We are doubling down on our support efforts. We expect to get back to each of you within 48 hours with a solution.
- We have opened a direct channel to ShapeShift, and we do everything in our power to deliver your funds back to your wallet as quickly as possible.
- In the next 24 hours, we will deliberately use transaction boosting services to accelerate your transactions. We cover all related costs.
What we’ve learned from this weekend
We are part of the ecosystem, and there is little we can do to mitigate the network issues created by turbulent markets, but there are steps we pledge to take in the immediate future to make sure we are better prepared:
- We pledge to hire aggressively in the next few months, adding as many support engineers to our team as necessary. At Exodus, we pride ourselves on providing world-class support. Our first response time is consistently less than 1 hour, often as fast as 15 minutes. But this weekend we fell short, and we learned from it.
- Our exchange feature needs improvement to make it truly seamless and fail-proof. We are incredibly lucky to have ShapeShift as an investor in Exodus, and in the next few weeks we start working together to develop a more resilient solution.
- We are also working on integrating alternative exchange platforms. Imagine that your phone can use any mobile network, and you can always connect to the one with the best coverage.
- We plan to add another new feature warning you of the “surge pricing” in case of a similar network issue. This hasn’t been on our roadmap before this incident, so it might take some time to roll it out — but we believe this can be a distinguishing feature of Exodus.
This was a difficult weekend for us at Exodus, both professionally and emotionally. The feeling of letting our community down is not something we want to experience ever again. We promise we will be better prepared next time.
We believe in 100% openness and transparency. We are posting this statement on Medium, so you can add your thoughts. We are here, we are listening, and we want to make this right.
Please reserve the Medium comments section for lively and honest discussion about the article! If you have technical issues with Exodus, our Community Support team will be happy to speedily assist you if you send a descriptive email to: firstname.lastname@example.org