> Hi @everyone, > I want to share with you my reflection on the past year of Cardax. > I would like to start by saying sorry. As the CEO of Cardax, **I am ultimately responsible for the bad situation** in which the project stands at the moment. I have made some decisions that have resulted in the opposite result that I had wished for. > Starting with the development of the DEX. > **I thought it would be a good idea to outsource the development of the platform to an experienced agency**. So I got in touch with many agencies specialised in blockchain development. I selected an agency called **Merehead** and they started working in **July 2021**. But after a few months, it was clear that they were not going to be able to deliver a finished product. The mistake here was hiring an agency that had a good track record in developing decentralised applications on Ethereum, but no experience with Cardano. **Finding developers with experience in Plutus was very difficult**. First, they have to be experienced in Haskell which makes it a niche of a niche. In parallel, I searched for developers that were part of IOG’s Plutus Pioneers Program (PPP). I had a few interviews but many were only available for a couple of hours a week as a side hustle next to their jobs, which wouldn’t have got us very far either. Eventually, Matthias and George, who had been part of the first cohort of the Plutus Pioneers Program, joined the Cardax team and we decided to stop working with Merehead. **The code that Merehead built was not something we could really use and build on top. So we were again on square one. This was September 2021**. Two new front-end developers from the PPP joined us, Matthew first and Atticus later. **George left our team in November to work for MLabs** and suggested them as the solution we were looking for to get the DEX done. I knew they had worked on a few Cardano-related projects (some of them were iconic projects in the ecosystem, like Liqwid and SundaeSwap) so I assumed they were a good fit. I hired them to help us build the DEX. > As you know by now, MLabs didn’t work either. From the moment we signed the contract (December 2021) until I decided to terminate their contract last week **they charged a total of $502,708** and were not able to even deliver the public testnet. I didn’t terminate their contract before because I had the hope that they would actually deliver but when it became clear that they were missing deadlines, not taking responsibility for it, and kept on charging **more than $100,000 per month then I had to do something**. I told them we were not going to keep on paying more than $20,000 per month and that they should work on finishing the assignment we gave them. This didn’t really work; they downsized the team working on Cardax to one developer. So then I terminated their contract. This was a very big disappointment as I was counting on them to deliver at least a basic version of the DEX that I could share with you, our community. We had weekly meetings with their team and to me it became clear that although they are technically good, the decision to work with a set of mainly new technology, rather than compromising on performance, was too ambitious and not a good decision. The use of the Cardano Transaction Library, for example, created by MLabs as an open-sourced project and for which we also paid to help develop, was challenging because it is in its very early days and doesn’t allow others to work with it well yet. 💩 4 👍 6 👎1 🇰🇷1 💪 2 > My experience with working with MLabs is mixed. They have good developers who I’m sure do their best. The problem is that MLabs is bad at Project Management. They don’t have Project Managers that match the quality of their developers which results in bad planning, constant delays, and not delivering on what has been promised. On top of this, their management (Mark Florisson and Ben Hart) doesn’t really care if you are not satisfied as a client, doesn’t accept any responsibility for not delivering, and only offers one solution: to keep on paying them, even though they cannot give a specific delivery date with certainty. They know you have already invested a big amount with them and that you are stuck to them if you ever want to have a working product. They take advantage of this to keep on charging for several hours every day. I think this is very wrong. So I said it to their CEO, I told him that he should be ashamed of having charged more than half a million US dollars and not having delivered anything. His reply was that this was only a tiny portion of what Cardax has raised and that **MLabs would be able to deliver a public tesnet within 3 months for another $170,000, but only with 60 to 70% certainty**, they would be able to deliver. At this point, I realized Cardax was being played, that we were seen as a cash cow to them, and that we had been taken advantage of. This is very bad for the Cardano ecosystem as many future projects could fall into the same trap. > Looking back I would tell myself to find development partners that not only are technically good but are also ethical and are aligned with you on your business goals (like Well-Typed for example). Building the core competencies in-house is crucial because it helps you prepare for the future maintenance and development of the product. It allows you to move faster and it gives you real control and full responsibility for the development of the product. > So, how are we moving forward on the development now? I’ve requested Well-Typed to do a review of the code MLabs left us with. This way we will know exactly what has been done and how far we are from launching the DEX on mainnet. They will share with me the results of their review this Friday and I will discuss next steps with them and Matthias from our team. Before making a decision I will share it with you, the Cardax community, to get your feedback. > Now let me elaborate on the funds. Cardax did two token sales in 2021 for which we received 4.4 million ADA in total. I decided to keep the vast majority of the funds in ADA and not to convert them into a stablecoin. The reasoning behind this was that by staking those ADA we could get rewards that we could also use in the growth of the DEX. But as we all know the price of ADA went from $3 last year to $0.47 now. This was clearly a bad decision as Cardax lost a lot of its initial budget. At the same time, the value of our funds in ADA was decreasing, our monthly expenses were increasing. To give you an idea some of the expenses like taxes and development have been extremely high. We have had to pay ⅓ of the funds we raised to taxes (payment in Euros at the ADA value time at the time of the token sale), development, legal, and operations account for the rest of the expenses. Because of this situation, we are left only with 110,000 USD that we can use. 👍7 😫 7 PepeHands 2 🇰🇷 1 💪2 > **What’s the plan moving forward?** > In order to cut and control our costs, I have told our technical team to pause their activities for the time being and I’ve laid off the rest of the team. The only expenses are now, the May invoice for Well typed and the future hours that will take them to do the code review. As I mentioned before, I want to discuss the next steps with you, The Cardax community, as soon as I get the code review from Well-Typed. > What is clear is that we will need more funds if we want to be able to deliver the DEX. That’s why we are doing an ISPO. > I’ve also put a proposal on Catalyst to get the funds we paid for the external audit paid retrospectively. Here is the proposal: https://cardano.ideascale.com/c/idea/418215 > How can you be sure that the funds we will raise with the ISPO and on Project Catalyst won’t lose value in the same way it happened with the funds raised last year? > All funds that come in from now on will be converted immediately into a stablecoin. Then they will be used to pay for the development of the DEX. I will share the address where we will receive ADA and the other address where we will keep the converted ADA into a stablecoin. Whenever there is an expense to be paid from that wallet, it will be communicated to the Cardax community on Discord. > **Change in the governance structure.** > In order to involve you, our community, more in the future decisions regarding the Cardax protocol, I propose the creation of a Cardax Treasury that will control 10% of the supply of CDX. These CDX tokens can be allocated towards contributor grants, community initiatives, and other programs to further the development of the Cardax protocol and ecosystem. This includes updating and modifying the protocol's logic, as well as the ability to allocate funds from the governance treasury. The CDX tokens held in the governance treasury smart contracts will be released on an ongoing basis, with a gradually decreasing amount vesting over 4 years. > This will basically create a community-owned treasury to fund the growth of the Cardax ecosystem. > **Early investors.** > To thank you for your loyalty and patience, those who participated in any of the token sales we did in 2021 will receive twice the amount of CDX tokens they were initially promised. This means that if you got for example 50,000 CDX tokens in total, you will receive another 50,000 CDX tokens. **This new batch of CDX tokens will be airdropped to your wallet in November 2023**. *This only applies to those who participated in any of the two token sales in 2021, it does not apply to those who bought CDX from the market. > Things will be changing in Cardax, for the better. There will be more power to our community that will allow us to build together a bigger Cardax ecosystem, more transparency on the expenses, a new airdrop to early investors, more control on the development of the platform by keeping the future development process in-house, and hopefully a working DEX soon. > But for all this to become true we need new funds. That’s why I ask you to support our ISPO by either delegating to the Cardax pool (\[CDX1\] Cardax 1) or by sharing the news about it with others on social media. https://adapools.org/pool/1fbf1129cdae0a21f4b9f3d5bef58626fc489e9f09a2a3ef6a2a7f8f > I would like to close this letter by saying thank you, I made some mistakes and I’m sorry for that. I will be more open and will consider your opinions more from now on. The creation of the Cardax DAO should help with this and other future governance-related matters. Let’s now make the ISPO a huge success so that we can finish the development of our DEX, go live and make it the most used DEX on Cardano"