Cardax DEX runs into development and financing trouble
Cardax plans to run EAMM protocol i.e a hybrid of an AMM and order book models. It raised $1.5 million from its first community token sale. Now very little of that amount is left. The project has asked its community to help refinance it via its new ISPO.
This DEX was expected to be among the top DEXes on Cardano. This prospect now seems quite distant if not entirely unlikely. We will explain why.
In software development, delivery timelines and budgets can get quite slippery. There's hope for the DEX if the following happens:
Raise enough cash via their new ISPO
Manage finances better, especially now that we're in a bear market.
Else they risk going down as FlickTo did.
Put together a dedicated team, an in-house team if possible.
After months of delay, Ryan Morrison, Cardax CEO, made the announcement below 👇 via discord. We publish the entire statement for completeness. Some parts will be highlighted in bold just to underline important parts. Those parts are not highlighted in the original announcement
Financial trouble announcement
While the announcement was made on a private-like channel, it's important that CDX holders or Cardax ISPO participants who do not closely follow the project. Here are major takeaways from the announcement:
- Cardax didn't have an in-house development team and had to hire two external teams
First Cardax hired Merehead an Ethereum-based development agency. For obvious reasons, this team had little to no experience with Plutus. This team worked with Cardax from July to September 2021.
Then they hired MLabs, a team that has a good grasp on Plutus. Allegedly, this hire turned out badly due to bad project management and came with an expensive budget.
Cardax was naive not developing an in-house team. Thus they were unable to move faster in a predictable manner.
Cardax received 4.4 million ADA via its token sales but failed to convert it to fiat.
As the bear market proved how bad of a financial decision this move was. At the pick of the bull market, the 4.4 million was worth at least 10 million dollars. At the time of the discord announcement, this stash had been reduced to a mere 110,000 USD. Expenses and volatility having taken their share.
Cardax slashed expenses and trimmed its team pending contribution by its community.
Cardax announced a new ISPO to raise additional funds to give the DEX a lifeline.
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.
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
Cardax put forward a catalyst proposal via Fund 9
I’ve also put a proposal on Catalyst to get the funds we paid for the external audit paid retrospectively.
More transparency on finances.
The funds that would be hopefully raised via catalyst and new ISPO would be stored in a published stablecoin address. Expenses would be communicated to the Cardax community.
Proposed the creation of a Cardax Treasury.
This would hold 10% of all CDX tokens. These tokens would vest over a suggested period of 4 years. They would fund contributor grants, community initiatives, and the development of Cardax's ecosystem. This treasury would be community-owned of course and therefore subject to requisite governance.
Doubling of early investors' CDX tokens.
To reward individuals who participated in CDX token sales, the Cardax team would double their initial allocation.
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.
Ryan closed the announcement by acknowledging the mistakes he and his team made. He emphasized that the creation of the Cardax DAO would help improve things in the future.
Cardax ISPO falls through
Cardax announced the closure of its ISPO on September 15th, 2022, via Twitter. The initiative failed to meet the DEX goals. The team thanked its delegators and asked them to move their ADA from Cardax1 pool to other SPOs. They would receive their rewards as usual.
Catalyst Fund 9
Cardax's aforementioned proposal failed to secure catalyst funding in the 9th round. It received a net vote of negative 17,762,026 ADA. Only about 7 million ADA voted in favor with 25 million voting against. Not surprising given the track record.
Cardax focuses on its Milkomeda product.
On September 17th, Ryan announced that Cardax would be moving to the Milkomeda sidechain. In his estimation, this will enable them to move faster, than they were building on top of Plutarch. Development on Cardano's mainnet chain, therefore, takes a back seat until later.
We're really excited about this new step. Our goal just got much bigger as Cardax will be competing to be a major player in the entire crypto space, not just the Cardano space. This doesn’t mean that we are turning our backs on Cardano, quite the opposite. We will be opening the wide gates of already-established trading of Bitcoin, Ethereum, Tether, Binance chain, and others to swap for Cardano native tokens and vice versa
On October 4th, Cardax announced that their Milkomeda offering a public testnet. The actual testnet release will come in weeks.
First published on Jul 6, 2022