The highly anticipated Digitex Futures commission-free exchange was scheduled to go live on April 30th, however, the launch has been postponed due last-minute revelations of development partner Spotware’s inability to deliver critical promised functionality.
In a video posted on YouTube on Friday, Digitex CEO and co-founder Adam Todd explained the reasoning behind the decision. In it, a visibly distraught and furious Todd apologizes to the crypto community, taking full responsibility for placing his trust on the wrong developers, saying:
“I have been totally blindsided by this, really, really let down by Spotware.”
Digitex made the decision to outsource the final build of the exchange to Spotware back in March of this year in order to speed up the time to market. After in-depth discussions regarding required functionality and timeframes, Spotware assured them that they understood what was needed and could deliver the finished product on time.
When they received the final build earlier this week, however, Digitex discovered that the software did not function as promised, was “riddled with errors”, and had a “built-in mechanical edge” that financially favored the exchange.
How Spotware failed to deliver
A statement on Digitex’s official blog notes that Todd became aware of several of the most critical bugs weeks ago and that, after several face-to-face discussions with Spotware, was assured that the issues would be resolved well ahead of the launch date.
Instead, with just days left before the launch, Spotware developers did a complete about-face and told Todd that the bugs were, in fact, not bugs at all, but were “expected behaviors” built into the software and, as a result, could not be fixed.
Spotware later released a detailed statement on their Medium, reacting to Todd’s bold allegations.
“He (Todd) insisted that he needs a cTrader-based product with relatively minor changes. This essentially gave him a 10-year old product within a couple of months. We agreed to help the man as he was out of options. He said many times that trying to build the platform himself was a road to nowhere,” the company stated.
“He (Todd) wanted to have an MVP beta in two months — an unheard of a timeframe for building a trading platform. He needed something to show DGTX holders that he could deliver on his promises. We could see that he was very keen to keep his community engaged. It was as if he only cared about his messages to the community and not the product.”
In his video, Todd details about five most critical issues as well as Spotware’s response to them.
- No 24-hour volume data
The first problem with the final build of the exchange is that no trading volume data is made available. This data is important for two reasons. First, it is a key metric used to measure market sentiment. Second, trading volume data is used by CoinMarketCap to rank crypto exchanges.
When pressed over the omission of trading volume data in the final build, Spotware said that they could add it, but that it would take them at least two months past the launch date in order to do it.
- Missing spot price
Spot price is the market price at which an asset – in this case futures contracts – can be bought or sold immediately. It was supposed to be displayed at the top of the ladder on the right-hand side of the exchange interface but at the last minute, Spotware developers informed Todd that it was impossible to do so with the current build.
Like the missing volume data, Spotware said that they could add the functionality, but that it would take an additional two months of work to accomplish.
- Leverage can’t be changed
While Digitex intended to limit leverage to a maximum of 10x for the first few days following its launch, the plan was always to increase that to 100x as new futures markets were added.
This is not possible with the current software, as the 10x leverage is fixed and cannot be changed. Once again, Spotware is saying that they can implement it but that it would take another two to three months of work.
- Inability to sell a purchased contract
In its current form, the software will allow traders to buy a contract, but they can only sell it if they have the same amount of margin. Using a 1000 DGTX balance, which is what 10,000 traders will start with, as an example, if you were to buy a contract at 545 DGTX, you would be left with a balance of 451 DGTX.
Because of this bug, you would be unable to sell your contract using the ladder because of insufficient funds. Your only option would be to sell at market value by closing out your position.
Despite acknowledging the existence of this bug weeks ago and promising to have it fixed in time for the launch, on Monday, Spotware informed Todd that this behavior was not a bug, but rather, was the way the software was designed to function.
Todd summed up the problem perfectly, stating:
“If traders can’t buy and sell on the exchange, we have no exchange.”
- Spotware’s software is designed to charge commissions
Yes, you read that correctly. The software that Spotware developed for a commission-free exchange charges commissions. The issue was discovered a few weeks ago while the platform was being tested. Todd noticed that the market makers were actually losing money instead of breaking even, as they should have been.
As Digitex explains:
“When an order hits multiple prices, like when the market moves, instead of all the orders going in at different prices, the software gives the trader an average price of the full order and then rounds it up or down to the nearest tick size. This is why the Digitex market maker bots were losing $20,000 worth of tokens every day during testing despite them trading only with themselves. This money was being made by the exchange.”
The money leak was reported as a bug and Spotware assured Todd that it would be resolved prior to launch. Earlier this week, however, they informed him that the leak was not a bug, but rather “expected behavior”.
Spotware seemed unable to grasp why this was such a critical issue, telling Todd that the rounding wasn’t anything he should worry about because it favored the exchange.
So where does Digitex Futures go from here?
With all of these issues unresolved, there was no way that Digitex cannot launch the exchange as-is. Fortunately, the company still has the original codebase that was built by the original development team in Dublin. It is a fully functional futures exchange with an attractive, intuitive interface and “blazing fast” matching engine built in C++.
“We’re not going back to a blank page, we have that code base that we built in Dublin. We were not happy with the time frame, which is why we went with Spotware, but we are now going to use the original code base and build up a team around that.”
New workspace has already been secured in Serbia and a lead developer has already been hired. In addition, Todd is bringing back the lead developer and front-end designer from the original Dublin team and is in the process of interviewing and hiring another seven or eight developers.
The new development team will be working “around the clock” to bring the exchange to market as quickly as possible. A new launch date has yet to be announced, but Digitex expects to have a “robust and launchable exchange” within the next several months.
For more information on this development, the Digitex Telegram channel is staffed around the clock. Todd will also be hosting a live AMA session on Tuesday, April 30th so be sure to watch it for all of the latest updates and information.