Paradigm Labs, a decentralized finance (DeFi) initiative supported by Polychain Capital, Dragonfly Capital, and Chapter One Ventures, has decided to close down its operations.
Liam Kovatch, chief executive at Paradigm, noted that the project is shutting down because the initiative’s developers were unable to identify a suitable product-market fit. The project was also not able to acquire the financial resources needed for development.
Kovatch explained in a blog post:
“After almost two years of active research and development, our team has come to the decision that without significant product-market fit and limited resources to pursue emergent opportunities, the kind of success we envisioned for Paradigm Labs is unlikely.”
He added that “out of respect” for the project’s stakeholders, the initiative’s founders honestly assessed the situation “as quickly as [they] believed [they] could responsibly do and converged on the decision to sunset the company.”
Established in 2018, Paradigm Labs completed a seed round (an undisclosed amount) in order to create a liquidity aggregation protocol for non-custodial or decentralized exchanges (DEX).
The company says it performed research for almost a year to determine which products it should develop. However, the firm’s founders realized that their product, Kosu, would not be able to adapt to the market structure of existing decentralized exchanges.
Kovatch remarked:
“Many of our early efforts and investments on the Kosu project were made obsolete by broader developments in DEX market structure. The idea for Zaidan (another one of the firm’s products being considered for development), our non-custodial RFQ system, came to us late in the company’s life cycle at which point we were under-resourced to fully develop Zaidan.”
It would have been too expensive and unfeasible to bring the Zaidan protocol to market, the company claims. Paradigm Labs also failed to acquire the capital needed to develop this product.
Kovatch added:
“For the remainder of March, the team’s priority is ensuring a smooth wind down of the project and company. This includes active communication with those affected and the business operations necessary to the legal dissolution of the company.”