Paradigm Labs Shuts Down, Says It Was 'Too Early' for DeFi Boom

Paradigm said it found it difficult "carve a viable niche" the rapidly evolving DeFi space.

AccessTimeIconMar 11, 2020 at 11:31 a.m. UTC
Updated Sep 14, 2021 at 8:18 a.m. UTC

Paradigm Labs is closing down after concluding that interest in decentralized finance (DeFi) came too late in the company's life cycle.

Based in California, Paradigm Labs wanted to develop liquidity solutions for the DeFi space. It had a promising start in 2018 when it raised $1 million in an oversubscribed seed round led by Polychain Capital, with additional placements from Dragonfly Capital and Chapter One.

But in a blog post Tuesday, founder and CEO Liam Kovatch said: "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."

Paradigm's failure to "carve a viable niche in the DEX marketplace" came as a result of a fast-evolving and fluid DeFi space that was difficult for the company to navigate, according to the post.

Its initial project, an order book that could be shared between different trading platforms, quickly became "obsolete" as Uniswap and P2P market infrastructure 0x Mesh grew in popularity, Kovatch said.

Although Paradigm had begun to make headway with a 0x-based non-custodial request-for-quotation system known as Zaidan, the company was "constrained by the high-capital requirements," meaning it couldn't service trades or "secure the necessary funding" to keep it running.

"The idea for Zaidan ... came to us late in the company’s life cycle at which point we were [too] under resourced to fully develop Zaidan. In general, we believe we were a bit too early," Kovatch said.

At the time of the seed round, Kovatch told CoinDesk the company had decided to cap investment at $1 million so the firm could remain "capital efficient and lean."

With Zaidan already shut down, Kovatch said Paradigm's 0x staking activities – known as Zaidan's War Chest – would be gradually wound up, along with the company, over the next month.

Read more about


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.