Why is DeFi Project Paradigm Labs Shutting Down?


Paradigm Labs is shutting down after concluding that interest in DeFi arrived too late in the life cycle of the company. The company struggled to keep up with the changing dynamics of the DEX market.

11 March, 2020 | AtoZ MarketsBased in California, Paradigm Labs wanted to develop liquidity solutions for decentralized finance (DeFi) sector. It had a promising start in 2018 when it raised a million dollars in an oversubscribed seed round. It led by Polychain Capital, with additional investments from Dragonfly Capital and Chapter One.

Polychain-Backed Paradigm Labs Shuts Down

Paradigm Labs is shutting down. CEO of Paradigm Labs, Liam Kovatch said the decision was made due to a failure to identify the fit between the product and the market and a lack of funding.

However, after almost a year of research, the team discovered that this product, Kosu, could not adapt to the rapidly changing market structure of DEX. Meanwhile, the investment which Paradigm Labs had made in Kosu, also made it hesitate to pivot towards its second product, Zaidan. Zaidan is a request-for-quotation system built on the DEX project 0x. Kovatch said:

“When we started to realize this, we had already developed Zaidan. But we were rather hesitant to move away from Kosu completely because of the investment we had made in the project. In retrospect, this hesitation was a mistake. We should have accepted the limits of the Kosu project and concentrated all our efforts on the Zaidan project earlier.“

It has permanently closed the beta version of the Zaidan trading system and the web portal.

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Lack of Funding to Support Live Trading System

To date, Paradigm Labs has developed a fairly sophisticated non-custodial RFQ system. Unfortunately, without traction, it was unable to obtain the funding necessary to support a live trading system. Therefore, it was unable to service the trades. 

“The idea for Zaidan, our non-custodial RFQ system, came to us towards the end of the business life cycle. At a time we lacked the resources to fully develop Zaidan. In general, we think we got there a little early, “said Kovatch.

The implementation of Zaidan protocol has proven costly, according to the company. Paradigm Labs has been unable to secure new funding to continue this endeavor. As the business closes, it also ends its ZRX staking pool, which the company created to finance the Zaidan operation.

“We strongly encourage all individuals who have staked with Zaidan’s War Chest to withdraw their participation or delegate to a new pool before 16 March. We will continue to subsidize the pool until 16 March, after which the pool will stop collecting fees “.

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