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DeFi Project Friktion’s Shutdown Said to Stem Partly From Founder Disagreement

source-logo  coindesk.com 30 January 2023 19:25, UTC

Friktion Labs, a crypto startup that builds high-yielding structured products for decentralized finance (DeFi) traders on the Solana blockchain, said late Thursday that it was shutting down its user platform, citing the challenging “economics” of the current market climate.

Behind the scenes, according to people familiar with the matter, there were also disagreements – friction, ahem – among the project’s founders.

The team announced the shutdown in a blog post: “Costs have outpaced revenue,” Friktion said.

At their height last April and May, Friktion’s so-called “volts” – deposit vaults for customer assets –held $150 million.

According to the blog post, the volts are 96% off their highs, and have now been put into withdrawal-only mode.

In a direct message to CoinDesk on Twitter, CTO Alex Wlezien characterized the decision as an inevitable consequence of the crypto-markets fallout from last year’s epic collapse of Sam Bankman-Fried’s FTX exchange.

“FTX hit the company and existing business hard in a difficult market,” Wlezien wrote.

Both he and CEO Uddhav Marwaha told CoinDesk in separate messages: “This is a joint decision made by our leadership team and is driven by the economics of the project.”

A key contributing factor, according to several people briefed on the matter, was that the founders differed on how to proceed with Friktion’s product roadmap.

Both founders declined to comment on questions of internal strife.


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coindesk.com