Author: Gu Yu, ChainCatcher
For a long time, Paradigm has been a landmark venture capital firm in the crypto industry, representing the industry's top investment style and aesthetics, and its research-driven crypto VC is highly praised. However, affected by the industry cycle, Paradigm has not been spared in the current general downturn of VC, one manifestation of which is an unprecedented wave of executive departures.Since April of this year, at least 7 employees have left, including several partners.
In December, Paradigm's first employee and general partner, Charlie Noyes, and Paradigm's head of market development, Nick Martitsch, both announced their departures.
In September, Paradigm's General Counsel, Gina Moon, and Paradigm researcher Transmissions11 resigned. In June, Paradigm's Head of Business Operations, Teresa G. Grandía, resigned. In April, Paradigm's Head of Engineering, Loren Siebert, and Research Partner, samczsun, resigned. This wave of resignations is extremely rare even among top-tier VC firms, reflecting that Paradigm has entered a very difficult phase. Judging from its publicly disclosed investment portfolio and trading frequency, Paradigm's investment frequency has decreased significantly in the past two to three years, and it lacks a "representative work" with industry consensus, missing out on many high-return projects. These are likely the main sources of Paradigm's predicament. Paradigm's golden age was roughly concentrated between 2019 and 2021. During this period, it completed its investment in key projects such as Uniswap, Optimism, Lido, and Flashbots, thereby establishing a strong brand identity: technical infrastructure, the Ethereum core ecosystem, and long-termism. This also earned Paradigm considerable reputation among crypto entrepreneurs and investors. These typical investments share several common characteristics: they are not short-term hot topics, but rather underlying protocols or key middleware; the investment timing is relatively early, but not extremely early; and they are highly consistent with Paradigm's internal research direction. It was during this stage that Paradigm developed a clear and repeatedly emphasized investment strategy: research-driven. However, the problem is that, in subsequent cycles, this methodology gradually showed insufficient adaptability to the rapid changes in industry logic, leading to a significant discrepancy between Paradigm's investment performance and its influence. Starting in 2022, a new generation of high-growth projects began to emerge more frequently in areas such as application layer, financial structure innovation, mechanism design, and product experience, such as prediction markets, revenue structure protocols, and perpetual contract protocols. These projects tend to iterate quickly, are more product-oriented, have a higher tolerance for "technical correctness," and are more sensitive to "user growth" and "mechanism efficiency." In the previous cycle, Paradigm clearly supported and invested in the blockbuster projects Blur and Friend.tech, becoming one of the main drivers behind their success. However, both projects quickly declined after their token issuance, with the teams selling off large amounts of tokens and gradually becoming less active, leading the market to question Paradigm's investment acumen and style. Meanwhile, Paradigm also took over follow-up funding for many overvalued projects. While this strategy brought Paradigm considerable profits during the bull market, due to the continued slump in the altcoin market and problems with the investment targets themselves, almost all of Paradigm's heavily invested projects quickly fell below their cost price after issuance or struggled to survive and sought transformation. In May 2024, Paradigm led Farcaster's $150 million Series A funding round at a valuation of $1 billion. Now, Farcaster has announced its abandonment of the social networking sector and its shift to the wallet field. In May 2024, Paradigm led a $70 million funding round for Babylon at a valuation of $800 million. Babylon's token FDV is now only $180 million. In April 2024, Paradigm led a $225 million funding round for Monad at a valuation of $3 billion. Monad's token FDV is now only $1.7 billion. In June 2022, Paradigm participated in a $130 million funding round for Magic Eden at a valuation of $1.6 billion. Magic Eden's token FDV is now only $200 million. What's even harder to accept for Paradigm is that it missed out on early-stage investments in numerous high-return projects over the years, such as Ethena, Pump.fun, Ondo Finance, and MYX. In the popular derivatives and RWA sectors, Paradigm hasn't invested in any projects in recent years. Regarding prediction markets, which have been highly favored by the capital market in the crypto industry in recent years, Paradigm invested in the prediction market project Veil as early as January 2019, but the project ceased operations after less than a year. The prediction market model is not theoretically novel, nor is its technical difficulty top-tier; these failed investment experiences resulted in Paradigm not participating in Polymarket's first five rounds of funding. Perhaps it wasn't until Polymarket announced its $150 million funding round at a $1.2 billion valuation in January of this year that Paradigm realized the value of this sector. It then began to heavily invest in Polymarket's competitor, Kalshi, first leading a $185 million funding round in June at a $2 billion valuation, and then participating in two more funding rounds within six months, valuing Kalshi at $5 billion and $11 billion respectively. This is also the highest-valued investment Paradigm has ever made. This shows that Paradigm is determined not to miss out on core investment targets in the hottest sectors, even exhibiting a "fomo" (fool of speculation) mentality.
Incubation stalled
Deep involvement in project incubation has long been one of Paradigm's signature styles, with Uniswap and Flashbots being representative examples from previous Paradigm cycles.
In a previous article, Paradigm stated that it is a community of developers dedicated to supporting other developers. The most fruitful collaborations often involve deep partnerships with startup teams to jointly solve important business and research challenges.
Incubation stalled
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