Qredo, a provider of crypto custody infrastructure, is facing a challenging financial situation. Despite having secured a substantial $80 million funding round in the previous year with backing from Coinbase Ventures and other investors, the company’s financial runway is dwindling, leaving them with approximately six months of funding left.
To address this issue, Qredo recently had to make significant staff reductions, laying off 50% of its employees. This follows a previous round of layoffs reported in September, where around 50 individuals were let go. As a result, Qredo’s current workforce has shrunk to about 50 employees, down from over 200 earlier in the year.
To mitigate its financial difficulties, Qredo is actively seeking fresh funding and considering strategic mergers and acquisitions. Two sources with knowledge of the matter indicated that 10T Holdings, the lead investor for Qredo’s Series A funding, is involved in these efforts, although 10T Holdings did not provide immediate comment on the situation.
The company’s struggles are primarily attributed to a decline in its business activities. Qredo’s spokesperson explained that they observed a monthly average of $2.5 billion in transactional activity in the second half of 2022 and during the first quarter of 2023. However, this activity has waned, along with the overall market activity, throughout the course of this year. In response to this prolonged decline, Qredo has decided to downsize its operations and concentrate on core areas of growth, particularly in web3 wallets and custody solutions.
Qredo had achieved a valuation of $460 million in February 2022 when they raised $80 million in Series A funding. At that time, the company had plans to utilize the funds for acquisitions, product development, and geographic expansion, though the specific allocation of capital remains unclear.
In a prior statement from September, a Qredo spokesperson had attributed the job cuts to a “prolonged cryptowinter” and the company’s decision to focus on its core protocol and web3 custody business.
Qredo’s core offerings consist of its Layer 2 protocol, the Qredo Network, and a custody technique known as distributed multi-party computation, which eliminates the need for third-party custodians. All funds and transactions are recorded on-chain on the Qredo Network and safeguarded by their unique dMPC technology.
Founded in 2018, Qredo has raised around $94 million in total venture capital funding. In July 2021, the company conducted a $35 million QRDO token sale. Notable venture capital investors in Qredo include Coinbase Ventures, Avalanche, Kingsway Capital, and GoldenTree Asset Management.
The QRDO token, associated with Qredo, has experienced a substantial drop in value, declining nearly 100% from its peak price of $9.81 in November 2021 to current levels of around $0.03915180, as reported by CoinGecko data. The fully diluted valuation of the token is approximately $64 million.
Qredo’s recent staff reductions coincide with a broader trend in the crypto industry, where several firms, including Ledger, Chainalysis, and Chia Network, have also been forced to cut their workforce in recent weeks.