Failure Analysis
Qredo died from a lethal combination of market timing, competitive saturation, and capital inefficiency during the 2022-2024 crypto winter. They entered a custody market...
Qredo \UK
Qredo built a decentralized digital asset management infrastructure for institutions, offering multi-party computation (MPC) custody without private keys. The value proposition was eliminating single points of failure in crypto custody while enabling instant settlement and programmable governance. They targeted the institutional crypto custody market during the 2017-2021 bull run when enterprises were desperate for secure, compliant ways to hold digital assets. The 'why now' was regulatory pressure post-Mt.Gox and institutional FOMO into crypto. They raised $95M from top-tier investors including Coinbase Ventures and 10T Holdings, positioning themselves as infrastructure for the tokenized economy. However, they launched into a market dominated by established players like Fireblocks, Anchorage, and BitGo who had regulatory moats and enterprise relationships. Qredo's Layer 2 blockchain approach added complexity without clear differentiation, and their timing coincided with the 2022 crypto winter and cascading failures (Luna, FTX, Celsius) that froze institutional adoption.
Discover the reason behind the shutdown and the market before & today
Market Analysis
The institutional crypto custody market in 2024 is a $500B+ AUM oligopoly dominated by Coinbase Custody, Fireblocks, BitGo, and Anchorage Digital. Coinbase won the...
Startup Learnings
Infrastructure plays need wedge products, not platforms. Qredo built a full-stack custody blockchain when the market wanted point solutions. Modern founders should launch with...
Market Potential
The institutional crypto custody TAM is real but concentrated. Coinbase Custody holds $130B+ AUM, Fireblocks processes $4T+ annually. However, the market bifurcated: (1) Large...
Difficulty
MPC custody requires deep cryptography expertise, regulatory compliance infrastructure, and enterprise security certifications (SOC2, ISO27001). However, modern MPC libraries (Fireblocks SDK, Coinbase WaaS APIs,...
Scalability
Custody is a high-margin SaaS business once built (basis points on AUM), but growth is gated by enterprise sales cycles and regulatory approvals. Qredo's...
Rebuild & monetization strategy: Resurrect the company
Execution Plan
Phase 2
Step 2 - Developer Platform (Expansion): Launch self-serve API with SDKs (JavaScript, Python, Go) for any platform to embed custody. Add policy engine (spending limits, multi-sig approvals, whitelisted addresses) and compliance dashboard (transaction monitoring, audit logs). Target invoicing platforms (Bill.com competitors) and expense management tools (Ramp, Brex). Charge $500/month SaaS fee plus 25 bps per transaction. Goal: 20 customers, $5M monthly volume, $50K MRR within 12 months. This proves horizontal scalability beyond payroll.
Phase 3
Step 3 - Vertical Expansion (Growth): Build vertical-specific modules: gaming treasury management (in-game currency custody, player payouts), AI agent wallets (programmatic spending with natural language policies), and RWA custody (tokenized treasuries and private credit). Partner with gaming engines (Unity, Unreal) and AI platforms (LangChain, AutoGPT) for distribution. Charge 10-50 bps depending on vertical. Goal: $50M monthly volume, $500K MRR, 100 customers within 24 months. This creates multiple revenue streams and reduces concentration risk.
Phase 4
Step 4 - Regulatory Moat (Defensibility): Obtain state money transmitter licenses (start with Texas, New York, California) and partner with a chartered trust company (e.g., Prime Trust successor, Fortress Trust) for qualified custodian status. Launch insurance product (custody insurance, crime insurance) underwritten by Lloyd's of London. This enables enterprise sales to banks and fintechs requiring regulatory assurances. Goal: $500M monthly volume, $2M MRR, Series B fundraise within 36 months. At this scale, become infrastructure for the next wave of stablecoin adoption, with defensibility from compliance moats and ecosystem lock-in.
Monetization Strategy
Hybrid model: (1) Transaction fees: 10-50 basis points on stablecoin volume depending on vertical (payroll is 50 bps, high-volume gaming is 10 bps). (2) SaaS fees: $500-$5,000/month for API access, policy engine, and compliance dashboard, tiered by transaction volume. (3) Compliance services: $10K-$50K annual retainers for white-glove KYC/KYB, transaction monitoring, and audit support for enterprise customers. (4) Yield share: 50/50 split on interest earned from customer stablecoin balances held in T-bills or money market funds (similar to Stripe Treasury). Target blended take rate of 30 bps on volume. At $1B monthly volume (achievable within 3 years given stablecoin payment growth), that is $3M monthly revenue or $36M ARR. Gross margins of 80 percent after infrastructure costs (Turnkey, Circle, Chainalysis). Path to profitability at $50M ARR with 50-person team. Exit via acquisition by Stripe, Adyen, or Coinbase as embedded custody becomes table stakes for payment platforms, or IPO if we reach $200M ARR and become the Plaid of stablecoin infrastructure.
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