Soundness Labs has announced it is closing after changing its focus from zero-knowledge infrastructure to post-quantum security for blockchain wallets. The team said the decision came after slow market adoption, even though the technology had been built and tested.
We are closing Soundness Labs…
We started as a ZK infrastructure team, building circuits, working with the @SuiNetwork and @ligero_inc teams on proof systems, contributing to the @WalrusProtocol, and exploring what zero-knowledge could do at the base layer of blockchains. Over… pic.twitter.com/yeO83zSHKQ
— Soundness (@SoundnessLabs) June 18, 2026
From zero-knowledge tools to quantum-safe wallets
Soundness Labs started by building zero-knowledge (ZK) systems and working with projects like Sui Network. Over time, it moved into a bigger problem: protecting crypto wallets from future quantum computer attacks.
In the past year, the team built a protection layer meant to secure wallets that use common cryptography like EdDSA and ECDSA. It worked across self-custody wallets, MPC systems, and hardware security setups. The team said it had already been deployed and was even noted by Coinbase’s quantum advisory group as a working solution for future migration plans.
Even with this progress, the team said most blockchain networks and wallet providers were not ready to adopt it. Many are still building their own internal research instead of using outside tools.
Why do crypto teams shut down before products scale
This is not the first time a crypto infrastructure project has shut down despite having working technology. In many cases, teams build early solutions to problems the market is not yet ready to solve. Even if the tech works, it can take years before blockchains, wallets, and custody providers agree on standards and upgrade together.
In crypto, big changes only work when many players move at the same time. If wallets upgrade but chains do not, or if chains upgrade but custody systems lag, the system breaks. That makes coordination slow and hard.
Soundness Labs also shows another issue in crypto that timing matters as much as technology. Even strong security tools can fail to spread if there is no clear demand or shared push from the industry. Quantum security is seen as important in the long run, but most teams are still focused on faster growth, cheaper transactions, and user adoption today.
For the crypto space, the shutdown is a reminder that building early is not always enough. If the rest of the ecosystem is not ready to move, even useful technology can end up unused.
Multiple blockchain startups have struggled with sustainability as funding slows and user growth plateaus. In some cases, companies have reduced their workforce or shifted their focus entirely toward artificial intelligence integration to stay competitive in a rapidly changing tech landscape.
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