Web3 Security Firm Harpie Shuts Down, Plans Asset Transfer Utility
Harpie, a Web3 security firm dedicated to preventing wallet theft and hacks, has officially ceased operations after failing to establish a sustainable business model. The firm, backed by major investors such as Coinbase Ventures and OpenSea, announced the shutdown on March 27 via an X thread. In its statement, Harpie expressed gratitude to its users and stated that while its mission was to create a “theft-free crypto ecosystem,” the business struggled to generate enough revenue to sustain its operations.
Harpie’s Closure Reflects Growing Challenges in the Crypto Security Space
Following the immediate shutdown, Harpie instructed users to disconnect their wallets from the Harpie RPC via their network switchers to prevent failed transactions. The company has also promised to develop a utility on its website that will allow users to transfer vaulted assets securely in the coming days. Furthermore, Harpie assured participants of its referral program and promotional campaigns that outstanding rewards from its Season 1 giveaways will still be honored.
Harpie raised $4.5 million in funding in 2021, with Dragonfly Capital leading the investment round. Initially, the startup charged a 7% fee on recovered assets but later transitioned to a fixed 0.01 ETH fee per recovered asset. However, despite these efforts to adjust its revenue model, the company was unable to achieve long-term financial stability, leading to its shutdown. Harpie’s shutdown is part of the ongoing difficulties faced by Web3 security startups in building profitable business models. While the need for on-chain security solutions remains high due to increasing crypto-related fraud and hacking incidents, monetizing these services effectively has proven to be a significant challenge. Harpie’s core functionality focused on acting as an on-chain firewall, preventing unauthorized transactions before they could be completed. However, the crypto space remains largely decentralized, with many users preferring self-custody solutions over third-party security providers. All these have made it difficult for firms like Harpie to remain afloat.
Broader Crypto Industry Faces Wave of Closures, Especially NFTs
Harpie’s shutdown is part of a broader trend of companies exiting the crypto space due to financial difficulties. LG Electronics recently announced the closure of its NFT platform, LG Art Lab, citing shifting strategic priorities.
LG Art Lab was initially launched in September 2022 and aimed to integrate NFT collectibles into smart TVs, allowing users to buy, sell, and display digital art. However, the platform struggled to maintain engagement in an increasingly uncertain NFT market and will officially shut down on June 17. Users’ NFTs will be automatically returned to their wallets by the end of April. This closure follows a series of similar shutdowns in the NFT sector. Kraken shut down its NFT marketplace, and Nike’s RTFKT NFT venture also closed its doors last December. Once a booming industry, NFT trading volumes have drastically declined from their August 2021 peak of $3.24 billion to under $100 million per week. According to DappRadar, NFT trading volumes saw a 60% drop in February, with sales falling from $1.36 billion in December to significantly lower numbers by early 2024. While the market showed signs of recovery in late 2023, the downturn suggests that digital collectibles are facing long-term sustainability challenges. Ethereum and Bitcoin remain the dominant chains for NFT sales, but overall trading activity has struggled to reach previous highs. For Harpie, while the need for on-chain security remains high, monetization challenges and competition from larger firms have made survival difficult for smaller startups. Looking forward, the firm has exited the market and is carefully leaving other innovators to continue keeping crypto secure for everyone.