Polynomial Shuts Down DeFi Derivatives Platform, Cancels Token Launch And Initiates Withdrawal Deadline For Users

Polynomial, a decentralized finance derivatives protocol, announced that it has ceased all operations, including the shutdown of both Polynomial Chain and Polynomial Trade. 

According to the project’s timeline, market activity was suspended on February 13th, with forced closure of all positions scheduled to begin on February 18th. The liquidity layer is set to be deactivated on February 24th, followed by a full chain shutdown on March 3rd. Users have been urged to withdraw funds before February 24, with the team stating that support will remain available throughout the process.

The project had previously announced plans for a token generation event in the first quarter, but the team confirmed that the launch will no longer take place. Instead, the shutdown will proceed, with the team citing concerns about releasing a token for what it described as a declining product. A snapshot has been taken of all participants, and the team indicated that early supporters will receive priority if the project returns in the future.

Polynomial highlighted the scope of what it had built, noting the development of more than 70 markets spanning crypto, equities, commodities, foreign exchange, and indices. The protocol introduced what it described as the first hybrid perpetuals model combining automated market makers with an order book system, along with multi‑collateral functionality and gasless trading designed to resemble centralized exchange performance. 

The team emphasized that the underlying technology was robust, pointing to more than $4 billion in cumulative trading volume, over 27 million transactions, a user base of 22,000 participants, and peak total value locked of $8 million.

Polynomial Cites Liquidity Deficit As Core Reason Behind Derivatives Platform Shutdown

Despite these achievements, the team stated that strong technical performance was not enough to secure a competitive position in the derivatives sector. They noted that improvements in execution speed, user experience, and infrastructure did not translate into sustained traction, as traders consistently gravitated toward platforms with deeper liquidity. 

According to the announcement, liquidity proved to be the decisive factor, overshadowing innovation and feature development. The team said it observed this dynamic firsthand as total value locked declined from its peak.

In reflecting on the broader market environment, Polynomial described a shift in how products must be built in an increasingly automated ecosystem. The team stated that the traditional assumption that high‑quality technology would naturally attract users no longer holds, arguing instead that liquidity compounds while features do not. They acknowledged that the protocol’s thesis on the growth of on‑chain derivatives was correct, noting that the sector has expanded significantly in recent years, but conceded that their own execution fell short.

The team reported that the protocol’s 27 million transactions have provided extensive insight into user behavior and market structure, giving them a clearer understanding of what constitutes a defensible position in the derivatives landscape. In a message to traders, liquidity providers, and community members, Polynomial expressed appreciation for the support received and reiterated that user funds remain secure. The team emphasized that the shutdown is being conducted carefully out of respect for the community.

Polynomial stated that it is not abandoning its long‑term mission of enabling scalable on‑chain derivatives. The announcement concluded with an indication that the team intends to return with a renewed focus on building liquidity first, maintaining the same mission and team while aiming for stronger execution. The group added that all current readers will receive early access when the project reemerges, describing the pause as a step toward reloading rather than ending its efforts in the sector.

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