OpenSea, the world’s largest NFT marketplace, has announced that it would cut its total workforce by 20% to reduce costs in the face of a prolonged slump in the digital asset markets, the company said. Since OpenSea does not disclose the number of its employees, it is unclear exactly how many people are impacted by the job-cut decision.
The New York-based company had explosive sales and volume growth in 2021, when the rise in cryptocurrency prices lured many people, including speculators, into digital assets. The crypto space exploded during the pandemic with prices of major crypto assets rocketing up, which led to the hiring spree among crypto and NFT firms.
However, the nascent NFT market slumped in recent months, as prices of cryptocurrencies plunged because investors became more risk-averse due to high inflation, central bank rate hikes and fears of impending recession.
“The reality is that we have entered an unprecedented combination of crypto winter and broad macroeconomic instability and we need to prepare the company for the possibility of a prolonged downturn”, the company’s chief executive officer Devin Finzer said in a statement shared on social media. A crypto winter is a period of large consolidation in the crypto market.
According to him, the job cuts would help the company maintain at least five years of growth at current volumes under various potential downturn or ‘crypto winter’ scenarios and OpenSea would have to go through this process only once.
Since its launch in 2017, OpenSea has facilitated NFT transactions worth more than US $10 billion and the total market capitalization of all crypto assets hit nearly US $3 trillion during parts of 2021. However, things changed soon after when the value of several cryptocurrencies plunged in recent months because investors started shunning risky assets and looking for safe haven investments.
OpenSea’s NFT sales volume on the Ethereum blockchain network plunged to US $700 million in June, down from US $2.6 billion in May and a far cry from the January peak of nearly US $5 billion. Crypto firms are struggling to weather the current storm, as fear, uncertainty and doubts (FUD) gripped the markets, caused by a combination of slowing business growth and high inflation.
The recent layoffs in the crypto markets seem quite brutal, even amidst the general wave of layoffs sweeping across industries, especially those in the US. Especially, when you consider the fact that the crypto industry topped the hiring charts until only a few months ago.
The layoffs in crypto firms come amid recession concerns and a prolonged slump in the value of cryptocurrency assets. In June, the biggest US cryptocurrency exchange company Coinbase Global Inc has announced it would cut its workforce by 1,100 employees or about 18% of its current staff strength because the company “grew too quickly” and a potential recession ‘could lead to another crypto winter’.
Meanwhile, Finzer highlighted his conviction in the NFT space and OpenSea’s role in it and hoped it would soon become the largest market on the planet. “During this winter, I expect that we’ll see an explosion in innovation and utility across the NFT ecosystem”, he said.