As the market collapses, crypto company Polygon Labs fires 20% of its employees.
The operator of an eponymous system used by developers to speed up and reduce the cost of Ethereum transactions, Polygon Labs, announced on Tuesday that it has laid off 20% of its personnel, or about 100 employees, becoming the most recent provider of digital assets to implement employment cutbacks. 500 people work full-time for Polygon. No matter their position or length of service with the company, the impacted employees will all receive three months’ worth of severance pay, the company stated in a blog post. According to the statement, the company’s treasury is still “strong,” with a balance sheet worth more than $250 million. In order to weather a downturn in the cryptocurrency market, Digital Currency Group-owned Luno said in January that it will reduce 35% of its overall personnel.
The layoffs follow Polygon Labs’ earlier this year merger of several company groups. When Polygon announced its corporate restructure on January 11, it stated that “all of our workers have been brought together under a group of businesses known as Polygon Labs.” The corporation had already announced changes to its community projects earlier in December, including the sunsetting of grants and the winding down of its DAO, or decentralized autonomous organization. The NFT, gaming, and metaverse arm of Polygon Studios, which is largely an open-source blockchain, is connected to Polygon. “Polygon Studios” is the name and brand of the new organization “will be terminated, and the newly established Polygon Laboratories will be fully owned by the Cayman Islands-based Polygon Foundation.
Polygon secured $450 million in a private token sale in 2022. Since then, the company has been expanding rapidly, partnering with numerous multinational corporations on various web3-related initiatives, and poaching developers from its competitors. Matic, the decentralized platform that facilitates easier access to the digital currency Ethereum, was established in 2017 and changed its name to Polygon in February 2021.
While rising interest rates heighten concerns about an economic slowdown, the cryptocurrency market has lost over a trillion dollars in value in 2022. Important market participants including Celsius Network and the cryptocurrency hedge fund Three Arrows Capital filed for bankruptcy as a result of the meltdown. The main exchange FTX filed for bankruptcy protection in November of last year, dealing the crypto industry its heaviest hit. Due to its quick decline, cryptocurrency companies are now under intense global regulatory scrutiny for the way they manage funds and carry out commercial activities. Following the fall of token prices in 2022, there will be significant job cutbacks across the industry, including at Coinbase Global, Blockchain.com, and Crypto.com, which will coincide with the layoffs. Hundreds of jobs have been lost by businesses overall in just the first two months of 2023.