- Five major platforms have laid off most of their staff in the past six months
- The bear market is the largest factor in this wave of layoffs
In the depths of the bear market, a number of crypto platforms have been forced to lay off some of their staff in order to cut expenses to the bone while trying to adapt to the ever-changing crypto market. Some have gone as far as dismissing more than half of their staff.
It was not long ago (merely less than a decade) when digital currencies started making a mark in the global market. However, little did people anticipate for the volatile nature of cryptocurrencies let alone the inevitable bear market that has been brutal to everyone (both employers and employees) in the crypto industry.
This week, Blockchainreporter has analyzed some of the reasons for the layoffs happening in the cryptocurrency industry. Here is a list of the top 5 crypto platforms that have laid off most of their staff and the reasons why.
Coinfloor, a major cryptocurrency exchange in the UK, announced a restructuring in the hopes of ensuring competitive advantage as stated by their CEO. The restructuring measures involved changes to their staff. Coinfloor being among the first platforms to dismiss their staff, they gave the reason to their abrupt prompted measure to be due to the decline in crypto coin prices and trade volumes which had left them in uncomfortable positions.
Bitmain and Huobi
Bitmain – a mining based company, and Huobi a major cryptocurrency exchange in Singapore, both announced that they would be relieving some of the staff of their duties.
Bitmain stated that they would be making major adjustments in their staff. Although no accurate number of the staff that will be laid off was confirmed, speculations suggest that the company was planning to acquit over half of its staff. On the other hand, Huobi said will be laying off an unknown number of ‘underachieving’ staff.
ConsenSys, an Ethereum based blockchain technology company decided to let go of several startups it has been supporting. This action will leave these startups at an unknown fate since despite them being the most promising startups in blockchain technology, they require funding if they are to realize success in the crypto space. Therefore, without funding, the only journey designated for these incubators is a slow slide into nothingness
There are a total of 36 spokes or incubators housed under ConsenSys with 5 to 50 employees each. When asked about the possible layoffs, ConsenSys did not deny them but instead stated that they were speaking with every spoke to find a way forward.
Joe Lubin, ConsenSy’s founder, stated that the reconstruction was to streamline the company due to the high fluctuation of Ethereum. During that period, Lubin was doubtful of Ethereum’s fluctuating price especially since it has then resulted to letting go of most of the spokes, thus, the platform came to an ultimate decision that they will no longer be an incubator for startups but just a normal investor in the blockchain technology.
ConsenSys had been established to work best where the value of the ethereum would be at 10,000 dollars. It is no surprise that this huge drop prompted ConsenSys to reconstruct.
The bear market has been unbearable to many crypto firms but not as much as it has been to Steemit. STEEM’s token has lost about 95% of its value, the primary reason why it laid off 70% of their staff. Steemit CEO Ned Scott stated that the staff dismissal was due to the current bear market in the crypto industry and though Steemit will still operate it will need to undergo restructuring and reevaluation as well.
During its launch back in 2016, the users were not ready for the developers mining technicalities. Also, apart from its co-founder, Dan Larimer, who left to pursue other ventures, the company behind STEEM had no initial coin offering (ICO). From that point in case, STEEM was forced to use the funds from the initial mining process which they used to stake to keep the operations ongoing. Currently, STEEM is sitting at a 95% drop in value. This has led to the reduction of investors since the incentives offered are much lower as proposed.
This year, Jan 10th, Shapeshift announced they hd laid off a third of their staff citing the bear market and the rush expansion of the business as the core reasons for the adjustments.
Unlike other affected crypto businesses who have failed to confirm the layoff rumours or disclose the number of the employees fired, Erick Vorhees, the CEO, confirmed this news by stating that they have discharged 37 people from their work enforcement.
According to the announcement, restructuring became imminent because the staff at Shapeshift grew faster than the platform’s ability to maintain them. Shapeshift also suffered a big blow in December 2018 when Bitcoin declined in value which resulted in them reducing their employee’s income.
So, what are the Major Factors for the Layoffs?
All the reasons for the layoffs seem to be directed towards the turbulence that has been happening in the crypto industry. Various financial institutions are scared of investing because of too many variables involved in crypto. Therefore, even though major organizations around the world have not taken up the idea of digital assets revolutionizing the financial system, the regulatory mechanism for these digital assets still lacks in various states. It is needless to point out how the bear market, security concerns, and volatility have led to the to the crypto companies mentioned above adjusting by laying off their staff.
Since the introduction of Bitcoin and other cryptocurrencies, there has been a high rise of fintech companies acknowledging the perks of blockchain technology. Consequently, the current state of crypto affairs has shown how precarious this endeavor can be and at the same time highlighted the risks that have yet to be adapted.
It is essential that matters of the volatility of these digital assets, the impact of the bear market and the increasing concern of crypto security is addressed so that we can all enjoy and reach the full potential this exciting technology has to offer.