Twocryptocompanies,dYdXandConsenSys,haveannouncedanewroundoflayoffs.What’shappening,andwhyareAmericanregulatorsbeingblamedforthis?
AntonioJuliano,theCEOofthedecentralizedderivativesexchangedYdX,announceda35%layoff.Hethankedtheformeremployeesfortheirworkandexplainedthelayoffsastheneedto“revitalize”theexchangesince,initscurrentform,itis“differentfromthecompanydYdXmustbe.”
“Ihaveseenthisoverandagain,anditwillcontinue.Whatwearebuildingismuchlargerthanjustacompany,andthisyouwillalwaysbeapartof.”
Notably,thelayoffsatdYdXcameshortlyafterConsenSyscutitsstaffby20%.ConsenSysCEOJosephLubincitedunfavorablemacroeconomicconditions,uncertaintyovercryptoregulationintheU.S.,andthecostofalegalbattlewiththeSecuritiesandExchangeCommission(SEC).
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Thebroadermacroeconomicconditionsoverthepastyearandongoingregulatoryuncertaintyhavecreatedbroadchallengesforourindustry,especiallyforUS-basedcompanies.
—JosephLubin(@ethereumJoseph)October29,2024
Atthesametime,Lubincalledthecompany’sfinancialpositionstable.
Accordingtohim,ConsenSyswillfocusonitscorerevenuedrivers,whichalignswithitspreviouslyadoptedstrategy.Thecompany’sflagshipproducts,MetaMaskandLinea,thesecond-layerEthereumnetwork,willserveasthebasisforfurtherdevelopment.
Inaddition,ConsenSysCEOsaidthatthelaid-offemployeeswillreceivesupportafterleavingthecompany,namely,severancepaydependingonthelengthofservice,assistancewithfutureemployment,andexpandedhealthbenefits.
LubinalsotoldFortunethatthelayoffswillaffectabout162ofthe828employeesworkingfromalldivisionsatConsensys.Now,ConsenSyshasnowbecometheleaderinlayoffsin2024,accordingtolayoffs.fyi.
WhytheSECisagaintheculpritofalltheworst?
Inthelayoffstatement,LubincitedtheSECasoneofthereasonswhyhewillcutstaff.InJune,theregulatorsuedthedeveloperoftheMetaMaskwallet,notingthatthecompanyviolatedthelawthroughtheMetaMaskStakingservice.
ThelawsuitcomesshortlyafterConsenSysfiledalawsuitagainsttheSECandfiveofitsunnamedemployeesoverits“oversightofETH,”askingthecourttoformallyapprovelanguagethatwouldnotclassifytheassetasasecurity.
Asaresult,theSEC’sDivisionofEnforcementcloseditsinvestigationintoEthereum2.0.TheagencytookthisstepaftertheorganizationsentaletteraskingforclarificationontheassetclasswhenapprovingthespotEthereumETF.However,thelawsuitovertheSEC’sallegationsisongoing,leavingConsenSysfacinglegalcosts.
Thelayoffscomeatatimewhenthemarketisbuckingtrends
Notably,thecryptomarketwasboomingatthetimeofthelayoffannouncement,whichisgenerallyconsideredagoodtimeforcryptocompanies.Thus,onOct.29,theBitcoin(BTC)rategrewfrom$70,000tojustover$73,600,approachingthehistoricalmaximumof$73,777.Sincethebeginningofthemonth,thecryptocurrency’svaluehasgrownby12%.AnalystsassociatethistrendwithforecastsfortheU.S.presidentialelection.
Bitcoinprice.Source:crypto.news
Interestingly,thegrowthofBitcoinisalsoexplainedbythesituationintheU.S.,whichtheCEOofConsenSyspreviouslycomplainedabout,explainingthelayoffs.
ThegrowthinthepriceofBitcoinisduetoseveralfactors.Inparticular,interestinBitcoinETFsfromlargecompaniessuchasBlackRockisincreasing,whichattractssignificantinvestments.Recently,theU.S.sawaninfluxof$2.7billionintoBitcoinETFs,whichhelpedattractnewinvestorsandraisetheprice.
Inaddition,thedesiretoprotectagainstinflationsignificantlyimpactsthemarket.Againstaweakeningdollarandrisinginflation,manyinvestorsareturningtolimitedassetssuchasBitcointopreservetheirsavings.
dYdXcutsstaffwhilecompetitorsgainmomentum
Sincethebeginningoftheyear,thecryptomarkethasbeenrecoveringfromalongcryptowinter,withmanyexchangesrampinguptheirgrowth.AccordingtoBloomberg,Crypto.com,Binance,Coinbase,Gemini,andKrakenarehiringascryptocurrencieslikeBitcoinrise—notdYdX,though.
Whenannouncingthestaffreduction,Julianomentionedthatinitscurrentform,theexchangeisdifferentfromwhatitshouldbe,withoutspecifyingwhatexactlyhemeant.However,furtherdevelopmentwillrequirehumancapitalcapableofrevivingtheplatform.Therefore,announcinga35%staffreductionagainstthebackdropofcryptoexchangestryingtogetthemostoutofthecurrentrallylooksillogical,tosaytheleast,butJulianoishardlyworriedaboutFOMO.
Howthedynamicsoflayoffsinthecryptoindustryhavechanged?
Accordingtolayoffs.fyi,Q12023wasthepeakinlayoffssince2020,whenmorethan167,000employeeslosttheirjobs.However,in2024,thesituationlooksmuchbetter:thepeakoflayoffsoccurredinQ1,with57,000employeeswholosttheirjobs.Therewereevenfewerlayoffsinthesecondandthirdquarters–43,000and38,000,respectively.
Source:layoffs.fyi
Thus,thestoryofdYdXandConsenSyshasbecomemoreofanexceptiontotherulethanatypicaltrendfor2024.Aftermassivelayoffsin2022and2023,theblockchainjobmarketseemstoberecovering.
crypto.news