OpenSea to Slash 20 Percent of Workforce to Reduce Costs Amid Prolonged Slump in Digital Asset Markets

Non-fungible token (NFT) marketplace OpenSea said on Thursday it would cut about 20 percent of its workforce to reduce costs in the face a prolonged slump in digital asset markets. "The reality is that we have entered an unprecedented combination of a crypto winter and broad macroeconomic instability, and we need to prepare the company for the possibility of a prolonged downturn," Chief Executive Devin Finzer said in a statement on Twitter.

NFTs are digital assets that exist on a blockchain and include everything from artwork to text and tweets.

OpenSea, the largest NFT marketplace, saw explosive sales growth in 2021 as the rise in cryptocurrencies created a new group of crypto-rich speculators.

But the NFT has market slumped in recent months, as cryptocurrency prices collapsed and investors ditched risky assets.

OpenSea's NFT sales volume on the Ethereum blockchain plunged to $700 million (roughly Rs. 5,600 crore) in June, down from $2.6 billion (roughly Rs. 21,000 crore) in May and a far cry from January's peak of nearly $5 billion (roughly Rs. 40,000 crore).

Finzer said the job cuts would allow the company to maintain 5 years of growth at current volumes under various potential downturn scenarios.

Other crypto- and digital asset-focused companies, including Coinbase, have been forced to cut jobs in recent weeks.

Recession fears coupled with the crash of crypto projects such as Terra wired a substantial amount of capital out of the crypto industry in recent months, making the slump more intense.

Last month, Coinbase itself announced the lay-off of 18 percent of its workforce in the backdrop of losses hitting the digital assets sector.

Taking full accountability of over-hiring, Coinbase CEO Brian Armstrong said that the company had onboarded too many members in recent months, that was now hindering the firm's efficiency.

© Thomson Reuters 2022