According to founder and CEO Devin Finzer, the layoffs are a product of a “crypto winter and broad macroeconomic instability,” two simultaneous forces that are proving too much for OpenSea.
OpenSea lay offs comprise 20 percent of the workforce.
Finzer announced on Twitter on Thursday, July 14 that OpenSea is laying off a fifth of its workforce, leaving the company with 230 remaining employees.
Finzer reportedly notified all impacted employees individually prior to announcing layoffs to the company and public.
OpenSea CEO Devin Finzer cites possibility of a ‘prolonged downturn’
According to Finzer’s letter, OpenSea needs “to prepare the company for the possibility of a prolonged downturn.” He adds, “The changes we’re making today put us in a position to maintain multiple years of runway under various crypto winter scenarios [...] and give us high confidence that we will only have to go through this process once.”
Finzer is under the impression crypto has an explosion ahead, with NFT innovation and utility at the forefront. He writes, “We’re in an even better position to capture what will soon become the largest market on the planet.”
Does OpenSea prescribe to the crypto liquidity problem?
The key reason why so many crypto companies are folding right now has to do with a lack of liquidity. Brokers are unable to honor an excess of withdrawals and subsequently freeze transactions (when they’re then unable to come up with a timely solution, they file for bankruptcy like Celsius or eye a buyout like Vauld).
NFT marketplaces like OpenSea depend on sales to maintain revenue. With NFT sales at their lowest level in a year, liquidity could be a problem at some point. However, its status as an intermediary marketplace between buyer and seller could protect it from shuttering. This is in addition to OpenSea’s recent funding round that brought $300 million its way.
While OpenSea is not immune to bankruptcy and could fold if the crypto condition gets any worse, the layoffs could also be as deep as it goes. If Finzer treated his employees the way he claims to have—including extending health benefits into next year and elevating vesting for newer employees that were laid off—his leadership could save OpenSea.
Finzer writes, “We’ve been through winter before, and we built this company with the cyclicality of crypto in mind. We’ve also built a very strong balance sheet through the money we’ve raised and the product-market fit we’ve proven.”
Despite all this, there is something to be said about the strongest NFT marketplace out there laying off such a massive amount of people. For many, it begs the question: If they can’t come out of this unscathed, who can?