Image Source: ICT.io
With more and more competition entering the NFT market, with sales lowering down, the leading NFT marketplace is cutting back on its staff.
Co-founder and CEO, OpenSea, Devin Finzer announced this afternoon that the company is laying off20% of its employees due to the ongoing macroeconomic downturn. However, he did not state how many employees that accounted for. a Forbes article in January revealed that Finzer and his co-founder Alex Atallah have a net worth of $2.2 billion each. And at the time company employed more than 70 employees.
A spokesperson for the company revealed that several 230 people will continue to remain with the company. In a February profiling, the company had just received another $300 million in funding with an increased valuation of $13.3 billion and stood as the leading company in selling tokens with 2.5% commissions on trades. With such a strong footing the company faced a drop-in activity and prices leading to a headline that NFT sales are showing a flatline trend. The market also showed that the companies that followed the NFT trend are also showing the backlash of the market activity decrease.
Recently the social media platform, Reddit launched a Collectible Avatar feature, without openly using the term, and just this morning, a Sony executive dismissed the concerns related from the gamers that a new collectible feature can be introduced in form of NFT or blockchain in its new PS5s.
It is being viewed as the latest in a string of Web3 companies that have made a rapid expansion in it over the last few years as the crypto prices saw a hike but are now cutting their staff number. According to Finzer, the company was able to communicate the layoff directly to the affected employees before releasing the news, providing a generous severance package that will continue to cover health insurance for the rest of the next year and providing job placement assistance. OpenSea will also provide them an increasing equity vesting. In his message, Finzer announced that these changes will give the company up to five years’ worth of runway if this adverse situation, which he termed “Crypto Winter”, persists.
Another crypto exchange company that launched the NFT marketplace at the start of 2022, Coinbase, had to lay off 1100 people the previous month. Whereas GameStop, after a round of massive layoffs, announced to enter the NFT store market just last week. While the new entrants have increased the competition, and declining NFT sales, OpenSea has had its issues that are stretched beyond the decreasing prices of NFTs:
The platform faced a bug that allowed the attackers to “steal’ high-priced NFTs for a much lower price from their owners.
In February, OpenSea witnessed a phishing attack that stole NFTs that at that time were worth more than $1.7 million.
Nate Chastain, the former OpenSea product chief, was let go for misusing his access to purchase NFTs before they were featured on the company’s main page. He is now arrested for the allegations of insider trading.
Near the end of last month, an OpenSea employee stole the email addresses of the platform’s users from its email delivery vendor which brought them at higher risk of phishing attacks.
While the entire notion around NFTs rests in their ability to certify ownership of the digital assets and their decentralization that is not dependent on a single source for their verification, OpenSea had to face authenticity issues. It is removing tokens for works with the related content that their creators don’t have the right to sell, which resembles other NFTs such as Bored Ape Yacht Club. It is also beginning to launch a new SeaPort protocol that is expected to significantly lower the problematic gas fees that can increase during high demand periods. The company has also recently redesigned its profile pages to avoid any potential breaches.