OpenSea co-founder and CEO Devin Finzer unveiled this afternoon that the NFT marketplace is laying off about 20 percent of its employees. Finzer did not say how many people represented. ONE Forbes article in January in which he celebrated Finzer and his co-founder Alex Atallah’s net worth of $ 2.2 billion (each) said the company employed more than 70 people, but an OpenSea spokesman says The edge that 230 people remain in the company.
When we profiled OpenSea in February, the company had just received an additional $ 300 million in financing with a valuation of $ 13.3 billion and was the dominant player in selling tokens and earned 2.5 percent commission on trades.
Still, a sustained decline in activity and prices has led to headlines about how NFT sales are falling off the cliff, while the backlash to the whole concept has followed many companies that have adopted them or suggested that they might. Recently, Reddit launched an NFT Collectible Avatars feature without openly referring to the term, and just today a Sony marketing manager had to dispel concerns from gamers that a new digital collectible feature would bring blockchain and NFTs to its PS5s.
Today is a tough day for OpenSea as we let go of ~ 20% of our team. Here is the note I shared with our team earlier this morning: pic.twitter.com/E5k6gIegH7
– Devin Finzer (dfinzer.eth) (@dfinzer) July 14, 2022
It is the latest in a series of Web3 companies that have expanded rapidly over the last few years as cryptocurrencies rose and are now cutting staff. Finzer said the company was able to notify affected employees directly in person before announcing the layoffs, providing “generous” severance pay, health care for the rest of the year, job placement and accelerated stock earnings. In its note, Finzer says these changes give the company up to a five-year trajectory if this “crypto winter” continues.
Coinbase, a cryptocurrency exchange that launched an NFT marketplace earlier this year, released 1,100 people last month, and GameStop just opened its NFT store last week, a few days after announcing a round of layoffs.
While the influx of new competitors has made things harder, as well as the increased use of alternative storefronts such as LooksRare, OpenSea has had a number of recent issues that extend beyond the falling prices of crypto and many NFTs:
- An error allowed attackers to snatch expensive goods from their owners for significantly less than their stated prices.
- In February, a phishing attack stole NFTs that (at the time) were worth as much as $ 1.7 million.
- Former product manager Nate Chastain, who dropped out last fall for abusing his access to buy NFTs just before they appeared on OpenSea’s main page (and is likely to suddenly increase in value as a result), has now been arrested for insider trading.
In late June, an employee of the email delivery provider stole email addresses of OpenSea users, increasing their risk of being hit by phishing attempts.
Meanwhile, while entire tokens of non-fungible tokens are their ability to certify ownership of digital objects and decentralization that does not rely on a single source of verification, OpenSea has had to work to address “authenticity.” It removes tokens for works with content that their creators do not have the rights to sell, or that simply mimic other NFTs like the Bored Ape Yacht Club.
It has also begun launching a new SeaPort protocol that is supposed to significantly lower the cumbersome gas charges that can increase during periods of high demand, and it has recently redesigned its profile pages.