OpenSea lays off 20%, braces for "prolonged downturn"

OpenSea, the most prominent marketplace for non-fungible tokens (NFTs), announced layoffs on Thursday that impacted 20% of their current workforce.

• CEO Devin Finzer announced the move in a Twitter post Thursday afternoon.
• After the staff reductions, OpenSea's staff stands at 230 people, the company told Axios in an email.

Why it matters: This is the latest announcement of layoffs from a major cryptocurrency player, suggesting that the pain hasn't quite stopped as a brutal market downturn batters the industry.

• Layoffs are being announced at crypto exchanges all over the world, including Coinbase and Gemini, and in the centralized crypto lending sector, at places like BlockFi.

Details: According to Finzer's post, each employee was notified one-by-one before the news was rolled out to the whole team.

• They were promised additional benefits, such as health coverage into 2023, and accelerated vesting for those who hadn't served long enough yet.

What they're saying: "We've been through winter before, and we built this company with the cyclicality of crypto in mind," Finzer wrote in a Slack message he shared with the company, and on Twitter.

• "We've also built a strong balance shee through the money we've raised the product-market fit we've proven," he added. "We need to prepare the company for the possibility of a prolonged downturn."
• Finzer wrote that at current volumes, the company could weather a 5-year downturn.

Zoom out: As a whole, the NFT market has taken a definitive turn for the worse. NonFungible.com has been tracking about $30 to $40 million in NFT sales each day since mid-May, across the whole market, compared to late 2021 when it frequently brought in more than $100 million each day.

OpenSea came into 2022 as one of the strongest companies in crypto. According to a Dune Analytics chart, its estimated revenue on the Ethereum blockchain peaked in January at $4.9 billion (in crypto).

• That same month, it raised $300 million at a $13.3 billion valuation, in a round co-led by Coatue and Paradigm.
• That said, competitors began to circle: A DAO-owned NFT marketplace, LooksRare, launched in January, with revenue that's consistently rivaled OpenSea's, based on TokenTerminal data.
• In June, Magic Eden, an OpenSea competitor that focuses on the Solana blockchain, hit unicorn status with its latest funding round.
• OpenSea launched on Ethereum, and has primarily focused on that ecosystem, though it has expanded to other chains, such as to Polygon and Solana.

Bottom line: Finzer ascribed the cuts to macroeconomic conditions, while also noted he looks forward to significant innovations in NFTs during the downturn.