OpenSea layoffs are putting the final nail in the coffin for NFTs’ stability

When OpenSea announced a 20% reduction in the company’s workforce, the myth of the NFT market’s insulation from harsh macroeconomic conditions took a heavy blow. Not everyone is pessimistic, though.

OpenSea, the biggest NFT marketplace in the world, laid off a fifth of its staff, co-founder and CEO Devin Finzer announced on Twitter. He blamed the decision on “an unprecedented combination of crypto winter and broad macroeconomic instability.”

“We need to prepare the company for the possibility of a prolonged downturn,” Finzer added.

OpenSea is not the first major crypto company to announce sweeping workforce reductions. Coinbase, Bullish, Gemini, BitMEX, OSL, and Abra have already trimmed their teams, and they all offer the same reason.

That said, OpenSea is the first major NFT marketplace to lay off this many people. According to Tokenized, it had approximately 600 employees when the news of the layoffs broke, by far the most any NFT marketplace employed. And while the NFT space has fared surprisingly well in previous market cycles, this time it looks like the winter has reached all corners of the map.

Chart showing OpenSea employees rising from 2 in 2017 to 600 in 2022.
Source: Tokenizedhq.com

Transparent but troubled

In stark contrast to the abrupt layoffs announced by Coinbase last month amid signals that the team spirit in Brain Armstrong’s exchange had turned sour, Finzer took every opportunity to drive home the point that OpenSea was parting with its now-former employees on good terms.

Those affected will receive “generous” severance pay, health insurance stretched into 2023, accelerated equity vesting for those who haven’t reached the cliff while employed, and job placement support.

Perhaps taught by Coinbase’s experience, Finzer doubled down on transparency, showing a screenshot of a Slack message sent to everyone in the company rather than posting a separate, public-facing statement on a blog or in a press release. That strategy has proved moderately effective.

By moving to cut down a fifth of the team, Finzer explained, the company sought to brace for the challenging time ahead and avoid further layoffs. He also strived to offer a positive outlook. “During this winter, we’ll see an explosion in innovation and utility across NFTs,” he said.

“It’s All F-in’ Over.” Or is it?

OpenSea’s layoffs are not the only signal that NFTs are embattled. While new artists still enter the space and artistic communities grow by the day, NFT collections once considered as firm blue-chip assets have been dropping sharply in value.

NFT collector Cozomo de’ Medici has tackled the downturn in a Twitter thread, comparing the situation the market has found itself in to the 90s comic book bubble that saw scores of rookies enter the space for a quick buck, only to find it collapse and comic book target crowd reduced to roughly the same number it was before the bubble came to be.

In a recent newsletter, though, Cozomo countered that grim comparison with a lighter note. “My hope is this bear market continues to phase out the cash grabs, the speculators,” he said, expressing hope that this was 1/1 crypto art’s chance to take center stage.

And it seems Cozomo isn’t the only one who sees a brighter future on the horizon. As soon as Devin Finzer posted the tweet about OpenSea’s layoffs, other NFT marketplaces and Web3 companies proceeded to share their recruitments in the replies, with LooksRare, OpenSea’s chief competitor, snatching the top spot.