Dapper Labs lays off 22% of staff as NFT market falls
Roham Gharegozlou, founder and CEO of Dapper Labs Inc., the developer of CryptoKitties and the non-fungible token market NBA Top Shot, announced late Wednesday that the company is laying off 22% of its employees in the wake of the falling NFT market.
“These reductions are the last thing we want to do, but they are necessary for the long-term health of our business and community,” Gharegozlou said. “We know that Web3 and crypto are the future across a range of industries – – with 1,000 times the potential from here in terms of mainstream adoption and impact ––– but today’s macroeconomic environment means we don’t have full control over the timing.”
Dapper Labs is known for a number of extremely popular products, including CryptoKitties, an Ethereum-based blockchain game that allows players to buy, collect, breed, and sell virtual cats that are NFTs. These cryptoassets are unique and controlled by the user and as a result maintain value, which can be bought and sold for other cryptocurrencies and exchanged for money.
The company also developed NBA Top Shot, which is an NFT marketplace for collectible basketball video clips “moments stored on the Flow blockchain, which was also developed by Dapper Labs.
Although the NFT markets soared in late 2021, cryptocurrency markets, and subsequently NFTs, crashed during what was dubbed “crypto winter” in recent months. According to a report from Reuters, the third quarter of 2022 saw $3.4 billion in NFT sales, down from $8.4 billion in the previous quarter, which is even further down from the $12.5 billion at the market’s peak in the first quarter of the year.
This dramatic reduction in the NFT market affected NBA Top Shots’ sales volume in October, according to analytics site CryptoSlam. The marketplace generated nearly $2.6 million in secondary sales in October, which was significantly down from the $40.8 million earned at the same time last year. During the peak months of the NFT craze, the marketplace generated $224 million in sales in February 2021.
In the announcement, Gharegozlou said the company “took a very deliberate approach by looking at our business today” in light of the bear market and assessing the team and determining the market strategy going forward. Although he didn’t mention any details about exactly what that strategy would be.
“Across Dapper Labs, we’re doubling down on what will move the needle and get the entire industry to its next inflection point – and pulling back on anything that doesn’t fit that focus,” Gharegozlou said.
As for the team members affected by the layoffs, they will be compensated while they seek new opportunities. The package includes three months’ severance pay, six months of continued health benefits, career coaching and alumni support.
“To support departing team members, we’ve worked to create a benefits package so you can receive compensation, health and other benefits from Dapper Labs while you seek your next opportunity,” Gharegozlou said.
These layoffs follow a number of different crypto industry companies downsizing in recent months, including Coinbase Inc. cutting staff by 18% in June, cryptocurrency exchange Crypto.com cutting staff by more than 30% and Bitmex planning to cut 30% of its workers this. month. Galaxy Digital, a crypto financial services firm, is exploring a 20% cut in its staff, with the market downturn.
