A co-founder of Ethereum layer two solution Polygon Labs has announced that the company will lay off 20% of its staff to “unify the company.”
According to Sandeep Nailwal, the firm will reduce its headcount by roughly 100 people to consolidate its employee base in line with a long-term strategy.
Polygon Says Crypto Winter Not the Cause For Layoffs
A blog post says the layoffs are the next consolidation stage after the firm brought several business units under Polygon Labs rather than the result of the crypto winter that saw several firms downsize in recent months.
“Our colleagues are our friends and comrades, and there is no doubt that we all share pride in our collective accomplishments to date,” the blog post reads.
While no mention was made of a job placement program, affected employees will receive three months of severance pay, irrespective of their previous roles. Polygon is financially secure, according to the post, with about $250 million and 1.9 billion MATIC in its treasury. MATIC is the native token of the Polygon network, used to pay transaction fees, and govern and secure the network.
Naiwal, Jaynti Kanani, and Anurang Arjun founded the Polygon blockchain to operate as an Ethereum sidechain after noticing congestion problems on Ethereum when collectors of the CryptoKitties NFT collection flooded the network with transactions, resulting in disruptions and high gas fees. A sidechain operates parallel to a main chain to enhance the latter’s transaction processing speed and efficiency.
The trio landed several notable wins, establishing Polygon as the NFT platform for several corporates, including Starbucks, Reddit, and Adidas. Luxury fashion brand Dolce & Gabbana partnered with Polygon marketplace UNXD last year to provide holders of a DGFamily Box NFT access to D&G’s other products.
Social media commentary on the layoffs was mixed, with some criticizing the project for poor business fundamentals and others seeking clarity on the management of capital.
Several users questioned how the firm used $200 million from its last fundraise about a year ago. Polygon raised $450 million from venture capitalists Tiger Global, Seven Seven Six, and Dragonfly Capital through a private token sale.
Others called hiring and firing within one year a “stupid move,” and questioned why lowering executive pay wasn’t also considered.
One employee affected by the layoffs said that he has no bad blood and believes in the future of Polygon.
Nailwal said after last year’s funding round zero-knowledge rollups will be the “endgame” for scaling solutions like Polygon. The firm has since invested in zk technology with Polygon Hermez, a privacy-focused rollup, and Polygon Zero.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.