On Wednesday, the Algorand Foundation joined the ranks of cryptocurrency companies that cut staff, losing 25% of its fewer than 200 employees and citing “the uncertain global macro environment” and a broader cryptocurrency slowdown.
The cuts come as a wave of layoffs proliferates across the industry. In February, the Gemini Space Station (GEMI) said it would eliminate about 200 positions, about a quarter of its staff, a figure that had risen to 30% by mid-March. On Thursday, Crypto.com said it is cutting 12%, about 180 positions.
This is in addition to the 20 employees who were laid off at OP Labs, the company building Optimism layer 2 blockchain, earlier this month and the five full-time employees and three contractors laid off at PIP Labs, the team behind Story Protocol, 10% of its workforce. Messari, a crypto data provider that now bills itself as an AI-first company, announced its third round of layoffs since 2023 along with a CEO change, without giving a figure.
Official explanations varied. Algorand directly pointed to macroeconomic conditions and weak token prices, although many framed its cuts as a pivot toward greater use of AI in the workflow.
“AI is now too powerful not to use at Gemini,” the company said in its letter to shareholders. “Not using AI in Gemini will soon be the equivalent of showing up to work with a typewriter instead of a laptop.”
“We join the list of companies integrating AI across the enterprise,” a Crypto.com spokesperson told CoinDesk on Thursday, pointing to greater efficiency that requires fewer workers. X CEO Kris Marszalek said companies that don’t pivot toward integrating AI into their processes will fail.
Algorand’s cuts reportedly affected community management and business development functions, not positions obviously displaced by AI. To be fair, the company blamed the crypto environment in general. Its ALGO token recently traded around $0.09, down 98% from its 2019 peak. bitcoin the largest cryptocurrency by market capitalization, has lost 20% this quarter.
Industry consolidation
Industry observers pointed to broader consolidation dynamics. Entire crypto sectors, such as recovery, DePIN and layer 2, that were once full of talent, have contracted sharply, while M&A activity is increasing layoffs as acquisitions (employees acquired through the purchase of a company) displace legacy employees.
“I don’t see any real indication that these layoffs have anything to do with AI workforce replacement at scale,” said Dan Escow, founder of cryptocurrency recruiting agency Up Top. “Entire categories like renewal, DePIN and L2 that were once strong with talent are basically non-existent. Companies are forced to cut costs to buy time to figure out how to execute what comes next.”
The broader hiring picture supports that reading. New job openings on major crypto job boards were posted about 6.5 per day in January, around 80% less than the same period last year.
The companies mentioned in this article alone (excluding Messari, which did not disclose figures) have announced around 450 job cuts in a matter of weeks. This may be the tip of the iceberg, in crypto winter 2022, CoinDesk recorded more than 26,000 job losses throughout the year, a tally that took months to become evident.
