The Algorand Foundation on Wednesday joined the ranks of cryptocurrency companies cutting jobs, laying off 25% of its workforce of less than 200 employees, citing “uncertain global macro conditions” and the broader cryptocurrency downturn.
The layoffs come amid a wave of layoffs across the industry. In February this year, Gemini Space Station (GEMI) said it would cut about 200 positions, accounting for about a quarter of its total workforce. By mid-March, this number had increased to 30%. On Thursday, Crypto.com said it would lay off 12% of its workforce, or about 180 positions.
In addition to this, earlier this month, OP Labs (the company that built the layer 2 blockchain Optimism) laid off 20 employees, and PIP Labs (the team behind Story Protocol) laid off 5 full-time employees and 3 contractors, accounting for 10% of its total staff. Messari, an encrypted data provider that now calls itself an artificial intelligence-first company, announced its third round of layoffs since 2023 and a change of CEO, without disclosing specific numbers.
Official explanations vary. Algorand takes aim at the macro environment and weak token prices, though many see its cuts as a pivot toward greater use of artificial intelligence in workflows.
“AI is now too powerful not to use it at Gemini,” the company said in a letter to shareholders. “Not using AI at Gemini will soon be the equivalent of working with a typewriter instead of a laptop.”
“We are joining the ranks of companies integrating enterprise-wide AI,” a Crypto.com spokesperson told CoinDesk on Thursday, noting that increased efficiency would require fewer workers. Kris Marszalek, CEO of X, said companies that don’t integrate artificial intelligence into their processes will fail.
Algorand’s layoffs reportedly involve community management and business development positions, rather than roles that are clearly being replaced by artificial intelligence. To be fair, the company blames this on the broader crypto environment. The ALGO token recently traded at around $0.09, down 98% from its 2019 peak. Bitcoin The largest cryptocurrency by market capitalization is down 20% this quarter.
Industry consolidation
Industry observers point to broader consolidation dynamics. Across the crypto industry, once-talent-rich industries such as Re-Staking, DePIN, and Layer 2, have shrunk significantly, while M&A activity has exacerbated layoffs as acquired employees (employees acquired through acquired companies) replace existing employees.
“I’ve seen no real indication that these layoffs have anything to do with mass replacement of the AI workforce,” said Dan Escow, founder of cryptocurrency recruiting agency Up Top. “Whole categories that once had strong talent like Re-Stake, DePIN, and L2 are now essentially non-existent. Companies are being forced into cost-cutting mode to buy time to figure out how to execute whatever comes next.”
The broader hiring picture also supports this interpretation. In January, the number of new job postings on major cryptocurrency job sites was approximately 6.5 per day, down approximately 80% from the same period last year.
The companies mentioned in this article alone (excluding Messari, which did not disclose specific figures) announced about 450 layoffs in a matter of weeks. This may just be the tip of the iceberg. During the crypto winter of 2022, CoinDesk tracked more than 26,000 job losses during the year, a number that took several months to become apparent.