A blockchain startup that raised operational funds in Ethereum has come in the middle of what is known as the “crypto winter.”
Status, as the project is called, recently announced that it has laid off 25% of its workforce citing economic scarcity. In a recently published blog post, the startup blamed this year’s extended bearish correction in the crypto market for their decision. It explained that over 1/3 of their total raised funds were in ether tokens, the Ethereum project’s native token, whose value plunged by over 80% since its all-time high.
Status, at the time of its ICO, had raised a whopping $100 million in cryptocurrencies to create an open-source, Ethereum-based messaging platform and mobile browser. The startup was able to convert some part of its funds to fiat to take care of its operational costs, but the remaining crypto balance got stuck in 2018’s bear cycle. It could have cost a minimum $2.64 million worth of losses, according to a general guesstimate.
Jarrad Hope, the co-founder of Status, said that his firm is unsure about when the market will recover, stating that the currency bear sentiment has stayed the longest compared to the previous ones.
“So, we are going to stretch our fiat as it stands today to provide six months of security over our operating costs. To do that we have to strip down the organization. Currently, 25% of our roles are non-essential to those goals and our long-term growth projects, and regretfully we’re forced to ask the contributors occupying them to leave today.”
The remaining workforce in Status, meanwhile, would face cuts in their wages unless the crypto market recovers.
Divan, one of the alleged contributors to Status’ core development, confirmed receiving a layoff mail from the company.
“How can you build community, if you throw out core contributors with words “we don’t need you?”,” he said in response to Hope’s notice.
The plunge in the cryptocurrency market has been weighing on other blockchain projects as well. ETCDEV, the development team behind the Ethereum Classic project, shut down their entire operations owing to economic scarcity. Joseph Lubin’s Consensys, one of the world’s leading crypto development startups, also reduced its workforce by 13% in what they called a “reorganization.”
“We are a part of this trend,” Igor Artamonov, founder of ETCDEV, said.
“There are a few things that happened at the same time. I am sure if that happened a year ago, that wouldn’t be a problem at all, a year ago there was a lot of free money in the market. But in a bear market there’s a change.”
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Last modified: May 20, 2020 1:58 PM UTC