Magic Eden, the largest nonfungible token marketplace for the Solana blockchain by market share, announced late Monday that it will be laying off 22 employees, or approximately 15% of its staff, as part of a “company-wide restructuring.”
Jack Lu, co-founder and chief executive of Magic Eden, said in a letter posted online that the company was restructuring because the business had “grown significantly and the nature of our challenges has evolved” since the company’s launch 15 months ago.
“Our focus areas for 2023 include growing traction across chains, developing services for NFT creators, and exploring new use cases like rewards and social experiences,” Lu said. “As we established these priorities for the year, we had to take a hard look at what structure and roles are needed.”
Nonfungible tokens are a type of crypto asset that represents the ownership of digital items such as artwork, music or items in video games. They are built on blockchains such as Ethereum and Solana, which are used to show the transaction history of the item’s ownership. An NFT can be bought, sold and traded on marketplaces such as Magic Eden, allowing NFT holders to exchange ownership for cryptocurrencies giving them a monetary value.
Although the NFT market was extremely buzzy in late 2021, cryptocurrency values, and similarly NFT markets, crashed during what was called “crypto winter” in 2022. According to a report from Reuters, the third quarter of 2022 saw $3.4 billion in NFT sales, a fall from $8.4 billion in the previous quarter. These numbers had been a significant pullback from sky-high sales the previous year. Although NFT sales volumes are recovering once again, this volatility has been causing issues across the industry.
Solana’s SOL token also suffered a significant market value decline during 2022, falling from $93 in January 2022 to $23 in January 2023. This has affected the market value of Solana-based NFTs, which are primarily bought and sold on Magic Eden’s market.
The marketplace doesn’t trade exclusively in Solana NFTs, and integrated both Ethereum and Polygon blockchain support in November to compete with larger NFT marketplaces such as OpenSea.
In spite of the layoffs, Lu said that the company “remains strongly capitalized with a long runway even in today’s bear market.”
“Many of our products are entering new stages of growth and we will make it our utmost priority to support these products with the strongest teams,” he added.
Magic Eden isn’t the only NFT marketplace to announce layoffs in recent months as crypto prices have fallen. Last month, NFT marketplace SuperRare laid off 30% of its staff and Dapper Labs, the developer of CryptoKitties and the NFT marketplace NBA Top Shot, cut 22% off its staff in November. OpenSea, the largest NFT marketplace by volume, cut 20% of its staff in July.