Matter Labs, the company behind Ethereum scaling network ZKsync, announced on Tuesday that it laid off over 16% of its staff, in the latest contraction to shake up the crypto industry. 

Alex Gluchowski, the company’s co-founder and CEO, announced the move publicly, calling it “the hardest change” he’s had to implement in Matter's six-year history.

“Our market environment and business needs have changed significantly over the course of this year,” Gluchowski tweeted, explaining the decision. “We went through a large org planning exercise, and it became clear that the talent and roles we have today do not perfectly match our needs.”

Affected employees were already notified of their termination, which in no cases had to do with job performance, per the CEO. 

A Matter Labs spokesperson confirmed to Decrypt that the layoffs impacted 24 employees, putting the company’s total headcount at 126. Blockworks first reported the news.

The spokesperson declined to elaborate on which departments were impacted by the layoffs. Matter Labs is still hiring for engineering, business development, and operational roles that Gluchowski described as “critical.”

Former employees will also receive exit packages including three months of pay, four months of health care, full vesting of company shares through the effective termination date, and career support, according to Gluchowski.

Matter Labs framed the layoffs as a necessary step given changing demands from teams building on ZKsync, one of the myriad Ethereum scaling networks that have launched in recent years, aiming to entice users with cheap gas fees and speedy transaction times. 

In that crowded field of layer-2s and sidechain scaling networks, which includes heavy hitters like Coinbase’s Base, Polygon, Arbitrum, and Optimism, among many others, it appears Matter Labs is rethinking how to best position itself. 

In June, the company announced the Elastic Chain, a means to allow the growing number of teams building custom chains on top of ZKsync to move smoothly (interoperably) across them all.   

On Tuesday, Gluchowski emphasized that the launch of the Elastic Chain pushed Matter Labs to re-evaluate its overarching strategies, goals, and team composition. This indicates that the company may be moving away from marketing itself as a general purpose Ethereum scaler—and towards supporting more niche and case-specific uses—as a means to stay competitive.

Edited by Andrew Hayward

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