Octopus Network Refactors Amid Crypto Winter: Layoffs and Strategy Shift Explained

The crypto winter is biting hard, and even established projects are feeling the chill. Octopus Network, a prominent decentralized app chain network built on the NEAR Protocol, has recently announced a significant “refactoring” of its operations to weather the ongoing market downturn. This move includes a painful but necessary reduction in workforce, highlighting the harsh realities of the current crypto climate.

What’s Happening at Octopus Network?

In a bid to ensure its long-term survival, Octopus Network is taking decisive steps to adapt to the prolonged bear market. Here’s a breakdown of the key changes:

• Significant Layoffs: Approximately 40% of the Octopus Network team, equating to 12 out of 30 employees, will be laid off. This is a substantial cut, reflecting the severity of the situation.
• Salary Reductions: Remaining employees will face a 20% pay cut. This measure is aimed at reducing operational costs and preserving capital.
• Token Incentive Suspension: The team token incentive program is being suspended indefinitely. This suggests a focus on immediate survival rather than long-term incentives during this period of uncertainty.

These changes are not taken lightly. Louis Liu, the founder of Octopus Network, acknowledged the difficulty of the situation, stating that this crypto winter feels distinctly different from previous ones. He anticipates the downturn to last for at least another year, if not longer, and expressed concern about the survival of many Web3 startups.

Why “This” Crypto Winter Feels Different?

Veteran crypto enthusiasts have seen market cycles before. However, the current downturn carries unique characteristics that are making it particularly challenging:

• Prolonged Duration: Unlike previous, sharper but shorter crypto winters, this one is dragging on, creating sustained pressure on projects.
• Macroeconomic Factors: Global economic uncertainty, inflation, and rising interest rates are impacting all markets, including crypto, adding external pressure.
• Fallout from Major Events: The collapse of FTX and other industry giants has shaken investor confidence and created a contagion effect across the crypto space.
• Web3 Startup Vulnerability: Many Web3 startups, often reliant on token appreciation and fundraising, are particularly vulnerable in a prolonged bear market where both are scarce.

Octopus Network’s Survival Strategy: Condensing and Focusing

To navigate these turbulent times, Octopus Network is not just cutting costs but also strategically refocussing its operations. The core elements of their survival strategy include:

• Condensed Operations: Streamlining operations to focus on essential activities and reduce unnecessary expenditures.
• NEAR and IBC Focus: Centering development efforts around NEAR Protocol and Inter-Blockchain Communication (IBC). This suggests a commitment to their foundational technologies and interoperability.
• Strategic Realignment: Adapting their overall strategy to the new market realities, prioritizing sustainability and core development.

Octopus Network Not Alone: Crypto Layoffs are Widespread

Octopus Network’s situation is not isolated. Numerous companies in the cryptocurrency and Web3 space have been forced to make similar tough decisions in recent months. Let’s look at a couple of examples:

Bybit: Second Round of Layoffs

Cryptocurrency exchange Bybit, which experienced rapid growth in recent years, announced a second round of layoffs in December. This came after a period of significant expansion, where their employee base grew from a few hundred to over 2,000 in just two years. The need for further layoffs indicates the depth of the market correction.

Swyftx: Australian Exchange Cuts Deep

Australian cryptocurrency exchange Swyftx also laid off a substantial portion of its workforce in December, cutting 35% of its employees, totaling 90 individuals. CEO Alex Harper emphasized that despite no direct exposure to the FTX collapse, Swyftx was “not immune” to the broader market fallout. This highlights the systemic impact of major industry events.

The Future of Crypto Workforce: More Challenges Ahead?

The actions taken by Octopus Network, Bybit, Swyftx, and others paint a clear picture: the crypto industry is undergoing a significant contraction. If market conditions continue to worsen or remain stagnant, it’s highly likely that more companies will be forced to implement further cost-cutting measures, potentially including additional rounds of layoffs.

For those working in the Web3 space, this period demands resilience, adaptability, and a realistic outlook. While the long-term potential of blockchain technology remains strong, the immediate future presents significant challenges. Companies that can strategically adapt, like Octopus Network is attempting to do, will be best positioned to survive and thrive when the market eventually recovers. The current crypto winter serves as a stark reminder of the cyclical nature of markets and the importance of sustainable business models in the volatile world of cryptocurrency.