Wave of Layoffs and Collapses in Web3: Signals from a Deep Crisis

The Web3 sector has been going through a tough testing phase in recent months, not just due to falling prices but also a series of mass layoffs, sudden closures, and forced acquisitions. From Polygon to Farcaster, from DappRadar to Blocto, the same scenario repeats: companies once backed by giant venture funds and highly valued now find themselves in regulatory and financial chaos.

These phenomena are not just normal market corrections but reflect a deeper struggle between the ambitious narratives these projects were built on and the reality of their products and profitability. Every shutdown or layoff reveals structural weaknesses accumulated during the crazy growth phase: complete reliance on external liquidity, lack of clear revenue models, and a genuine lack of security awareness.

Wave of layoffs exposes the real economic cycle crisis

Layoffs are no longer just short-term cost-cutting measures but honest reflections of management re-evaluating future income expectations. When a company decides to cut its team by 25% or 50%, it’s effectively admitting that the marginal gains from expansion will not outweigh the new costs in the current market environment.

In early 2025, Berachain experienced a wave of layoffs reaching 25% of its workforce, followed by resignations from top management including the CFO and COO. Its stock plummeted over 60% just three months after listing, forcing it to adopt a radical austerity strategy. Eclipse Labs cut 65% of its staff in August, while Lido announced laying off 15% of its team due to budget pressures. Eigen Labs also reduced its staff by about 25%, shifting focus toward EigenCloud.

What makes this wave notable is that it exposes many projects’ failure to build an independent economic cycle. Most of these companies spent huge amounts on HR, marketing, and products but failed to turn these investments into real cash flows. The result: now that total liquidity has decreased, there’s only one option: shrink and wait.

Necessary strategic shift: from simple infrastructure to emerging fields

Instead of passive waiting, some strong projects have chosen bold strategic reorientation. This shift reflects a mature understanding that traditional growth plans are no longer feasible.

Polygon, a well-established Layer 2 platform, decided to pivot toward payments and stablecoins. In January, it acquired Coinme and Sequence, giving it organized money transfer capabilities and a simple payment platform free from complex bridges and gas fees. The clear goal: transform Polygon Labs from a purely technical platform into a profitable blockchain payments company.

Magic Eden, a leading NFT platform on Solana, ceased supporting EVM marketplaces and entirely shifted its focus to a new predictive market project called Dicey. This is not retreat but strategic evolution: recognizing that the NFT market has reached its ceiling and seeking new asset classes with higher growth potential.

Another notable phenomenon: Bitcoin mining companies migrating toward AI data centers. Bitfarms, formerly a Bitcoin mining firm, announced in November 2025 plans to gradually shut down mining operations and repurpose its facilities for high-performance computing and AI infrastructure. It even rebranded entirely as Keel Infrastructure, trying to break the psychological link with Bitcoin. Cipher Mining followed suit: rebranded as Cipher Digital and sold its mining stakes to Canaan for about $40 million, focusing entirely on next-generation computing.

These shifts point to one crucial truth: successful Web3 projects are those with enough flexibility to reinvent themselves as market dynamics change.

Forced acquisitions: the end of the independence era

Not every project can wait or reorient. Many have chosen the easier route: selling out.

Farcaster, a decentralized social communication protocol backed by massive funding and high expectations, announced in mid-January that Neynar had acquired it entirely. The move was surprising, especially since founder Dan Romero had just a month earlier announced a major strategic shift, abandoning the “social communication focus” that had lasted over four years, moving instead toward a wallet-based model. Neynar’s acquisition simply indicates that the new approach failed completely. Farcaster returned all $180 million of investor capital.

Lens Protocol faced a similar fate. The decentralized social network protocol, once highly regarded, saw rapidly declining user activity. It announced that Mask Network now manages the protocol, with the original team moving to a purely advisory role, refocusing on their core area: DeFi.

Ready Player Me, an avatar NFT platform, received $56 million from a16z, but the NFT market collapse caused a dramatic drop in its user base. Its X account posted only five tweets over the entire past year. The end: sold to Netflix, with the team leaving with their heads held high financially.

These acquisitions are not successes but admissions of failure to build sustainable independent projects. However, they are also less painful than other options.

Hacks and thefts: the price of lax security

While some struggle with weak revenues, others face a more existential threat: hacks and breaches.

In mid-February, IoTeX’s multi-chain bridge was hacked, leaking private keys of validators and losing $4.4 million. IoTeX had enough resources to fully compensate victims, but most smaller projects lack this capacity.

Step Finance, a DeFi protocol on Solana, was hacked for $40 million from its treasury due to an exploit of admin devices. The team explored funding and acquisition options but found no viable solution. The result: immediate suspension of all operations.

TrueBit, a protocol for scaling blockchain computations, was attacked in January via an integer overflow vulnerability in its smart contract. The attacker exploited the price calculation function to create large amounts of TRU tokens at nearly zero cost, then drained the treasury. Losses: $26.4 million, with the token price collapsing to zero. The official TrueBit account has not been updated since the responsibility was announced in January.

These incidents reveal an uncomfortable truth: while projects race toward innovation and growth, they often neglect security standards and audits. Every theft adds another layer of distrust in the ecosystem.

Silent closures: the dishonorable end

Worse than layoffs and thefts is the quiet disappearance. Projects that invested millions and human resources ultimately announce shutdowns.

DappRadar, founded in 2018 and once the most popular decentralized app store in the industry, raised over $7 million. It launched a token in 2021 to address income issues, but without real support, its price kept collapsing. Finally, it shut down.

ZeroLend, a cross-chain lending protocol, closed operations in February 2025 after just three years: the supported chains became inactive, infrastructure declined, and hackers and scammers attracted it. A full cycle of losses with no rescue.

Blocto, a multi-chain smart wallet, announced closure in December 2025 after losing over $5.5 million to sustain community services. The team tried to contact Flow/Dapper leadership for months but received no serious response. Operating funds exhausted, the door closed permanently.

These closures are not just product or marketing failures but a failure to build a sustainable economic logic from the start.

Summary: from winter to rebuilding

In the early days of Web3, the narrative was much stronger than the product. An ambitious vision and seemingly revolutionary mechanisms were enough to attract capital. But as liquidity returns to rationality, investors and users realize that the true risk-to-reward ratio needs re-evaluation.

Projects with a clear cash flow logic, genuine user needs, reliable technical engineering, and strong compliance capabilities will survive. Layoffs, acquisitions, thefts, and closures are not the end but a natural stage of maturation.

All technological revolutions have gone through this: capitalism’s hype, expansion, sharp correction, and rebuilding trust. Web3 is no exception. As regulatory frameworks gradually clarify and infrastructure improves, the remaining teams will emerge from this winter with a deeper awareness of risks and a stronger, more practical model. With increasing support from AI capabilities, the crypto ecosystem in the next cycle may be more resilient and predictable than ever before.