Staffing cuts at several companies in the business of facilitating the trading of decentralization assets preceded the recent sell-off of the digital asset. Today's news that Coinbase is cutting more than 1,000 staff supersedes the reductions at the other two websites. The retreat may feel surprising given the success of the exchanges.
How could a company that reported a lot of growth and profits last year be in a situation where they would need to cut staff? Other companies in the larger web3 space are under fire, including Block Fi, which recently cut staff.
The answer to the swap from rapid staffing to personnel cuts at exchanges is something that we can comprehend. As their revenues grew, costs scaled. As their top lines contract due to falling trading volumes, those costs have become a burden.
How things got so upside-down so quickly can be traced back to May data.
It was an excellent 2021, by the way. The company's net income rose from $322 million in 2020 to $3.62 billion last year. The company's growth and profitability made investors and potential employees want to work for it.
In its final earnings report of the year, the company said it had invested a lot to keep the revenue expansion going.
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