A digital art auction house that had gained popularity as cryptocurrency prices soared is cutting 20% of its staff as confidence in the market plummets.
OpenSea has led the trade in so-called “non-fungible tokens,” or NFTs, digital collectibles that have been gobbled up by cryptocurrency enthusiasts to the tune of billions of pounds.
NFT sales soared to $25 billion last year, according to a Knight Frank Wealth Report, accounting for nearly a third of the global art market.
But token trading has grown from around $100 million a day at the start of the year to around $30-40 million a day. This accompanied a rout in the price of Bitcoin and other cryptocurrencies.
Devin Finzer, chief executive of OpenSea, said the company is bracing for a “prolonged downturn” in cryptocurrency.
“The changes we are making today put us in a position to maintain several years of trail in various winter crypto scenarios (five years at current volume),” he said.
Mr Finzer said OpenSea would lay off a fifth of its staff. Departing staff members would have the shares they needed to obtain in the company advanced to them. OpenSea said there would be around 230 people after the cuts, suggesting around 50 had been made redundant.
NFTs are a kind of unique online token designed to be impossible to counterfeit. The technology means that a cryptocurrency enthusiast can claim to be the owner of a rare virtual trading card or an original piece of digital art.
Artists such as the Estate of Andy Warhol have ‘minted’ their own NFTs and Premier League football clubs have launched digital collections of player trading cards. Fashion companies have also entered the market, with Adidas collaborating with leading NFT designers Bored Ape Yacht Club last year.
OpenSea operates a marketplace for these tokens, leveraging sales made in cryptocurrency. In December alone, it processed around $3.3 billion in NFT sales, making around $82 million in revenue for itself.
Earlier this year, the company was valued at $13.3 billion in a $300 million funding round.
The cuts at OpenSea follow massive layoffs in the cryptocurrency space. Coinbase, the first mainstream cryptocurrency exchange, cut 1,100 employees in June while dozens of other digital coin companies were forced to scale back their ambitions.
The clamor around NFTs has seen traditional auctioneers follow tech start-ups and start selling digital tokens. Both Sotheby’s and Christie’s have held NFT art auctions.
Sotheby’s launched its own NFT website, called Sotheby’s Metaverse, which included auctions of collectible artwork featuring Liverpool FC players. It is currently hosting a sale of digital art by Japanese artist Tomokazu Matsuyama.
Across the market as a whole, NFT sales totaled just over $1 billion in June, according to cryptocurrency firm Chainalysis, from a peak of $12.6 billion. The price of Ethereum, the cryptocurrency typically used to fuel NFT sales, has plunged 63% so far this year.