Polkadot's Major Layoffs: The Company Continues to Spend Like It's a Bull Market, Management Salaries Are Too High, and It Is Forced to "Decentralize Governance"

Original Title: Polkadot workers endured 'Hunger Games' retreat after getting news of mass layoffs, employees say

Original Authors: Tim Craig, Inbar Preiss, DLNews

Translation: Hailsman, ChainCatcher

A week before Parity Technologies (the Polkadot ecosystem development organization) was set to hold its annual retreat in Mallorca, Spain, its 385 employees received some shocking news: the company would be laying off most of its staff.

However, several employees told DL News that, due to pre-booked flights, the soon-to-be-laid-off employees would still attend the five-day retreat at the Iberostar Playa de Muro resort from October 9 to 13. A representative from Parity told DL News that the company chose to continue with the event after announcing the layoffs.

What was originally planned as a fun week, including talks, workshops, and parties, turned into discussions about Parity's dissolution, who would survive the cuts, and what would happen next.

"It felt like a surreal, nauseating joke," said a Parity employee who attended the retreat in a short message, "a bit like the Hunger Games."

Internal Conflict

Parity Technologies is a blockchain infrastructure company responsible for developing the Polkadot blockchain.

According to several current and former employees, Polkadot and Parity are now embroiled in internal conflict as funding dwindles and employees criticize executives for paying themselves hefty salaries.

Eric Wang, former head of strategic growth projects at Parity, left the company in January and told DL News: "The executives are well-compensated, but they haven't delivered much in terms of actual results." "The parity has been broken."

The situation has dramatically shifted for one of the most touted projects in the DeFi space.

Polkadot launched in 2020 with a strong pedigree and vast potential. Ethereum co-founder Gavin Wood founded Polkadot to address the limitations of the blockchain he helped create, such as scalability issues.

In the following three years, talented developers and DeFi enthusiasts flocked to Polkadot, which reached a peak market cap of around $54 billion in November 2021, becoming a perennial top 10 company in the cryptocurrency space.

"A Challenging Step"

In response to DL News' request for comment, Parity did not deny or confirm the layoffs and did not address the issue of executive compensation.

Parity stated that it looks forward to "continuous emergence" of participants in its network and further adoption of the Polkadot blockchain. A spokesperson said, the company is committed to decentralizing the development of Polkadot and described the situation as "a challenging step" for the company.

In an email statement to DL News, a Parity spokesperson said: "We are grateful to our team members who have played a crucial role in our achievements today." "While this is a challenging step for Parity, it is a necessary step for Polkadot."

Given Parity's commitment to expanding Polkadot's user base, employees were caught off guard by the layoffs and requested anonymity to protect themselves during this sensitive time.

Employees stated that only the company's core engineering, developer relations, ecosystem operations, and Asia teams were not laid off.

Retreat in Spain

These issues were supposed to be addressed at the retreat in Spain. However, team members found it difficult to set aside the pressure of impending layoffs.

One employee attending the meeting said: "It seemed like they had a voice in the decentralization plan." "Some people even cried while giving speeches on stage. Many left early."

According to multiple employees who attended the retreat, Wood did not attend, which left many feeling angry and confused. Employees reported that the founder of Polkadot and Parity was also absent from an all-hands meeting when employees were informed about the upcoming layoffs.

Employees interviewed by DL News expressed their belief that the decision was made by Wood.

One employee said: "Many employees feel he hasn't clarified his priorities or assisted in promoting Polkadot."

Wood did not respond to DL News' request for comment.

Falling Behind Competitors

Employees also noted that Parity's Chief Financial Officer Fahmi Syed left the company the day before the layoffs were announced. Syed's LinkedIn profile indicates he still holds the position of CFO at the company.

Fahmi Syed declined to comment on DL News' request.

Wood established Parity Technologies to help commercialize the Polkadot network. It plays a similar role to the commercial entity IOHK, which is developing the Cardano blockchain.

However, Polkadot has fallen behind its competitors. While Ethereum rose by 32%, Polkadot's DOT cryptocurrency has dropped by about 18% this year.

Polkadot's DOT token plummeted during the bear market over the past 12 months.

Part of Parity's funding comes from the Web3 Foundation, another organization established by Wood. According to a Parity employee, the Web3 Foundation also announced layoffs affecting about 40% of its staff.

According to the job site SignalHire, the group is headquartered in Zug, Switzerland, and has between 100 and 200 employees.

"The Company Spends Money Like It's Still a Bull Market"

On October 10, Parity posted on its official X account stating that it is "cancelling its listing function" to decentralize the development of the Polkadot ecosystem.

Parity has not publicly acknowledged the layoffs, but shortly after the X post was published, an employee from Parity's press office told DL News that the company would "experience personnel changes in the coming months."

According to Parity employees, the company is laying off staff due to running out of cash. They stated that Parity had been aggressively hiring over the past 12 months, leading to its financial troubles.

One employee remarked that the company's leadership should have managed costs better during the bear market. "The company spends money like it's still a bull market," the employee said.

Others attributed the layoffs to excessive salaries paid to executives, stating that executives often receive over $1 million in cash.

One employee recounted: "At one point, a vice president in charge of digital marketing accidentally emailed his salary to the entire company, showing his income was around $700,000."

On-site, employees are concerned about what will happen to the Polkadot ecosystem, with some having worked in this ecosystem for seven years.

Some expressed that their biggest worry is that talent will leave the Polkadot ecosystem without Parity as a guiding force.

"Decentralization sounds great, but without a unified strategy or anyone in charge, no one knows what will happen," the employee stated.

On the other hand, this employee also believes that the layoffs could be positive in the long run. "Getting rid of all these employees and decentralizing can only be a good thing because the barriers to entry are set very low," he said.

Others involved in the Polkadot ecosystem seem to have completely withdrawn. According to the same individual, the Web3 Foundation was supposed to attend the Parity retreat but canceled their flights after the layoffs. "No one attended," the employee said.

And there is currently no timeline for the layoffs, leaving Parity employees in a state of uncertainty. Most importantly, employees still cannot explain the poor timing of Parity's mass layoffs.

"Why fire everyone before the retreat?" one employee said. "It's just a dumpster fire."