Web3 Winter Mass Exodus: Resignations, Closures, Transformations, and Acquisitions

Author: Gu Yu, ChainCatcher

In the recent year of the crypto winter, one Web3 startup after another has withered like fallen leaves. The exuberance of the previous bull market has dissipated, replaced by broken funding chains, rampant hacking, and strategic disorientation. Many companies that once shone with top-tier teams and prestigious VC endorsements are now struggling to survive in the cold wind: some are hastily pivoting, some are selling themselves at low prices, some are shutting down quietly, and others are facing devastating thefts.

Layoffs and waves of resignations have followed, with many senior figures such as Tom Howard, Strategic Director of CoinList, Abdul Rehman, Head of Monad DeFi, Benjamin Speckien, Head of Security at Celo, and Aleksander Leonard Larsen, COO of Axie Infinity, leaving their companies.

This is not just a financial crisis; it is a brutal reflection of the industry's reshuffling. Essentially, these phenomena stem from the profound collision between technology and capital, products and markets, vision and reality within the Web3 ecosystem. Each story reflects the confusion and unwillingness of market participants.

Layoffs

Layoffs are a common strategy for crypto projects in a bear market. By cutting non-essential positions in marketing, technology, and other areas, projects can significantly reduce labor costs and improve operational efficiency, thereby ensuring a longer survival period and preparing for the next bull market.

In early February, the well-known cryptocurrency exchange Berachain announced a 25% layoff (up to 200 people) and closed its exchange operations in the UK, EU, and Australia. Two weeks later, its COO Marshall Beard, CFO Dan Chen, and Chief Legal Officer Tyler Meade, among other senior management, left the company, with their original responsibilities taken over by other team members.

This came just three months after its IPO, during which its stock price had already fallen by over 60%. The dismal market conditions and revenue situation forced it to adopt an aggressive business contraction strategy.

In early January, the Berachain Foundation also announced it had laid off most of its retail marketing team, and Chief Developer Alberto would also be leaving. The project acknowledged that during 2024/2025, a retail-first strategy would be far less effective across the entire cryptocurrency sector.

In August 2025, modular rollups infrastructure developer Eclipse Labs announced a team adjustment with a layoff rate of 65%. In the same month, Lido announced a 15% layoff due to cost pressures, and the founder of Sandbox announced his resignation and a 50% layoff, shifting focus from the metaverse to Web3 applications and Launchpad plans. In July 2025, Eigen Labs announced a layoff of about 25%, shifting its business focus to EigenCloud.

On the surface, layoffs are a cost control measure, but at a deeper level, they signify a reassessment of future revenue expectations. When management chooses to reduce team size, they are essentially judging that the returns from marginal expansion can no longer cover the additional costs in the current market environment.

This also means that Web3 startups are beginning to shift from "growth-first" to "survival-first." Efficiency issues that were masked during the bull market are magnified in the bear market. Whether the organizational structure is redundant, whether market deployment is efficient, and whether product iterations truly correspond to user needs will all be exposed under cash flow pressure.

Transformation

If layoffs are a form of passive contraction, then transformation is an active adjustment. Even projects with sufficient financial backing need to carefully consider whether their established strategic direction aligns with current market trends and user needs.

Many projects built their growth logic during the last cycle on the premise of abundant liquidity and high risk appetite. When these premises disappear, the narrative becomes difficult to sustain. Thus, we see many projects extending from purely on-chain infrastructure to areas like payments, AI, and RWA.

Polygon is a typical representative. As an established Layer 2 project, Polygon has maintained a leading position in both technology and market, but due to the increasing neglect of the Layer 2 track and difficulty competing with non-EVM public chains like Solana and Aptos, it decided to pivot to the stablecoin sector in January this year, with the first step being to acquire capabilities and resources related to payments.

In early January, Polygon Labs announced the acquisition of Coinme and Sequence to enhance the core infrastructure for regulated stablecoin payments and fund flows. Coinme provides a regulated fiat on-ramp and off-ramp in the U.S., connecting cash, debit cards, and digital assets under the existing regulatory framework, while Sequence abstracts operations like bridging, trading, and gas for end users.

Polygon stated that these acquisitions together form the foundation of an open financial stack aimed at achieving regulated stablecoin payments and fund flows, operating on Polygon's blockchain. Polygon Labs will become a profitable blockchain payment company.

Last month, the Solana ecosystem NFT marketplace Maagic Eden announced it would gradually cease support for EVM and Bitcoin Runes and Ordinals markets, redirecting its main resources to its newly launched prediction market project Dicey.

The collective transformation of Bitcoin mining companies has also become a typical case. In November 2025, Bitfarms announced it would shut down its Bitcoin mining operations over the next two years and transform its facilities into AI and high-performance data centers. Recently, Bitfarms also announced its name change to Keel Infrastructure, completely severing its association with "Bitcoin."

[Cipher Mining](https://www.rootdata.com/zh/Projects/detail/Cipher Mining?k=MzU0NA== "Bitcoin mining company (NASDAQ:CIFR)") announced in February its name change to Cipher Digital and sold its mining site shares to Canaan Creative for about $40 million, focusing on becoming a leading developer and operator of next-generation computing data centers.

Selling Out

Even projects with substantial financial backing have had to make the decision to sell out due to slow product progress and lack of confidence. A typical case is the decentralized social protocol Farcaster.

In mid-January, the decentralized social protocol Farcaster announced its acquisition by Neynar, transferring ownership of the protocol contracts, codebase, applications, and Clanker to Neynar, which will be responsible for subsequent operations and maintenance. At the same time, the project team returned the full $180 million in funding to investors.

Just a month prior, Farcaster co-founder Dan Romero had announced a major strategic adjustment, abandoning the "social-first" approach to finding product-market fit pursued over the past four years, and shifting to a wallet-centric growth model. However, this acquisition signifies that Farcaster's exploration in the wallet sector did not meet the team's expectations.

Another decentralized social protocol, [Lens Protocol](https://www.rootdata.com/zh/Projects/detail/Lens Protocol?k=MjA3Nw== "Web3's social layer"), is facing a similar situation. Due to a continuous decline in user activity, the original Lens team announced that the protocol has been taken over by Mask Network, with the original team transitioning to technical advisors, returning to innovate in their area of expertise in DeFi.

The cross-game avatar NFT platform [Ready Player Me](https://www.rootdata.com/zh/Projects/detail/Ready Player Me?k=NDk4NQ== "Avatar NFT platform") was previously favored by the industry with a $56 million funding round led by a16z, but due to the declining NFT sector and a significant drop in user numbers, its X account has only posted 5 tweets in the past year. At the end of last year, Ready Player Me was sold to streaming giant Netflix, allowing team members to exit successfully.

Theft

Theft has become the fate of many high TVL protocols, as hackers view them as serious "targets," with large amounts of funds being stolen almost weekly, leading to significant losses for the protocols themselves or deposit users, exacerbating market and user distrust.

In mid-February, the well-known DePin infrastructure IoTeX suffered a hacker attack on its cross-chain bridge, where the leak of the validator owner's private key allowed unauthorized control of the bridging contract, resulting in a loss of $4.4 million. Subsequently, IoTeX announced a 100% compensation for users affected by the hacking incident, which had almost no impact on project operations. However, for many small and medium-sized projects, a hacker attack can be catastrophic.

In early February this year, the Solana-based DeFi protocol [Step Finance](https://www.rootdata.com/zh/Projects/detail/Step Finance?k=ODk2 "Solana front-end portal") had approximately $40 million stolen from its treasury due to a breach of its executives' devices. The team explored various possibilities, including financing and acquisition, but failed to find a viable solution, leading to the difficult decision to immediately cease all operations.

In early January, the blockchain computing scaling protocol TrueBit was attacked due to an integer overflow vulnerability in its smart contract. The attacker triggered an overflow error in the token purchase price calculation function through carefully crafted input parameters, allowing them to mint a large number of protocol tokens TRU at a very low or even zero cost, and then immediately destroyed these tokens to extract a large amount of ETH from the pool, ultimately profiting $26.4 million, while the price of its TRU token dropped to zero. After issuing a responsibility announcement in January, TrueBit's official X account has not been updated since.

Shutdown

Compared to layoffs and transformations, many projects quietly fall during a long struggle. They invest significant funds and manpower in product development, market operations, and listing processes, but both funds and patience are exhausted in a series of marketing events with little impact and new products that users are indifferent to, ultimately leading to the announcement of operational cessation.

DappRadar was founded in 2018 and was once the most popular application data statistics website in the crypto industry. Despite raising over $7 million, the platform decided to issue tokens in 2021 to expand its cash flow due to the monetization challenges of data platforms. However, due to the lack of practical support for the tokens, their price continued to decline, failing to provide sustainable financial support.

"We have made the difficult decision to shut down the DappRadar platform. In the current environment, operating a project of this scale has become financially unsustainable. After exhausting all possibilities, we had to make this tough choice," DappRadar stated in its announcement. "As we turn away, we are confident that we have adhered to the right direction, upheld our principles, and injected positive energy into the industry."

In February this year, the multi-chain lending protocol ZeroLend officially announced it would cease operations three years after its establishment. "In recent times, several chains that ZeroLend initially supported have become inactive or experienced significant declines in liquidity. In some cases, oracle providers have also stopped support, making it increasingly difficult to reliably operate the market or generate sustainable income. Meanwhile, as the protocol scaled, it attracted more malicious actors, including hackers and scammers. Combined with the inherently low-profit and high-risk nature of lending protocols, this has led to the protocol being in a long-term state of loss."

In December 2025, the cross-chain smart wallet Blocto announced it would cease operations. "In the past few years, we have incurred over $5.5 million in losses to maintain community services. But this cannot continue indefinitely. Realizing that operational funds were about to run out, we began trying to communicate with the leadership of Flow/Dapper in June this year, but failed to secure a single meeting opportunity with the leadership. Each email exchange took weeks, while our remaining funds were continuously depleting."

Conclusion

In the early development stage of Web3, the power of narrative far outweighed the product itself. A grand vision and a seemingly disruptive mechanism are often enough to attract capital and users. However, as macro liquidity returns to rationality and investors and users begin to recalculate risk-reward ratios, only those projects with clear cash flow logic, genuine user demand, reliable technical architecture, and compliance capabilities will be able to traverse the cycles.

The real cases presented in this article serve as a cold mirror reflecting the structural vulnerabilities accumulated during the rapid expansion of the Web3 ecosystem: excessive reliance on external liquidity, neglect of business loops, and insufficient awareness of security and compliance.

However, this round of winter is not the end; it is more like a necessary stage for industry maturation. Almost all technological revolutions in history have gone through similar phases: capital frenzy, bubble expansion, sharp corrections, and confidence rebuilding, and Web3 is no exception.

Therefore, rather than viewing these layoffs, transformations, thefts, and shutdowns as pessimistic signals, it is better to understand them as a necessary filtering process. As regulatory frameworks gradually clarify, infrastructure performance continues to improve, and the market undergoes self-purification, the teams and products that emerge from the winter often possess stronger risk awareness and clearer business logic. Coupled with increasingly powerful AI capabilities for assistance and integration, the new cycle of the crypto ecosystem is more promising than ever!

Related Reading: “Institutions are Embracing Crypto, Yet Practitioners are Exceptionally Frustrated, Who Will Ultimately Win?”