Writing about crypto layoffs can be a difficult task, as there are many factors involved, and layoffs sometimes come unexpectedly, affecting any of us.
In an article published last week on AltCoinDesk, we discussed how venture capital (VC) firms are becoming increasingly selective with funding, and sometimes avoid crypto due to its highly volatile nature. Moreover, institutional investments like VCs are shifting some of their focus toward funding AI.
As an extension of that article, AltCoinDesk conducted an interview to understand what industry experts have to say about crypto layoffs. We spoke with David Arnež, CEO & Co-Founder of Inflectiv AI, who shared some insights about crypto layoffs, the impacts of VC funding, and how institutional investors choose a crypto project.
1. Why are we seeing so many layoffs in the crypto industry lately?
David: The layoffs are largely a result of the normalization phase after a speculative cycle. During bull markets, many crypto companies hire aggressively based on projected growth rather than proven revenue models. When funding tightens, and token prices stabilize or fall, companies are forced to adjust their cost structures.
During a speculative cycle or bull market, crypto firms often hire large numbers of employees, as expectations are high. They hire employees based on projected growth rather than proven revenue models. However, when funding shrinks and token prices stabilize or fall, those firms automatically adjust their cost structures, and hence layoffs happen.
Another major factor for the ongoing layoff is that the industry is maturing from experimentation to real product delivery. Today, investors need a clear understanding of business models, sustainable revenue, and real users. Teams that were built around hype cycles or short-term token launches are therefore restructuring or downsizing.
In many ways, this is a healthy correction, similar to what happened after the early internet boom.
2. How is the slowdown in venture funding affecting crypto startups and new projects?
David: Venture capital funding has become more selective than it is unavailable.
Investors are now focusing on/seeking:
- products with clear market demand,
- teams with deep technical knowledge,
- projects generating real revenue or usage, and
- projects building new primitives/categories.
This significant change in investor priority is forcing startups to become more disciplined. Instead of raising large rounds to build speculative ecosystems, teams must demonstrate product-market fit earlier.
Ironically, this can bolster the industry. The projects that survive this environment are usually the ones building infrastructure, tools, or applications that solve real problems.
3. How can we compare layoffs with those in traditional fintech sectors?
David: The pattern is actually quite similar.
Both fintech and crypto went through rapid hiring during periods of cheap capital, especially between 2020 and 2022. As interest rates increased and capital became more expensive, companies across both sectors began restructuring.
The difference is that crypto cycles tend to be more compressed and more visible because token prices and on-chain activity change quickly. But structurally, the same economic forces are at play: capital efficiency, profitability expectations, and the shift from growth-at-all-costs to sustainable businesses.
4. A recent report shows that job openings are collapsing. Will this impact crypto?
David: Yes, but not necessarily in a negative way.
The crypto industry historically relied heavily on rapid expansion during bull markets, which created a lot of temporary hiring. As the sector matures, we’re likely to see smaller, more efficient teams building more robust products.
Many of the most important breakthroughs in technology historically came from lean teams during slower markets. When capital is tighter, teams focus more on solving real problems rather than chasing trends.
5. How can a crypto project survive in today’s market?
David: The key question is whether a company is solving a real problem for real users.
Imagine a crypto project that closely aligns with customer needs and creates measurable value. Such projects will always see capital flowing into them. Markets may become cautious, but demand for useful technology never disappears.
In crypto specifically, the projects that will succeed are those creating practical infrastructure and applications, not just speculative tokens.
For instance, one of the biggest challenges in AI today is that most knowledge is locked in documents, sensor data streams, and private databases, which AI systems cannot easily use. Unlocking and structuring this kind of intelligence is becoming an important new layer for the emerging AI-agent economy.
Ultimately, downturns filter out noise and concentrate attention on teams that are genuinely building the next generation of digital infrastructure.
