The FTX contagion continues to take its toll on web3 companies
•Solana NFT protocol maker Metaplex announced on Thursday that it has undergone a company-wide round of layoffs.
• The layoffs were due to the worsening market conditions for crypto, and for Solana in particular.
• Metaplex is the protocol that powers NFTs on Solana, which has taken root as an alternative NFT network to Ethereum.
• The company started the year strong, with a $46 million raise in January, but then MPLX tokens plummeted in value later in the year.
• Enthusiasm around Solana’s NFT space cooled amid debates over creator royalties and falling sales in October.
• Last week FTX imploded — taking down with it all assets and projects connected to Solana — and SOL dropped 60% in value as a result.
• Though not directly impacted by FTX’s collapse, Metaplex appears to be suffering from reputational damage spreading across the Web3 ecosystem.
Metaplex cuts jobs
On Thursday, NFT protocol Metaplex announced company-wide layoffs due to the worsening market conditions for cryptocurrency. The layoffs come as a result of the cooling of enthusiasm around Solana’s NFT space, which caused MPLX tokens to plummet in value. Last week, the implosion of FTX took down with it all assets and projects connected to Solana, resulting in a 60% drop in value for SOL. Metaplex appears to be suffering from reputational damage spreading across the Web3 ecosystem.
Metaplex is the protocol powering NFTs on the Solana blockchain. The company began with a strong start completing a $46 million raise in January with the likes of Multicoin Capital, Jump Crypto,and Michael Jordan all making investments into the company.
The CEO of Metaplex Stephen Hess made a statement about the situation:
“While our treasury wasn’t directly impacted by the collapse of FTX and our fundamentals remain strong , the indirect impact on the market is significant and requires that we take a more conservative approach moving forward”
The Market for NFTs
NFTs are non-fungible tokens that represent ownership of digital assets. They have been growing in popularity as a way to collect, trade, and sell digital art, music, and other virtual items. The market for NFTs has exploded in recent months, with major sales including $69 million for a digital artwork by Beeple and $2.9 million for an NFT version of NBA Top Shot highlights.
The market for NFTs has been driven by a combination of factors, including the rise in value of Ethereum (which is used to mint most NFTs) and publicity around major sales. However, the market has begun to cool in recent weeks amid debates over creator royalties and falling sales. Last week’s implosion of FTX imploded — taking down with it all assets and projects connected to Solana — and caused SOL to drop 60% in value. Though not directly impacted by FTX’s collapse, Metaplex appears to be suffering from reputational damage spreading across the Web3 ecosystem.
Is Metaplex capable of being saved?
It is unsure just how deep the hole goes with FTX and how many other companies are going to feel the damage that was caused by FTX but it is very clear that there are unfortunately more on the horizon. Metaplex has been a big proponent of protecting its consumer base and to have this type of problem is a setback for the company. NFTs are not looking too well either as the sentiment towards the technology is almost all but dead. The future of Metaplex now depends on Solana and how the blockchain can survive this terrible hit from the collapse of FTX. It all remains to be seen and time will be the judge of all things once again.