ZKsync developer Matter Labs lays off 16% of its workforce

• Matter Labs has laid off 24 employees, over 16% of its workforce, amid market changes.
• The company is shifting focus from general-purpose scaling to niche applications.
• Despite layoffs, Matter Labs continues hiring for critical engineering and business roles.

Matter Labs, the company behind the Ethereum scaling network ZKsync, has announced the layoff of over 16% of its workforce, affecting 24 employees.

The announcement, made on September 3, 2024, by Matter Labs’ co-founder and CEO Alex Gluchowski, marks a significant shift for the company as it navigates the increasingly competitive landscape of Ethereum layer-2 scaling solutions.

Matter Labs restructuring amid market challenges

The layoffs come as Matter Labs re-evaluates its strategy in the face of changing market conditions and evolving business needs. It follows a large organizational planning exercise that revealed a mismatch between the company’s current talent and the needs of its future strategy.

According to Gluchowski, the decision to downsize was “the hardest change” he’s had to implement in the company’s six-year history.

In the layoff announcement, Gluchowski explained that the affected employees were notified of their termination and emphasized that the decision was not performance-related. He highlighted the necessity of aligning the company’s resources with its new strategic goals.

Despite the layoffs, Matter Labs is currently hiring for key roles in engineering, business development, and operations, underscoring its ongoing commitment to innovation and growth despite the reduction in staff.

Shifting focus from general-purpose to niche solutions

The layoffs are part of a broader strategic pivot for Matter Labs.

In June 2024, the company introduced the Elastic Chain, a new solution aimed at enhancing interoperability for the growing number of teams building custom chains on ZKsync. This launch has prompted Matter Labs to reconsider its positioning in the highly competitive Ethereum layer-2 ecosystem, which includes other major players like Coinbase’s Base, Polygon, Arbitrum, and Optimism.

Gluchowski indicated that Matter Labs might be moving away from its initial focus as a general-purpose Ethereum scaler. Instead, the company is exploring more niche and case-specific applications of its technology, a move designed to better meet the needs of its users and stay competitive in the crowded market.

As Matter Labs adjusts its course, the company’s commitment to innovation remains strong. The layoffs, while difficult, are a step towards aligning its workforce and resources with its evolving strategy in the Ethereum scaling space.