Yuga Labs soared in value amid the hype surrounding NFTs, but a recent report suggests 95pc of these digital tokens are now effectively worthless.
Yuga Labs, the start-up behind the Bored Ape Yacht Club NFTs, has announced it is eliminating a number of roles across its company as part of a restructuring period.
In a team email, the company’s CEO Daniel Alegre said the layoffs are part of a strategy to update the start-up’s “core competencies” and readjust its focus. Alegre said there are a number of company projects that “either spread the team too thin or required execution expertise beyond our core competencies”.
“There have been a few rocky roll-outs, particularly in our gaming execution, because we learned along the way that we weren’t optimised to build and manage everything in-house, nor should we be,” Alegre said.
It is unclear how many staff are being cut from these layoffs, but co-founder Greg Solano said on X that the company still has more than 120 employees.
“We’ve been spread quite thin for a while as a company, and while there have been some wins, our execution in other areas hasn’t been up to our standards,” Solano said.
The rise and fall of NFTs
An NFT, or non-fungible token, is a digital file with verified identity and ownership through blockchain technology. NFTs have largely been used for images and artwork, but supporters of the technology claim it has other potential applications.
The concept surged in 2021 and 2022, with companies flocking to support the growth of NFT marketplaces. But this market has seen its share of failures since then, as the digital files had periods of waning when there were dips in the broader cryptocurrency sector.
Yuga Labs saw rapid success in recent years thanks to its Bored Ape Yacht Club NFTs, which saw the company reach a $4bn valuation after a $450m funding round in 2022, which was led by A16z crypto, Andreessen Horowitz’s crypto fund. But the company appears to be shifting its focus to other projects – such as metaverse-focused gaming – amid the recent turmoil in this market.
A recent report by DappGambl suggests the market has shrunk immensely compared to its peak. This report suggests that 95pc of NFTs on the market are now completely worthless, while the weekly traded value in July 2023 was only 3pc of its peak in August 2021.
“This daunting reality should serve as a sobering check on the euphoria that has often surrounded the NFT space,” the report said. “Amid stories of digital art pieces selling for millions and overnight success stories, it is easy to overlook the fact that the market is fraught with pitfalls and potential losses.”
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