The CEO of Dapper Labs said today that the company had to lay off 51 brilliant employees due to the bear-market in NFTs.
Dapper Labs calls itself an “NFT company,” and it is the team behind famous projects such as CryptoKitties, NBA Top Shot, NFL ALL DAY, LaLiga Golazos, and others.
The bear-market of NFTs and the problems of Dapper Labs
Taking data from OpenSea, which is what has long been the world’s leading marketplace for NFTs, the bear-market began in June last year, and is still ongoing.
After an all-time high of $4.8 billion in monthly trading volume in January 2022, the growth of this marketplace has stalled. It is enough to think that only a year earlier, in January 2021, monthly trading volumes had stopped just above $7 million.
So what happened in 2021 was a real speculative bubble, in some ways very similar to that of the crypto markets, albeit with enormously lower volumes.
Until May 2022, monthly trading volumes on OpenSea had remained above $2.5 billion, but with the implosion of the Terra/Luna ecosystem, and the collapse of the crypto markets, the bear-market of the NFT market began in June last year.
Monthly volumes collapsed first to less than 700 million, and then fell again to 250 million in November.
By 2023 they seemed to have recovered somewhat, as they exceeded 650 million in February, but then the slump continued.
In June they plummeted to 160 million, and in the first twelve days of July they were even below 65 million.
Such a slump could not help but affect the entire industry, including leading companies like Dapper Labs, which have been in business for years.
Dapper Labs: the NFT gaming company
Probably the most famous collection of NFTs created by Dapper Labs are the CryptoKitties, which is one of the absolute most historic ones in this industry.
Indeed, they were among the first ever NFTs to be launched, back in November 2017, when the OpenSea marketplace itself had not even been launched yet.
The first complete monthly figures we have regarding trading volumes on OpenSea date back to August 2018, and at that time trades totaling only a little over $3,000 were recorded.
Dapper Labs’ most successful NFTs, however, are probably the NBA Top Shots, which had a truly colossal boom in trading volumes in the first part of 2021.
According to CryptoSlam data, they went from $99,000 in trades on 1 January 2021 to $6.7 million three weeks later. Then, after an initial downturn, they resumed their run, reaching a daily high of $45.7 million in late February.
By April, average daily volumes had dropped to $1 million, and by the end of 2021 they even fell below half a million.
The real collapse occurred from the end of May 2022, when they fell sharply below half a million dollars in daily trading volume, and even plummeted below $30,000 on some days in early July 2023.
These figures clearly illustrate what a sales crisis the company is going through.
Indeed, the one announced today is actually the third round of layoffs, following the massive ones of November 2022, when they were forced to cut the entire workforce by 22%, and February 2023, when the cut was 20%.
This third round of layoffs seems much less extensive than the previous two.
The future of the industry
As the bear-market in the NFT market seems unabated, the future for Dapper Labs seems uncertain.
On a positive note, although they were forced to make a third staff cut, the latter was smaller in extent than the previous two.
Thus it might seem that the bulk of the problem has already been solved in the past months, and that the current initiatives may well be merely an adjustment of the policy of reducing expenses.
Moreover, just as the speculative bubble in the NFT markets burst following the one in the crypto markets, perhaps the bottom of the bear-market might also be lagging behind the one in November.
However, if the NFT market fails to recover soon, it is possible that the winter in this sector will last longer than expected. Should this be the case, for companies in this sector, the problems may only be just beginning.
However, it should be noted that it is possible that if the crypto markets rebound strongly, the NFT markets may then rebound accordingly, especially if non-fungible tokens do indeed enter the gaming industry en masse.