The Once-Popular Web3 Faces Layoff Wave

Author: Jia Liu, Zhang Sheng BeatZ

"AI is the main reason for our layoffs." This has become the primary statement from companies announcing layoffs today.

In the first half of 2026, nearly 140,000 people were laid off in the U.S. tech industry. Amazon cut 9% of its workforce, while Meta laid off 10%. The reasons given for these layoffs were almost identical: AI is changing everything, and companies must streamline.

In fact, over 56% of layoffs in 2026 explicitly cited AI, automation, or machine learning as reasons. AI has been the top reason for layoffs in U.S. companies for four consecutive months. Ironically, nearly 60% of companies admitted that they packaged layoffs or hiring slowdowns as "AI-driven," while the real reason was financial pressure.

The impact of AI is not limited to Silicon Valley; it is reshaping the employment structure across almost all industries. The Web 3.0 sector, as a crossroads of technology and finance, has been hit particularly hard. Large-scale layoffs in the Web 3.0 industry have been ongoing for over six months, and they are both severe and rapid.

Since the beginning of this year, especially in recent months, news about layoffs, team restructuring, and personnel changes surrounding leading trading platforms has been appearing frequently on X, Reddit, Xiaohongshu, Maimai, and in coffee chats among industry professionals. The once-dominant BitMEX has almost faded from mainstream view, while smaller platforms are exiting or scaling back their business lines. With talent and attention being drained by the AI industry, layoffs in the Web 3.0 sector seem inevitable.

The Sword of Damocles Has Fallen

Kevin received his layoff notice just three days before his Last Day.

Kevin had worked at a major internet company for several years before being attracted by the high salaries and narratives of the Web 3.0 industry, leading him to switch to a leading trading platform. He later learned that his layoff had actually been decided over a month prior.

During that time, he felt no signals indicating layoffs were coming. All work was proceeding normally, meetings were held as usual, and messages were being exchanged. It wasn't until HR approached him that he received no reasonable explanation, no claims of poor performance, yet the sword of layoffs still fell on Kevin's head.

Looking back, the only signal he could identify was that two of the ten members in their small group had already left before him. At the time, everyone said it was "not a good fit" or "looking for easier jobs." "In hindsight, that might have been when they were already being pushed out," Kevin told Zhang Sheng BeatZ.

Richard's small trading platform employed a more extreme method for layoffs. After being a full-time dad for nine years, he returned to the workforce and found a job at a relatively small crypto trading platform. However, he and many of his colleagues were soon laid off.

He described how one morning, he opened his computer as usual, only to find that his system access had been revoked. He initially thought it was a technical glitch until he opened the work group and saw about forty colleagues asking the same question: "Why can't I log in?" No one knew what was happening. Panic spread like water in the group chat. Hours later, they received a cold layoff notice in their personal emails, effective immediately.

What chilled Richard even more was another incident. Shortly before the layoffs, his manager had hinted that one of his developers "might need to be adjusted." Richard had been trying to help this colleague stay on, even rearranging work assignments to prove the person was irreplaceable. However, before he could submit his proposal, both of them ended up being laid off.

Another former employee from a crypto trading platform, Xiaoyu, described a similar layoff scenario to Zhang Sheng BeatZ. In her previous company, the first step of layoffs was to disable employees' Slack accounts and cut off email access in bulk. "Whenever we saw someone suddenly disappear from Slack, we would rush into private chat channels, eagerly sending our phone numbers and LinkedIn links," Xiaoyu said, "because we didn't know who would be next, and everyone wanted to stay in touch while they still could."

"When the layoff finally hit me, my manager messaged me on Slack, asking if I had time for a call," Xiaoyu said. "Before I could even reply, all my access was revoked."

Layoffs Like a Tornado

Kevin revealed that in the months following his departure, the group continued to lay off employees, and now only two remain. His trading platform lays off about 10% of its workforce each quarter, totaling 40% over the year.

Coinbase announced a global layoff of about 700 people in May, officially defined as an "AI-native restructuring," representing about 14%. However, Zhang Sheng BeatZ learned from insiders that the impact on Coinbase's Indian office was far greater than this number. Former employees claimed that about 90% of the staff in the Indian office were let go, affecting all business departments, not just sales. Only a few top engineers were invited to relocate to Canada to continue working.

It is said that the main reason for the mass layoffs in the Indian office was high costs and significant time zone differences with the U.S. Coinbase pays its SDE2 (mid-level engineer) in India about 7.5 million rupees, equivalent to about 110,000 CAD, which is comparable to the salary level of mid-level engineers in Canada. In many high-paying product companies, Indian architects' salaries are even higher than their EU counterparts.

Many trading platforms have been reported to have employees who were laid off on the same day after failing to reach an agreement with HR on compensation plans, with that day being confirmed as their last working day and their system access revoked. The recently closed trading platform BitMart had entire departments laid off starting in May.

Moreover, many trading platforms choose to lay off employees at specific times, which is not a coincidence. According to Zhang Sheng BeatZ, the period around June 30 is a peak for industry layoffs. The reason is simple: new financial reports are due in July, and this data is to be presented to investors. Laying off a group of people and cutting expenses makes the profit and loss statement look better immediately. For the management of trading platforms, layoffs are not just about reducing costs; they are also a form of financial narrative management. A streamlined report presented to investors is more persuasive than any explanation.

Not only Kevin and Richard's trading platforms but almost all of the Web 3.0 industry is undergoing large-scale layoffs, with only a few compensation packages being reasonable and satisfactory.

The situations faced by the interviewees mentioned earlier are quite similar; trading platforms cut off contact and access very quickly during layoffs: "Everyone's contact information is on there; without those permissions, we have no channels to fight for our rights."

Zhang Sheng BeatZ learned from insiders that operations and product roles, because they work in offline or overseas offices, still receive normal handover time and compensation during layoffs, "but many tech roles are remote, so they just fire you directly and quickly, which doesn't affect them at all."

Since many IT employees are based domestically while trading platforms are registered overseas, "you are not there, and the cost for individuals to execute is very high. That little money doesn't affect their lives, so most people don't want to or can't argue."

Even with a few days of buffer time, the situation employees face is not good. When HR communicated the layoff procedures, they asked Kevin to fill in the reason for leaving in the system and persuaded him not to select "company dismissal."

"They would say that if you choose company dismissal, the background check won't pass, and they'll speak ill of you. So they force you to choose personal reasons for leaving." If he chose personal reasons, the company wouldn't have to pay any extra compensation.

In the end, Kevin did not receive severance; the company only settled his salary and overtime pay up to his last working day. Kevin later reflected that he had missed some signals before being laid off. For example, the working relationship with his direct supervisor had started to become less smooth, and he could clearly feel that the supervisor didn't like him as much anymore. But in an organization that operates at high speed every day, these subtle changes are easily overlooked until the moment the shoe drops.

During this wave of mass layoffs, major trading platforms are trying to find ways to make layoffs look less like layoffs.

For instance, Zhang Sheng BeatZ has heard from many interviewees that leading trading platforms send out equipped computers before employees start. These computers have tight monitoring systems installed that can track employees' keyboard input frequency and mouse click behavior, and this data is included in performance evaluations.

It is said that a trading platform employee was fired the next day for watching a show on iQIYI using the company-issued computer for a while.

Another common practice is to set employees impossible KPIs, and after the evaluation period, dismiss them under the pretext of "poor performance" or "not meeting company requirements." In this way, layoffs are packaged as compliant performance eliminations, and the company does not have to pay extra compensation.

A former employee of a trading platform revealed on X that during one layoff period, the trading platform held regular tests on "Web 3.0 industry knowledge" and forced it to be included in KPI evaluations. If employees failed the exam, they also faced the risk of being directly fired.

This massive wave of layoffs has swept in like a tornado, rapid and fierce, but due to the long-term high-pressure monitoring environment, everyone tacitly avoids discussing the elephant in the room.

Under the Wind, Silence Reigns

Compared to those who were laid off decisively, those who remain may not be luckier.

Xiaoyu said that after each round of layoffs, the survivors often envy their colleagues who have left, as at least their shoes have already dropped. Those who remain live every day like startled birds, unsure if they will be next. Since the layoffs began, she has felt a significant decline in work morale, permeated by an unspoken sense of defeat, making it hard to muster enthusiasm for anything.

Richard also mentioned that the work atmosphere during the layoff period underwent subtle changes. Previously, while everyone was busy with real work, product updates, and feature iterations, the pace was tight and intense. Now, the busyness is entirely different, more about satisfying the management's cleverly devised reasons. The company has intensified its evaluation mechanisms, requiring punctual attendance and increasing the frequency of meetings compared to before.

The "stand-up meeting" culture of trading platforms has been pushed to extremes during the layoff period. The original intention of stand-up meetings was to finish meetings quickly; standing up makes it uncomfortable, so people would keep it brief. However, according to Richard, in his trading platform, this tool originally meant to improve efficiency has become a drain: they have to hold two stand-up meetings a day, yet no one knows which direction the product is heading.

Three project managers have changed in six months, and the product management team is almost empty. Many people have ongoing projects, but because key personnel are suddenly laid off, sometimes even just minutes before a meeting, all that work must come to a halt.

Richard described that his trading platform even had outsourced teams, and these outsourced personnel were paid significantly more than regular employees. It wasn't until Richard later communicated face-to-face with two colleagues that he learned that high executives had withheld employees' salary increases for two years.

Richard believes that the management is indifferent to cost overruns because what they truly care about is not technology and products, but power and control.

Kevin feels the same way. He increasingly feels that the trading platform he is on resembles a lethargic state-owned enterprise. Amid frequent security incidents across the entire crypto trading platform industry, the technical team of the trading platform has not only failed to gain more resources but has also become a state of being overly cautious: not seeking achievements, but merely avoiding mistakes.

"Everyone is afraid to take risks, just wanting to avoid mistakes in their work; it feels entirely like a state-owned enterprise," Kevin said.

Before being laid off, John, who grew up abroad, had long lost patience with such a work environment.

From the moment he joined, he felt that the company's "Chinese culture" was particularly strong. Chat records, JIRA, meeting minutes, etc., were almost all in Chinese, and foreign employees felt excluded if their Chinese was not good. The work atmosphere was extremely harsh, the pace was fast, and there was a performance review every quarter.

Since everyone is distributed across different time zones, being online at unusual hours is quite common. John mentioned that his team's weekly stand-up meeting was scheduled for Sunday evenings, "My weekend plans always end early." His QA testing colleague in the U.S. time zone often sends messages at eleven o'clock at night.

"We are always on call 24/7," John said, noting that he often sees colleagues submitting code at two in the morning on Saturdays, "There is no balance between work and life; the rhythm of life here is more like work, life, and then work again."

Intrigues and Power Plays, Direct Lineage and Abandoned Pawns

Richard joined the company at its peak and witnessed the entire process of its rise and fall, with the most lamentable aspect being the "power struggles" among the management of the trading platform, which are more naked and chaotic than other office politics.

A serious trust crisis arose among the partners in his company due to government investigations and potential lawsuits. One side's CTO/CFO felt deceived by the other partners or felt they did not receive the necessary support when facing government issues. Ultimately, the partners went their separate ways and announced a split.

Thus, one side formed a "board of directors" with the core team and a senior employee, establishing a new company to become the actual developer of the old product. Those who were once called friends turned into client relationships within just a month. By February, the new company was advancing its business at the pace of launching two new products each week. This all happened just before and after Richard resigned.

The lower-level employees in this high-level power struggle had neither the right to know nor the right to choose. They were all victims of internal strife and turmoil within the company.

In the Web 3.0 industry, many project founders and even CEOs of trading platforms are merely front figures. This is an open secret within the industry, and almost all practitioners tacitly understand it. The real decision-makers often remain behind the scenes, and the primary ability required of those in front is not innovation or technology, but loyalty.

"Toxic culture is transmitted from the top down. Those who can survive in this system are likely to be such roles. If you can rise, you will definitely be alienated into this kind of person by the environment. If you are not like this, you won't be able to rise," Kevin analyzed. "Those who are promoted are almost all skilled in power plays, good at upward management, and strong towards subordinates."

Those who are not considered direct lineage will be pushed out by the higher-ups through various means. First, they are no longer invited to meetings; key decisions are made without them; then they are transferred to marginal positions, away from core business; next, they no longer need to submit weekly reports, and new tasks are no longer assigned. By the time their replacements are arranged, they finally realize they have been sidelined.

"So the entire system is very toxic," Kevin said. "You can look at Glassdoor; everyone generally thinks colleagues are nice, willing to support each other, and have good personalities. But the entire system feels like a deep palace. You can't say the wrong thing in front of your superiors and must pay attention to rhetoric."

Under the Fallen Nest, How Can There Be Complete Eggs?

"I think the entire crypto business model has collapsed," Kevin said.

The core revenue of trading platforms in the past relied on two things: trading fees and listing fees. When the market was hot, new projects flooded in, retail investors rushed to trade, and both fees skyrocketed, leading to team expansions. "But now all the projects that want to list have been proven; they all just want to make money and leave."

The issue of listing fees is equally severe. According to Kevin, the fees charged by trading platforms to project parties are extremely high, with a small project needing to pay hundreds of thousands of dollars just for listing fees, while the market value after going live might only be tens of millions of dollars. "The trading platform has completely wiped out the entire ecosystem. On one hand, the cost of starting a business in the crypto space is too high; on the other hand, retail investors are no longer willing to pay. In his view, this is a downward spiral process: project quality declines, more projects break, retail investors leave, trading volume shrinks, fees decrease, and listing fees are forced to rise."

The rise of on-chain derivatives platforms like Hyperliquid has made the situation for centralized trading platforms even more passive. The most profitable segment of derivatives trading for centralized trading platforms can no longer occur solely within their own systems.

Market-level shocks are also accelerating this downward spiral.

Many interviewees mentioned the large-scale liquidation event on October 10 last year, which had a profound negative impact on the industry and severely undermined the confidence of all practitioners. All open positions with leverage exceeding two times were forcibly liquidated that day, and retail investors suffered heavy losses, from which they have yet to recover.

Under the fallen nest, how can there be complete eggs? No one can remain unscathed. The plight of trading platforms sends ripples throughout the entire industry.

John told Zhangsheng BeatZ that many mid-sized Web 3.0 institutions managing between one hundred million and five hundred million dollars are shutting down, and old financing strategies and DeFi yield strategies are becoming increasingly difficult to maintain. Since last summer, the liquidity crisis in the cryptocurrency market has been "very severe." Essentially, all altcoins launched in early 2025 are trending towards zero, with extremely low book values. Over-the-counter trading volumes are bleak, and aside from RWA-related businesses, there is almost nothing worthwhile to pursue in market making. A friend of John's who works in a market-making firm told him that even though they improved their strategies to increase market share and profit per hand, the company's total profits still significantly declined, with earnings generally shrinking to about 30% of what they were originally, and John's friend was ultimately laid off due to company cost-cutting.

Not only market makers and quantitative firms, but Kevin mentioned in the interview that current VCs in the Web 3.0 industry are very cautious in terms of investment amounts and numbers, essentially in a state of not investing. Even when they do invest, the amounts are significantly lower than before. "This cycle has seen VC investment amounts shrink by 80%. No one is investing in crypto. So when the next bull market comes, there won't be any good projects for retail investors to list."

The situation for project parties is equally difficult. Kevin's judgment is: "Except for some projects that have Web 2.0 revenue on the B-side, the vast majority of projects have no B-side revenue and no C-side revenue."

Crypto is Like a Cockroach Hotel

Good birds choose their trees to perch on, but for those laid off from crypto trading platforms, the problem is not about choosing trees but whether there are any trees to choose from.

After leaving the trading platform, Kevin went to an AI-related startup. He is not alone. According to Zhangsheng BeatZ, the vast majority of practitioners leaving the Web 3.0 industry have flocked to the AI industry. This is not hard to understand: AI is currently the hottest track, with active financing and abundant positions, and there are many commonalities in channels and attributes between the crypto and AI industries, both emphasizing growth, user acquisition, and global operations, with many skills transferable.

Richard's disappointment with the Web 3.0 industry is even more thorough. In his view, the trading platform he worked for was filled with incompetent people from top to bottom, from the infighting among partners to the apathy of grassroots employees. "Even today, people in the cryptocurrency circle are still a group of self-righteous and arrogant individuals." He later also turned to the AI industry, completely leaving the crypto world.

In contrast, very few can truly transition to traditional industries. A small number of technically skilled trading system and risk control talents have entered traditional market makers and quantitative companies. Some operations, BD, and compliance personnel have transitioned to traditional brokerage systems, taking advantage of the active Hong Kong and U.S. stock markets, but these are in the minority. The fate of more laid-off employees from trading platforms is still to flow to the next tier of small trading platforms.

Because traditional industries' discrimination against the Web 3.0 industry is deeper than many people imagine.

Zhangsheng BeatZ learned from some human resources departments in traditional finance that they directly eliminate candidates whose resumes still show they are working at Web 3.0 companies during the recruitment process. In the stereotypical view of many traditional finance practitioners, the crypto industry is like a huge "cockroach hotel," implying a regulatory gray area, speculative culture, and unverifiable performance. Those coming out of here are seen as inherently guilty in their eyes.

Even within the AI industry, there are similar biases. Some serious AI companies working on large models and infrastructure also hold reservations about candidates with backgrounds in the Web 3.0 industry. In their view, the "growth" in the Web 3.0 industry is more built on speculation and narratives rather than real technological barriers. A person who has worked in operations at a trading platform is viewed as having far less value than someone who has worked in operations at ByteDance in the eyes of HR at an AI company.

This may be the most profound cost experienced by Web 3.0 practitioners who have gone through layoffs.

This Winter is Colder Than Ever

Every industry has cycles. But this round of winter for the Web 3.0 industry may be different from the past.

Compared to the past, the competitive landscape in the cryptocurrency field has completely changed. Prediction markets like Prediction Market, Polymarket, and Kalshi, as well as retail brokerage trading, are all competing for the same pool of retail investors' funds. The money of American retail investors is flowing into AI stocks and prediction markets, rather than returning to the crypto market.

Some practitioners even believe that the current situation is worse than the crypto winter of 2022. At least in 2022, there were still retail investors in the market, but now, the massive liquidation on October 10 swept away the last of the leveraged retail investors.

To determine whether an industry is young or old, one must look not only at its revenue but also at what it is fighting for.

Even in such a "shrinking" market, the struggles and underhanded tactics among various trading platforms have not ceased. According to Zhangsheng BeatZ, it has been learned from insiders that the HR departments of some trading platforms have even listed "poaching high-salaried employees from competitors" as a KPI indicator, hiring them for a few months before dismissing them for various reasons, disrupting the rhythm of competing teams, obtaining intelligence and customer resources, while the poached individuals are merely one-time tools.

This reminds me of the food delivery wars in the internet industry a few years ago, where the smartest group of people spent hundreds of billions in profits on mutual consumption. Alibaba, Meituan, and JD.com burned over 220 billion RMB, approximately 31 billion USD, on food delivery subsidies in just two quarters, nearly equal to the total amount spent by all companies globally on generative AI in an entire year.

Today’s crypto trading platforms are replaying the same script. The entire industry’s pie is shrinking, retail investors are leaving, and trading volumes are declining, yet each platform continues to poach talent from one another, publicly bicker, and engage in a war of attrition.

In the past, we often attributed the large-scale layoffs in trading platforms to the cyclical nature of the Web 3.0 industry and the impact of AI. As mentioned at the beginning of this article, by 2026, over half of the tech layoffs cited AI as a reason, but nearly 60% of companies admitted that the real reason was financial pressure.

The Web 3.0 industry is no exception.

Charging project parties hundreds of thousands of dollars for listing fees; launching a large number of tokens of questionable quality, causing retail investors to lose everything in repeated failures; using opaque performance evaluations and monitoring systems to erode employees' trust and creativity; failing to contemplate new business models during the winter, instead spending resources on undermining competitors.

If today’s Web 3.0 industry winter is not a cyclical fate, then who is to blame for the decline of the Web 3.0 industry?