Web3 Layoffs: It's Not AI Taking Jobs, But the Industry Running Out of Money

Author: Jia Liu, Zhang Sheng Beatz

"AI is the main reason for our layoffs." This has become the primary statement from nearly all 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%. Their reasons for layoffs are 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 leading cause of layoffs in U.S. companies for four consecutive months. Ironically, nearly 60% of companies admit that they are packaging layoffs or hiring slowdowns as "AI-driven," while the real reason is financial pressure.

The shockwaves of AI are not limited to Silicon Valley; it is reshaping the employment structure across almost all industries. The Web3 sector, as a crossroads of technology and finance, is experiencing particularly severe impacts. Large-scale layoffs in the Web3 industry have been ongoing for over six months, and they are both unusually intense 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 practitioners. The once-dominant BitMEX has nearly faded from mainstream view, while smaller platforms are exiting or shrinking their business lines. With talent and attention being siphoned off by the AI industry, layoffs in the Web3 sector seem to be an inevitable choice.

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 Web3 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 he would be laid off. All work was proceeding normally, meetings were held as usual, and messages were being replied to. It wasn't until HR approached him, without any reasonable explanation or claims of poor performance, that the Sword of Damocles fell on Kevin's head.

Looking back, the only signal he could identify was that two of the ten people in their small group had already left before him. At the time, everyone was saying 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 had an even more extreme layoff method. 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 colleagues were soon laid off.

He described that one morning, as he was preparing to work, he found that his system permissions 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 made Richard feel even colder was another incident. Shortly before being laid off, his manager had hinted that one of his development colleagues "might need to be adjusted." Richard was still trying to help this colleague stay, even rearranging work responsibilities to prove that this person was irreplaceable. In the end, before he could submit his proposal, both of them ended up being laid off.

Another former employee of 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 deactivate employees' Slack accounts in bulk and cut off email access. "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 to be laid off, 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 was free for a call," Xiaoyu said. "Before I could even reply, all my permissions were 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. The trading platform he was at laid off about 10% of its workforce each quarter, accumulating to 40% over the year.

Coinbase announced global layoffs of about 700 people in May, officially defining it as an "AI-native restructuring," accounting for about 14%. However, sources told Zhang Sheng BeatZ that the impact on Coinbase's Indian office far exceeded 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 deemed top engineers were invited to relocate to Canada to continue working.

It is said that the primary reason for the large-scale 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 negotiating compensation plans with HR without success, only to be informed that the day would be their last working day and their system access would be 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 coincidental. 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. By laying off a group of people and cutting expenses, the profit and loss statement immediately looks better. For the management of trading platforms, layoffs are not just about reducing costs; they are a form of financial narrative management. In front of investors, a streamlined report is more persuasive than any explanation.

Not just Kevin and Richard's trading platforms, but almost all of the Web3 industry is undergoing large-scale layoffs, with only a few compensation packages being reasonable and satisfactory.

The interviewees mentioned above encountered similar situations, where trading platforms cut off communication and access at an alarming speed during layoffs: "Everyone's contact information is on there, and 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 technical roles are remote, so they just fire you directly and quickly, which doesn't affect them at all."

Because many IT employees are located domestically while trading platforms are registered overseas. "You are not there, and the cost of executing personal matters is very high. With just that little money, it doesn't affect life, 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 out the reason for leaving in the system and persuaded him not to select "company termination."

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

In the end, Kevin did not receive severance pay; the company only settled his salary and overtime pay up to the last working day. Kevin later reflected that there were indeed some signals he did not understand before being laid off. For example, the working relationship with his direct supervisor began to become strained, and he could clearly feel that the other party was not as fond of him 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 period of large-scale layoffs, major trading platforms are trying to find ways to make layoffs appear not like layoffs.

For example, Zhang Sheng BeatZ has heard from many interviewees that before employees join, leading trading platforms send out equipped computers. These computers are installed with strict monitoring systems 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 for a while using the company-issued computer.

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 a layoff period, the trading platform held regular tests on "Web3 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, swift and fierce, but because of 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 already left, because at least their shoes have dropped. Those who remain live each day like a bird on a wire, unsure if they will be next. Since the layoffs began, she has felt a significant shift 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 the intensity high. Now, the busyness is entirely different, more about meeting the management's cleverly crafted demands. 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, prompting everyone to be concise. However, Richard described that 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 supposed to go.

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

Richard described that in his trading platform, there are even outsourced teams, and these outsourced personnel's salaries are significantly higher than those of regular employees. It wasn't until Richard later spoke face-to-face with two colleagues that he learned it was because executives had withheld employees' raises for two years.

Richard believes that management does not care about 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. In the context of frequent security incidents across the entire cryptocurrency exchange industry, the technical team of the trading platform has not only failed to gain more resources but has instead become a state of being overly cautious: seeking no merit but avoiding mistakes.

"No one dares to take risks anymore; they just want to avoid making mistakes at 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 heavy. 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 evaluation every quarter.

Since everyone is distributed across different time zones, being online at unusual hours is a common occurrence. John mentioned that his team's weekly stand-up meeting was scheduled for Sunday evening, "My weekend plans always end early." His QA testing colleague, who is in the US 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 here; the rhythm of life is more like work, life, and then work again."

Intrigues and Power Struggles, 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 were 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 litigation issues. One side's CTO/CFO felt deceived by the other partners or felt unsupported during 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 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 around the time 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 victims of the internal struggles and turmoil within the company.

In the Web3 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 are aware of it. The real decision-makers often hide behind the scenes, and the people in front must possess loyalty rather than innovation or technology as their primary capability.

"Toxic culture is transmitted from top to bottom. Those who can survive in this system are likely to be such roles. If you can rise, you will definitely be alienated by this environment. If you are not such a person, you won't be able to rise," Kevin analyzed: "Those who are promoted are almost all adept in power dynamics, skilled in 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 whole 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 whole 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 to just want to make money and leave after making it."

The issue of listing fees is equally severe. According to Kevin, the fees charged by trading platforms to project parties are extremely high; a small project has to pay hundreds of thousands of dollars just for listing fees, while its market value after going live might only be tens of millions of dollars. "The trading platform has 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 buying in." He sees this as a downward spiral: project quality declines, more projects fail to launch, retail investors exit, 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 derivative trading segment for centralized trading platforms can no longer occur solely within their systems.

Market-level shocks are also accelerating this downward spiral.

Many interviewees mentioned the mass liquidation event on October 10 last year, which had a negative impact on the industry and caused profound damage to the confidence of all practitioners. All open positions with leverage exceeding two times were forcibly liquidated that day, leading to a bloodbath for retail investors, and recovery has yet to occur.

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

John told Zhangsheng BeatZ that many medium-sized Web3 institutions managing between 100 million to 500 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 cryptocurrency has been "very severe." Essentially, all altcoins launched in early 2025 are trending towards zero, with very low book values. Over-the-counter trading volume is bleak, and aside from RWA-related businesses, there is almost nothing worth doing 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 profit 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 institutions, but Kevin mentioned in the interview that current Web3 industry VCs are very cautious in terms of investment amounts and numbers, basically in a state of not investing. Even when they do invest, the amounts are significantly reduced compared to 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 many good projects for retail investors to invest in."

The situation for project parties is equally difficult. Kevin's judgment is: "Except for some projects that have Web2 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, but for those laid off from cryptocurrency trading platforms, the problem is not about choosing trees but whether there are any trees left to choose.

After leaving the trading platform, Kevin went to a startup related to AI. He is not alone. According to Zhangsheng BeatZ, the vast majority of practitioners leaving the Web3 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 Web3 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 laziness 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 people 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 US stock markets, but these are in the minority. The more common outcome for those laid off from exchanges is to flow into the next tier of small exchanges.

Because traditional industries' discrimination against the Web3 industry is deeper than many people think.

Zhangsheng BeatZ learned from some HR departments in traditional finance that they directly eliminate candidates who still hold positions in Web3 companies when reviewing resumes. In the stereotype 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 who come out of here carry an original sin 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 Web3 industry. In their view, the "growth" of the Web3 industry is more built on speculation and narrative rather than real technological barriers. An operations person from a trading platform and an operations person from ByteDance are viewed as having vastly different values in the eyes of AI company HR.

This may be the most profound cost experienced by Web3 practitioners after being laid off.

This Winter is Colder than Ever

Every industry has cycles. But this round of winter in the Web3 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 are all competing for the same funds from the same batch of retail investors. 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 leveraged retail investors.

To determine whether an industry is young or old, one must not only look 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 from informed sources, 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 firing them for various reasons, disrupting the rhythm of competing teams, obtaining intelligence and customer resources, while the hired individuals are merely disposable tools.

This reminds the author of the delivery wars in the internet industry a few years ago, where the smartest group of people spent hundreds of billions in mutual consumption. In two quarters, two of China's internet giants, Alibaba and Meituan, burned over 220 billion yuan (about 31 billion USD) in delivery subsidies, nearly equivalent to the total amount spent on generative AI by all companies worldwide in a year.

Now, cryptocurrency trading platforms are replaying the same script. The entire industry's cake is shrinking, retail investors are leaving, trading volumes are declining, yet each platform continues to poach employees, sabotage each other, publicly insult each other, and engage in a war of attrition.

In the past, we often attributed large-scale layoffs at trading platforms to the cyclical nature of the Web3 industry and the impact of AI. As mentioned at the beginning of the article, by 2026, over half of tech layoffs cited AI as a reason, but nearly 60% of companies admitted that the real reason was financial pressure.

The Web3 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 suffer losses time and again; using opaque performance evaluation and monitoring systems to erode employee trust and creativity; failing to think of new business models during the winter, instead spending resources on undermining competitors.

If today’s Web3 industry winter is not a cyclical fate, then who is to blame for the decline of the Web3 industry?

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