Web3 Cold Winter Battle Royale: Resignations, Closures, Transformations, and Selling Out

Author: Gu Yu, ChainCatcher

In the recent year of the crypto winter, Web3 startups have been falling one after another like falling leaves. The once-booming bull market has vanished, replaced by broken funding chains, rampant hacking, and strategic confusion. Many companies once thrived on top-tier teams and backing from leading VCs, but now they are struggling to survive in the cold wind: some hurriedly pivot, some sell out at low prices, some shut down quietly, and others suffer devastating thefts.

Layoffs and resignations have also followed. Senior figures such as Tom Howard, Strategic Director at CoinList; Abdul Rehman, Head of Monad DeFi; Benjamin Speckien, Security Director at Celo; Aleksander Leonard Larsen, COO of Axie Infinity, have all left their companies.

This is not just a financial crisis but a brutal reshuffle of the industry. Essentially, these phenomena stem from a profound clash within the Web3 ecosystem—between technology and capital, product and market, vision and reality. Each story reflects the confusion and reluctance of market participants.

Layoffs

Layoffs are a common strategy for crypto projects in bear markets. Cutting non-essential roles like marketing and tech staff can significantly reduce personnel costs and improve operational efficiency, helping projects extend their survival and prepare for the next bull run.

In early February, the well-known crypto exchange Berachain announced a 25% layoff (up to 200 people) and shut down its exchange operations in the UK, EU, and Australia. Half a month later, senior management including COO Marshall Beard, CFO Dan Chen, and General Counsel Tyler Meade resigned, with their responsibilities taken over by other management team members.

This was only three months before its IPO, during which its stock price had already fallen over 60%. The bleak market conditions and revenue issues forced it to adopt aggressive business contraction strategies.

In early January, the Berachain Foundation also announced the dismissal of most retail marketing teams, and lead developer Alberto would leave. The project admitted that, in 2024/2025, a retail-first strategy in the crypto space had become less effective.

In August 2025, Eclipse Labs, a developer of modular rollup infrastructure, announced a 65% layoff. The same month, Lido announced a 15% cut due to cost pressures; Sandbox founder stepped down and laid off 50%, shifting focus from metaverse to Web3 applications and Launchpad plans. In July 2025, Eigen Labs laid off about 25%, shifting focus to EigenCloud.

Layoffs appear as cost-control measures, but more deeply, they reflect a reassessment of future revenue expectations. When management reduces team size, it essentially judges that the marginal returns from expansion no longer justify the additional costs.

This also signals that Web3 startups are shifting from “growth first” to “survival first.” Efficiency issues masked during the bull market are now magnified in the bear market. Organizational redundancies, market deployment efficiency, and product iteration aligned with user needs are all exposed under cash flow pressure.

Transformation

If layoffs are a passive contraction, then pivoting is an active adjustment. Even projects with sufficient financial backing need to carefully consider whether their strategic direction aligns with current market trends and user needs.

Many projects built their growth logic in the last cycle on abundant liquidity and high risk appetite. When these conditions disappear, their narratives become unsustainable. As a result, many are extending into new areas like payments, AI, and RWA.

Polygon is a typical example. As a veteran Layer 2 project, Polygon has maintained a leading position technically and in the market. However, with Layer 2 increasingly sidelined and unable to compete with non-EVM chains like Solana and Aptos, in January this year, Polygon decided to pivot toward stablecoins, starting with acquiring capabilities related to payments.

In early January, Polygon Labs announced the acquisitions of Coinme and Sequence to enhance regulated stablecoin payments and fund flow infrastructure. Coinme provides a licensed fiat on/off-ramp in the US, connecting cash, debit cards, and digital assets under existing regulations. Sequence offers infrastructure that abstracts bridging, trading, and gas operations for end users.

Polygon stated that these acquisitions form the foundation of an open financial stack aimed at enabling regulated stablecoin payments and fund flows on Polygon’s blockchain. They aim to turn Polygon into a profitable blockchain payments company.

Last month, Solana’s NFT marketplace Magic Eden announced it would gradually cease support for EVM, Bitcoin Runes, and Ordinals markets, redirecting resources to its new prediction market project Dicey.

Bitcoin mining companies are also undergoing notable pivots. In November 2025, Bitfarms announced it would shut down its Bitcoin mining operations over the next two years and convert its facilities into AI and high-performance data centers. Recently, Bitfarms rebranded as Keel Infrastructure, severing its ties with “Bitcoin” in its name.

Cipher Mining announced in February it would rebrand as Cipher Digital, selling its mining farm shares to Canaan for about $40 million, focusing on becoming a leading data center developer and operator in next-generation computing.

Selling Out

Even projects with massive funding, due to slow product progress and waning confidence, have had to sell out. A typical case is the decentralized social protocol Farcaster.

In mid-January, Farcaster announced it was acquired by Neynar, with the protocol contracts, codebase, applications, and ownership transferred to Neynar, which will handle future operations and maintenance. The project team also refunded investors the full $180 million raised.

Just a month earlier, co-founder Dan Romero had announced a major strategic shift, abandoning the “social-first” approach of the past four years in favor of a wallet-centered growth model. But this acquisition indicates that Farcaster’s exploration into wallets did not meet expectations.

Similarly, Lens Protocol, another decentralized social protocol, faced decline. Due to decreasing user activity, the original team announced the protocol was taken over by Mask Network, with the original team becoming technical advisors and returning to DeFi innovation.

The cross-game avatar NFT platform Ready Player Me, previously backed by a16z with $56 million, was highly regarded. But as the NFT sector declined and user numbers plummeted, its X account only posted five tweets in the past year. At the end of last year, Ready Player Me was sold to streaming giant Netflix, with the team successfully exiting.

Hacks and Theft

Theft has become a fate shared by many high TVL protocols. Hackers see them as prime targets, with large-scale thefts occurring almost weekly, causing significant losses to protocols and depositors, further eroding market and user trust.

In mid-February, the cross-chain bridge of IoTeX, a well-known DePin infrastructure project, was hacked. The leak of validator private keys allowed unauthorized control of the bridge contract, resulting in a loss of $4.4 million. IoTeX then announced full compensation for affected users, with minimal impact on operations. For many smaller projects, such attacks can be catastrophic.

In early February, Solana-based DeFi protocol Step Finance was hacked when its executive devices were compromised, resulting in theft of about $40 million. The team explored options including fundraising and acquisitions but couldn’t find a viable solution, ultimately deciding to cease all operations immediately.

In early January, the blockchain scaling protocol TrueBit was attacked via an integer overflow in its smart contract. The attacker exploited a carefully crafted input to trigger an overflow in the token purchase price calculation, allowing them to mint TRU tokens at extremely low or zero cost, then immediately burn them to extract high ETH from the pool. The attacker profited $26.4 million, and TRU’s price collapsed to zero. After issuing a post-mortem in January, TrueBit’s official X account has not been updated since.

Shutdowns

Compared to layoffs and pivots, many projects quietly fail during long, drawn-out struggles. They invest heavily in product development, marketing, and listings, but funds and patience are exhausted in fruitless marketing events and new products that fail to attract users, leading to eventual shutdowns.

DappRadar, founded in 2018, was once the most popular application data platform in crypto. Despite raising over $7 million, it faced monetization challenges. In 2021, it issued tokens to boost cash flow, but the tokens lacked utility and their prices kept falling, making sustainable support impossible.

“We have made the difficult decision to shut down the DappRadar platform. In the current environment, operating such a large-scale project is no longer financially sustainable. After exhausting all options, we have no choice but to make this tough call,” DappRadar stated. “As we step away, we believe we have stayed true to our principles and contributed positively to the industry.”

In February, multi-chain lending protocol ZeroLend announced it would cease operations after three years. “Over the past period, several chains supported by ZeroLend have become inactive or experienced significant liquidity drops. In some cases, oracle providers also ceased support, making reliable market operation and sustainable revenue increasingly difficult. Meanwhile, as the protocol grew, it attracted more malicious actors, including hackers and scammers. Given the slim profit margins and high risks inherent in lending protocols, the protocol has been operating at a loss for a long time.”

In December 2025, cross-chain smart wallet Blocto announced it would shut down. “Over the past few years, we have absorbed over $5.5 million in losses to maintain community services. But this cannot last forever. Realizing that operational funds are running out, we started communicating with Flow/Dapper leadership in June this year, but have yet to secure a meeting. Each email takes weeks, while our remaining funds are depleting.”

Conclusion

In the early stages of Web3, narrative power far exceeded the product itself. A grand vision and seemingly disruptive mechanisms could attract capital and users. However, as macro liquidity returns to rationality and investors and users reassess risk and reward, only projects with clear cash flow logic, genuine user needs, reliable technology, and compliance will survive the cycle.

These real-world examples serve as a cold mirror reflecting the structural fragility accumulated during Web3’s rapid expansion: over-reliance on external liquidity, neglect of business closed loops, and insufficient awareness of security and compliance.

But this winter is not the end; it’s more like a necessary phase of industry maturation. Almost all technological revolutions have gone through similar stages: capital frenzy, bubble expansion, sharp correction, and confidence rebuilding. Web3 is no exception.

Therefore, rather than viewing layoffs, pivots, thefts, and shutdowns as signs of pessimism, see them as a necessary filtering process. As regulatory frameworks become clearer, infrastructure improves, and markets self-purify, the teams and products that emerge from this winter will have stronger risk awareness, clearer business logic, and with the aid of increasingly powerful AI, the new cycle of crypto ecology remains more promising than ever before!

Related reading: “Institutions Embrace Crypto While Practitioners Feel Disillusioned—Who Will Win?”