A digital art auction house that had surged in popularity as cryptocurrency prices soared is slashing 20pc of its staff as confidence in the market collapses.
OpenSea led the trade in so-called “non-fungible tokens”, or NFTs, digital collectibles that have been gobbled up by cryptocurrency enthusiasts to the tune of billions of pounds.
NFT sales rocketed to $ 25bn last year, according to a wealth report by Knight Frank, representing almost a third of the global art market.
But trade in the tokens has fallen from around $ 100m per day at the start of the year to around $ 30-40m per day. This has accompanied a rout in the price of Bitcoin and other cryptocurrencies.
Devin Finzer, OpenSea’s chief executive, said the company was preparing for a “prolonged downturn” in cryptocurrency.
“The changes we are making today put us in a position to maintain multiple years of runway under various crypto winter scenarios (five years at the current volume),” he said.
Mr Finzer said OpenSea would let a fifth of its staff go. Staff leaving would see shares they had been due to get in the company advanced to them. OpenSea said it would have around 230 people after the cut backs, suggesting around 50 had been let go.
NFTs are a kind of unique online token designed to be impossible to counterfeit. The technology means a cryptocurrency enthusiast can claim to be the owner of a rare virtual trading card or original work of digital art.
Artists such as the estate of Andy Warhol have “minted” their own NFTs and Premier League football clubs have launched digital collections of player trading cards. Fashion companies have also entered the market, with Adidas last year collaborating with leading NFT creators Bored Ape Yacht Club.
OpenSea runs a marketplace for these tokens, taking from the sales which are done in cryptocurrency. In December alone, it processed around $ 3.3bn in NFT sales, making around $ 82m in revenue for itself.
Earlier this year, the company was valued at $ 13.3bn in a $ 300m funding round.
The cutbacks at OpenSea follow mass redundancies across the cryptocurrency space. Coinbase, the top consumer cryptocurrency exchange, slashed 1,100 staff in June while dozens of other digital coin companies have been forced to scale back their ambitions.
The clamour around NFTs has seen traditional auctioneers follow tech start-ups and begin selling digital tokens. Sotheby’s and Christie’s have both hosted auctions of NFT artworks.
Sotheby’s launched its own NFT website, called Sotheby’s Metaverse, that has included auctions of collectible artwork featuring Liverpool FC players. It is currently hosting a sale of digital art by Japanese artist Tomokazu Matsuyama.
Across the market, NFT sales totalled just over $ 1bn in June, according to cryptocurrency company Chainalysis, down from a peak of $ 12.6bn. The price of Ethereum, the cryptocurrency typically used to power NFT sales, has plunged 63pc so far this year.