Matter Labs Restructures to Meet Changing Demands, Lays Off 16% of Team

Matter Labs, the main developer behind the Ethereum layer-2 protocol ZKsync, laid off 16% of its employees as part of a restructuring to adapt to “the different type of technology and support” developers building on system now require, CEO Alex Gluchowski said in a post on X.

“We went through a large org planning exercise, and it became clear that the talent and roles we have today do not perfectly match our needs,” Gluchowski wrote in his Tuesday post. Matter Labs may have as many as 200 employees according to its LinkedIn profile, so the layoffs could amount to more than 30 people.

ZKsync is jostling for market share in the crowded field of Ethereum layer-2 networks, protocols built atop the main blockchain that provide an alternate venue for transactions to be settled, with the goal of doing so faster and cheaper.

The proliferation of layer 2s may indicate that the sector needs to be reframed and looked at through a use case-specific lens, Gluchowski suggested in a recent interview with CoinDesk. Matter Labs released its Elastic Chain in June to tackle fragmentation between this multitude of layer 2s by enabling them to plug into its interoperability layer.

“I think that we will not need too many general purpose layer 2s, but we do need some application specific L2s or community specific L2s,” he said in the interview. “We have projects launching on the Elastic Chain that are just gaming chains, which does not really need to be sharing infrastructure block space with DeFi or financial applications.”

The protocol’s ZKSync (ZK) token has dropped 3.14% in the past 24 hours according to CoinGecko, while ether fell 2.9%. The broader market, as measured by CoinDesk 20 Index (CD20), declined 1.5%. ZK has lost about 64% of its value since its June debut.

See also: Solving Fragmentation Is Next Blockchain Race as Layer 2s Multiply, ZKsync Developer Says

UPDATE (Sept. 3, 15:18 UTC): Adds detail and background throughout.