Solana game developer Automata’s recent announcement of mass layoffs has left the crypto circle in a jumble. And as the co-founder and CEO Michael Wagner stated, the decision wasn’t made lightly. A ‘significant headcount reduction’ is expected to ensure Automata’s ability to continue developing its Star Atlas game, which will see the team downscale from 235 personnel to only 45 by late 2022.
This dramatic scaleback, according to Wagner, is also set to affect the pace of software development kit (SDK) that merges Unreal Engine 5 and the Solana blockchain, the basis for the Star Atlas game – with development expected to “resume at a significantly slower pace.”
One of the reasons behind this drastic step is substantial financial losses, linked primarily to the in-game token Atlas’ decline by 80% in value, significantly impacting the project’s revenue—about 33%. Additionally, a material tax liability of nearly $30 million and a loss of $15 million from FTX’s collapse, which made a considerable chunk of their liquid cash balance, form part of their financial woes.
Although a ‘sizable portion’ of the FTX funds was recovered by January, the setback was such that expected equity and debt financing deals possibly won’t go through. This comes despite the Solana Foundation offering grants to support its ecosystem, and all-time high usage of the Solana blockchain.
One might question whether Automata took on more than it could handle with its AAA-quality development. Its high capital-intensity is currently unsustainable, requiring a significant shift in business strategy.
On the other side of the pond, Robinhood, the cryptocurrency-friendly trading platform, is accelerating its plans to launch services in the UK. The hiring of former Barclays executive Jordan Sinclair as its U.K. entity’s CEO indicates that Robinhood’s expansion into the U.K. market will likely take place by the end of 2023.
But with the back and forth of companies like Automata and Robinhood, it’s even more imperious to assess risk and the dynamic landscape of cryptocurrencies. Companies, investors, and the market at large must consider the fluidity of finance and technology in the blockchain world to make strategic, informed decisions. The ticking time bomb of an ever-changing market landscape awaits.
Source: Cointelegraph
