Dapper Labs, the tech firm and non-fungible token (NFT) creator, has announced its second round of staff layoffs in less than a year. The move comes amid a more broadly challenging market environment for NFTs and cryptocurrencies.

The company behind creating the popular NFT collections, such as CryptoKitties and NBA Top Shots, has announced that it will be parting ways with 51 employees.

This latest round of staff reductions marks the third time Dapper Labs has downsized its workforce in less than a year, having already cut its staff by 20% in February 2023 and 22% in November last year.

In a note to employees, the CEO of Dapper Labs, Roham Gharegozlou, revealed that the latest round of staff reductions will affect both full-time employees and C1 contractors.

The CEO’s note read:

The decision was incredibly difficult because of the amazing people affected but it is necessary and the right thing to do is to ensure a lean and efficient Dapper Labs.

Dapper Labs Cites Market Conditions And Low Demand For Latest Downsizing

According to employee data from Growjo.com, the latest workforce reduction at Dapper Labs amounts to approximately 12% of the company’s total staff.

This news comes at a time of broader weakness prevailing in NFT markets, as sellers struggle to find buyers and trading volumes decline.

According to data from the NFT analytics platform NFTGo, the NFT market has seen a considerable fall in trading volume in recent months, as investors and collectors alike have become more cautious amid the ongoing volatility and uncertainty in the cryptocurrency industry.

Furthermore, many blue chip NFT collections have seen a significant decline in floor prices in recent months, contributing to the challenges facing the NFT industry. In addition to challenging market conditions, Dapper Labs has cited a lack of appetite for digital artwork to contribute to its latest round of staff reductions.

Dapper Labs CEO: Company “Well Capitalized” Despite Downsizing

Despite recent downsizing, Dapper Labs and its blockchain platform, Flow, remain well-capitalized to pursue their mission, according to the company’s CEO.

Gharegozlou added:

With this restructure we have made the business more lean, which is going to let us do the right thing for our fans and grow our communities in the most healthy ways possible.

According to reports, in March 2021, Dapper Labs raised $305 million in funding, bringing its post-money valuation to $2.6 billion.

According to industry observers, including sports and NFT commentator Clegainz, the recent layoffs at Dapper Labs were “unsurprising” given the challenging market conditions in the Web3 industry and the wider macroeconomic landscape.

Clegainz also pointed out that Dapper Labs was not alone in facing these difficulties, as other Web3 companies were also experiencing similar hardships.