Optimism Team Lays Off 20 Employees Amid Ethereum Scaling Shifts, Base Migration Plans

OP Labs, the core development team behind Ethereum layer-2 network Optimism, is laying off 20 employees as the firm seeks to make quicker decisions and reduce overhead. 

The decision “reflects a narrowing focus” and was not made due to financial constraints, according to an internal note shared publicly by OP Labs co-founder and CEO, Jing Wang. 

“This is not about finances. OP Labs is well capitalized with years of runway,” Wang said in a Slack message to the company that she published on X. “This is about doing fewer things well, making decisions faster, and reducing coordinating overhead.” 

The firm’s decision comes at a pivotal moment for layer-2 networks. It follows Ethereum co-founder Vitalik Buterin’s February message that insisted the mainnet behind the second-largest crypto asset needed a “new path,” with less reliance on scaling networks. 

“The original vision of L2s and their role in Ethereum no longer makes sense,” Buterin posted on X at the time. While previously advocating for layer-2 networks as a necessity to help scale the Ethereum ecosystem, Buterin now thinks mainnet, or layer-1 Ethereum, is scaling sufficiently on its own. 

“L1 does not need L2s to be ‘branded shards,’ because L1 is itself scaling,” he said. 

Optimism’s open-source technology stack OP Stack, which helps power more than 50 layer-2 networks and secure $13 billion in assets according to its website, is also being dealt a blow in the near future.

Last month, the Coinbase-incubated layer-2 network Base announced it would be modifying its technology stack, migrating away from Optimism’s technology in a move that will allow it to ship faster and similarly reduce overhead.

The change will mean that a portion of the sequencer revenue that Base generated and shared with Optimism will cease to exist once the migration is complete. 

A representative for OP Labs told Decrypt the firm had no further comment on the layoffs, pointing to the X post and saying it is focused on “supporting employees and managing the transition internally.”

The Optimism token (OP) is down around 2.9% in the last 24 hours amid the news, now changing hands around $0.11. The token has not been spared by broader crypto market drawdown in recent months and has fallen around 86% in the last year, now around 98% off its all-time high of $4.84 from early 2024. 

OP mainnet, the firm’s own Ethereum scaling network, ranks 12th among all networks in terms of bridged total value locked with $1.16 billion, according to data from DeFiLlama.

Editor’s note: This story was updated after publication to include the response from OP Labs.