On the very day that the Ethereum Merge dramatically elevated the importance of validators in the blockchain's ecosystem, one of the biggest ones - stakefish - was beset with chaos.
More than 25% of its workforce, according to people familiar with the matter, was either laid off or resigned, including two senior departures: Head of Strategy and Operations Jun Soo Kim and Head of Protocols Daniel Hwang.
CoinDesk spoke with four current and former employees for this story, all of whom took issue with how the layoffs were handled. One of the employees asked not to be identified because they signed a non-disclosure agreement. In total, right when stakefish was set to rake in big rewards for securing Ethereum's new miner-free network, eight employees were laid off and three more resigned from the company.
According to these employees and internal messages reviewed by CoinDesk, workers were not informed they would be let go from stakefish until a few days before their termination date, Sept. 15. That was also the day of the Ethereum Merge - precisely the event for which stakefish had spent years laying crucial groundwork because that day was when Ethereum officially shifted from being run by miners to validator operators like stakefish.
When asked for comment via the messaging service Telegram, Chun Wang, the CEO and founder of stakefish, wrote: "It is normal in a bear market to reduce team size and optimize costs." He added: "Only non-tech positions are laid off. We're still working hard to hire more developers and devops."
Kim's resignation in particular marks a major blow to stakefish, which offers customers the ability to help secure proof-of-stake blockchains like the newly revamped Ethereum in exchange for rewards. According to former employees, Kim, whose resignation will take effect in October, was viewed as a potential replacement for Wang and served as a sort of interim CEO whenever the company's founder was absent.
Kim told CoinDesk that he decided to leave in order to start his own venture.
Hwang, the only member of stakefish's senior leadership to be included in the layoffs, opted to resign rather than accept a two-week severance package, which he told CoinDesk he considered "insulting." Another employee who spoke to CoinDesk reported having been offered the same deal. (For comparison, Coinbase, the cryptocurrency exchange that laid off 18% of its workforce earlier this year, offered its employees a minimum of 14 weeks severance pay).
Hwang said he was tipped off that he would be let go by Andrea "Dimi" Di Michele, one of his direct reports. Dimi, who was appointed as Hwang's replacement and was one of stakefish's longest-serving employees, resigned from the company a few days later.
"They gave, like, two days' notice," Dimi told CoinDesk. "I don't want to throw shade on stakefish - it's not my intention - but I think it's not fair what's going on," he said. "In general, stakefish had a great opportunity to do something great," he added. "I'm very disappointed."
Ethereum's switch from a proof-of-work to a proof-of-stake system handed the reins of the second-largest blockchain from miners to validators that "stake" ether (ETH), Ethereum's native currency, by sending it to an address on the chain where it cannot be bought or sold. Stakefish, which sets up interest-earning validators on behalf of its customers, controlled around 2% of all staked ETH at press time. It is also a major validator in other ecosystems, including Cosmos, Polkadot, Polygon and Solana.
Stakefish is based in the British Virgin Islands and has co-working spaces in Palo Alto, California, and Seoul. Most of its staff works remotely.
Wang, stakefish's founder, co-founded F2Pool, the third-largest bitcoin (BTC) mining pool. Employees told CoinDesk the two companies frequently collaborate and share resources.
As news of the layoffs spread across stakefish, several employees took to the company's Slack messaging platform to air their grievances around how information had been communicated to employees.
"I have to express my opinion that this layoff is implemented in a horrible way," one employee wrote. "Keeping everything quiet makes the top management's words untrustworthy. It only makes low morale much lower, and the employees have no idea what to expect next. Lower morale, more people will decide to go. Maybe that's the goal?"
"I understand the decision however the implementation of this decision by those in HR has been for want of a better word horrific," responded another employee. "Letting people know in a staggered fashion that they are to be fired with 2 days notice as if rumors and news like that does not travel sideways in a company is absolutely unbelievable."
This employee reported hearing of the layoffs on a call with their team. "Upon further pushing we found out that people currently on this call were yet to hear that they are in fact fired, which as you can understand left us all dumbstruck," they wrote.
"As of today 1 member of the marketing team has still not been contacted by anyone that they are to be fired tomorrow," responded a third employee.
Danny Nelson contributed reporting.