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Polygon Labs has laid off 100 employees, about 20% of its workforce, due to the consolidation of business units.
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The laid-off employees will receive three months of severance pay, regardless of their position or tenure.
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Polygon Labs is a decentralized platform that makes Ethereum more accessible and was founded as Matic in 2017 before rebranding as Polygon in February 2021.
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The crypto sector lost over a trillion dollars in value last year due to rising interest rates and concerns about an economic downturn.
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The market crash resulted in high-profile bankruptcies of companies such as Three Arrows Capital and Celsius Network.
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FTX, a major exchange, filed for bankruptcy protection in November, causing regulatory scrutiny of crypto firms' fund holding and business operations.
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Polygon Labs is the latest digital asset company to lay off employees due to market conditions.
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The layoffs affected all levels and tenures of employees.
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Severance pay was offered to help ease the financial burden on affected workers.
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The layoffs at Polygon Labs reflect the wider challenges facing the crypto sector as it navigates market volatility and regulatory scrutiny.