Yuga Labs, the Web3 startup behind Bored Ape Yacht Club and CryptoPunks, has announced it is laying off employees from its U.S. team as part of a broader restructuring.

The decision was shared with company employees in an email from CEO Daniel Alegre and later posted on Yuga Labs’s website on October 6.

Yuga Labs declined to disclose the number of employees impacted, though a message on X, formerly Twitter, by co-founder Greg Solano revealed the company still had more than 120 U.S. employees.

Alegre wrote that Yuga Labs was under-resourced to take on its current load of projects, and needed to consolidate and refocus on core projects.

“To create truly amazing experiences that matter to our communities and our business, we need to place our bets on fewer key initiatives and team up with complementary external partners to make these experiences happen,” he wrote.

In short, this means a full commitment to Otherside, Yuga Labs’s gamified metaverse. Alegre arrived six months ago at Yuga Labs from Activision Blizzard, the gaming giant that owns video games Call of Duty and World of Warcraft—a move that seemed geared towards bolstering the development and monetization of Otherside. It was accompanied by hiring Spencer Tucker as its first chief gaming officer.

Otherside is being designed as a virtual world in which to house Yuga Labs’s NFT brands including Bored Ape Yacht Club, CryptoPunks, 10KTF, and Meebits. While Alegre’s post promised that the company would continue growing the BAYC and CryptoPunks brands and communities, it noted that the 10KTF and Meebits teams will be folded into Otherside.

Over the past 18 months, Yuga Labs has held demos for games, sold virtual land called Otherdeeds, and partnered with companies to build out its gaming capabilities.

As Alegre noted in his letter, it’s been a bumpy ride. “There have been a few rocky rollouts, particularly in our gaming execution,” he wrote. “We weren’t optimized to build and manage everything in-house. We need to make greater progress with the development of Otherside.”

The layoffs are occurring at a moment of continued downturn for crypto and Web3 companies more generally. Yuga Labs saw royalty revenue fall to $2.5 million in Q3 compared to $8.7 million in Q1. The company declined to comment on the specific impacts of the market, though Alegre’s message acknowledged it was a challenging time “not only for our industry but also for the global economy.”

More Yuga Lab layoffs may be on the way, with Alegre noting in his message that the company was actively reviewing its international teams.

In March 2022, Yuga Labs raised $450 million in venture capital funding through a $4 billion valuation.

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