Matter Labs, the primary developer behind the Ethereum layer-2 protocol ZKsync, has laid off 16% of its workforce as part of a company-wide restructuring. This decision was made to better align the company’s resources with the evolving needs of developers working on ZKsync, according to CEO Alex Gluchowski’s post on X (formerly Twitter) on Tuesday.

Gluchowski explained that a recent organizational planning exercise revealed a mismatch between the current talent and roles within Matter Labs and the company’s future requirements. As a result, the restructuring was deemed necessary to adapt to the new demands of the technology and support required by developers building on the ZKsync platform.

Matter Labs, which has approximately 200 employees according to its LinkedIn profile, is expected to have laid off over 30 people as part of this move. The restructuring marks a significant shift in the company’s strategy as it seeks to optimize its workforce and better support the development and adoption of ZKsync in the rapidly changing blockchain landscape.

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What is ZKsync?

ZKsync is a layer-2 scaling solution for Ethereum that leverages zero-knowledge proofs, specifically zk-rollups, to increase transaction throughput and reduce fees while maintaining the security and decentralization of the Ethereum network.

Key Features of ZKsync:

1. zk-Rollups:

• Core Technology: ZKsync uses zk-rollups, a technology that bundles (or “rolls up”) hundreds of transactions into a single batch, which is then processed on the Ethereum mainnet. The zk-rollup generates a succinct cryptographic proof, called a zero-knowledge proof, which is submitted to the Ethereum blockchain. This proof ensures that the transactions within the rollup are valid, without requiring the mainnet to process each transaction individually.
• Scalability: By reducing the load on the Ethereum mainnet, zk-rollups significantly improve scalability, enabling thousands of transactions per second (TPS) compared to Ethereum’s base layer.

1. Low Transaction Fees:

• Cost Efficiency: ZKsync reduces gas fees for users by processing transactions off-chain in batches and then submitting them to the Ethereum mainnet in a compressed format. This efficiency makes it cheaper for users to interact with decentralized applications (dApps) and perform transactions.

1. Security:

• Ethereum-Level Security: Since ZKsync relies on the Ethereum mainnet for its security, users can trust that their assets and transactions are as secure as they would be on Ethereum itself. The zero-knowledge proofs ensure that even though transactions are processed off-chain, they are fully verifiable on-chain.

1. Fast Transactions:

• Instant Confirmation: Transactions on ZKsync are confirmed almost instantly, providing a much smoother user experience compared to the often slower confirmation times on Ethereum, especially during periods of high network congestion.

1. Support for Ethereum Ecosystem:

• Interoperability: ZKsync is fully compatible with Ethereum’s smart contracts and supports the Ethereum Virtual Machine (EVM), meaning that developers can deploy their existing Ethereum dApps on ZKsync with minimal modifications.

1. Decentralization:

• No Compromise on Decentralization: Unlike some other scaling solutions that rely on centralized validators, zk-rollups maintain decentralization by having all transactions verified on the Ethereum mainnet.

1. Ecosystem and Adoption:

• Growing Ecosystem: ZKsync is gaining traction within the Ethereum ecosystem, with various decentralized finance (DeFi) platforms, NFT marketplaces, and other dApps starting to integrate and support ZKsync to offer users lower fees and faster transactions.

Use Cases:

• DeFi: Lower fees and faster transactions make ZKsync an attractive option for DeFi platforms looking to improve user experience.
• NFTs: Artists and collectors can benefit from reduced costs when minting, buying, or selling NFTs.
• Payments: ZKsync’s low fees and fast confirmation times make it suitable for microtransactions and other payment-related applications.

Future Prospects:

As Ethereum continues to evolve, ZKsync is expected to play a critical role in scaling the network, especially with the growing demand for decentralized applications and the limitations of Ethereum’s base layer in terms of throughput and cost.

Next move for Matter Labs

Following the restructuring and layoffs, Matter Labs is likely to focus on several key areas to ensure continued growth and alignment with its evolving strategy. Here are some potential next moves for the company:

1. Refinement of ZKsync Technology: Matter Labs may invest more heavily in enhancing ZKsync’s core technology, particularly in areas that are critical for scaling Ethereum’s capabilities. This could include improvements in performance, security, and user experience.
2. Support for Developers: Given that the restructuring was aimed at aligning resources with the needs of developers, Matter Labs may introduce new tools, frameworks, or educational resources to better support developers building on ZKsync. This could also involve more hands-on collaboration with key development teams and partners.
3. Expansion of Ecosystem Partnerships: Matter Labs might pursue strategic partnerships within the Ethereum and broader blockchain ecosystems to drive adoption of ZKsync. This could include collaborations with decentralized finance (DeFi) projects, non-fungible token (NFT) platforms, and other layer-2 solutions.
4. Community Engagement and Transparency: To maintain trust and support within the community, Matter Labs may increase its transparency around the restructuring and future plans. Engaging more actively with the community through social media, blog posts, and events could help in this regard.
5. Focus on Revenue Generation: With the changing economic landscape, Matter Labs might look into diversifying its revenue streams. This could involve introducing premium services, consulting, or enterprise solutions based on ZKsync’s technology.
6. Hiring for Strategic Roles: Despite the layoffs, Matter Labs may seek to hire talent in specific strategic areas where gaps have been identified. This could include roles in business development, product management, or specialized technical positions.
7. Scaling Operations Globally: Matter Labs may look to scale its operations and market presence globally, potentially entering new markets or increasing its footprint in existing ones, particularly where Ethereum and layer-2 solutions are gaining traction.

Overall, Matter Labs is likely to focus on refining its core product, strengthening its ecosystem, and ensuring it has the right team and resources in place to support its long-term goals.