Author: Claude, Deep Tide TechFlow

Deep Tide Guide: Alex Gluchowski, founder of Matter Labs, the parent company of zkSync, announced on June 17 that the company would lay off employees again, fully betting on a privacy chain called Prividium, specifically serving regulated financial institutions.

This is the second layoff for the company in two years. A founder who claims to be a "freedom maximalist" ultimately took the project towards compliance, permissions, and banks. The community's reaction is split, with the sharpest question being: After raising 458 million dollars, where did the money go? The current price of the $ZK token is about 0.019 dollars, down about 93% from its historical peak.

The story of zkSync is heading in the opposite direction from what it originally promised.

On June 17, Matter Labs founder and CEO Alex Gluchowski posted on the X platform, announcing a reduction in the company's team size. "Today we have reduced the team size at Matter Labs. This is my decision, and I want to explain it," he wrote at the beginning of the post.

The layoffs included senior engineers, designers, and operators, whom Gluchowski referred to as "the strongest group of people I've worked with." This is the second layoff since September 2024, and the official ratio of layoffs has not been disclosed.

What is truly worth noting is not how many people were laid off, but what this company has decided to become.

From "Serving Everyone" to "Serving Banks," a complete turnaround

Gluchowski clearly explained the logic behind this layoff in his post: since 2024, the company has started building products for regulated financial institutions, which later evolved into Prividium, "the entire company is now focused on one goal: to build infrastructure for enterprises and regulated financial institutions on-chain, with privacy at its core."

What is Prividium?

In simple terms, it is a "permissioned" blockchain, in stark contrast to the public, permissionless chain that zkSync has always touted, where anyone can use it. Permissioned means that only approved institutions can access it, and ordinary users cannot enter.

The Matter Labs official website describes Prividium as an Ethereum platform for financial institutions and fintech companies, which is currently piloting with Deutsche Bank and UBS.

The contrast of this shift lies in Gluchowski himself.

His X bio states "Freedom maximalist," adhering to "freedom → progress → prosperity." This technology set of zkSync has long been treated as a public good by the crypto community, and when Matter Labs wanted to register the "ZK" trademark in 2024, it was withdrawn after collective opposition from zero-knowledge researchers, citing that such technology should not be monopolized by any single entity.

Now, this company has proactively shifted its focus from a public chain serving retail and developers to a permissioned chain serving licensed banks.

The 458 Million Dollar Inquiry, the Community Turns Against Instantaneously

Gluchowski probably anticipated the reaction beneath the post.

Matter Labs has raised approximately 458 million dollars, backed by well-known institutions such as Dragonfly and Blockchain Capital. In the C round of 2022, they raised 200 million dollars. The community's response is divided into two camps, one looking forward to the direction of Prividium, while the other directly questions the destination of the money. A widely shared comment read, "Can you explain? You raised 450 million dollars to develop products. Where is the money? Why are you still asking for money while laying off people?"

This is not the first time Matter Labs has faced scrutiny over layoffs.

In September 2024, the company laid off 16%, totaling 24 employees, reducing the total number to 126 people. At that time, the official repeatedly emphasized that "the financial situation remains stable," and the layoffs were to "maintain lean operations," not because of a lack of funds. The wording for both layoffs is very similar, stating that "the team structure does not match current needs."

The problem is that when a company has raised nearly 500 million dollars and continues to raise funds but has two rounds of layoffs in two years, the credibility of the statement "we are not short of money" will be repeatedly diminished.

$ZK Down 93%, Token Holders Pay for the Shift

The most direct cost of the strategic shift is borne by retail investors in the secondary market.

The current price of the $ZK token is about 0.019 dollars, while its historical peak shortly after its launch in June 2024 was 0.27 dollars, reflecting a decline of approximately 93%. This token has spent most of its time since launch below its issuance price, with a current market value of about 180 million dollars, ranking outside the top 150 in crypto assets.

The awkwardness of the token lies in its value capture logic, which is disconnected from the company's new direction. Prividium serves banks, adopting a commercial model of "enterprise authorization fees" off-chain.

A Survival Posture in the L2 Red Sea

Looking at the broader picture, Matter Labs' turnaround is also a facet of the entire Ethereum L2 competition.

In recent years, a large number of players have entered the Ethereum Layer 2 network (which runs on top of the mainnet, seeking faster and cheaper scalability solutions): Coinbase’s Base, Arbitrum, Optimism, Polygon, all competing for the same pool of developers and users. zkSync was once the most active in the ZK Layer 2 space, but after the airdrop in June 2024, users quickly dwindled, with active addresses dropping from a peak of over 200,000 in July to an average of only about 30,000 by the end of the year. In a homogenized environment where no one can create differentiation, shifting to tackle the "service banks" segment, which has higher profits and fewer competitors, is a comprehensible business decision.

However, this decision comes with its costs. It means giving up a portion of the earliest believers in the narrative of "permissionless, belonging to everyone," hence holding $ZK. Matter Labs has chosen a more pragmatic and potentially more profitable path, at the cost of dismantling the sign they erected years ago.

Gluchowski concluded his post by saying to those departing, "Thank you for everything you built here, thank you for the standards you set."

This statement also reflects the company itself.