Author: Claude, TechFlow
TechFlow Insight: Alex Gluchowski, founder of Matter Labs, the parent company of zkSync, announced another round of layoffs on June 17. The company is now fully betting on a 'permissioned' privacy chain called Prividium, specifically serving regulated financial institutions.
This is the company's second round of layoffs in two years. A founder who once called himself a 'freedom maximalist' is ultimately steering the project towards compliance, permissions, and banks. The community's reaction is divided, with the most pointed question being: after raising $458 million, where did the money go? The $ZK token is currently priced around $0.019, down approximately 93% from its all-time high.
The story of zkSync is heading in the opposite direction of its original promise.
On June 17, Alex Gluchowski, founder and CEO of Matter Labs, posted on platform X, announcing a reduction in the company's team size. "Today we reduced the size of the Matter Labs team. This was my decision, and I wanted to explain it," he wrote at the beginning of the post.
The layoffs included senior engineers, designers, and operations staff, whom Gluchowski called "one of the strongest groups of people I've ever worked with." This is Matter Labs' second round of layoffs since September 2024, with the specific percentage not officially disclosed.
The real focus is not how many were laid off, but what this company has decided to become.
From 'Serving Everyone' to 'Serving Banks', A Complete Strategic Pivot
Gluchowski explained the logic behind the layoffs clearly in his post: the company has been building products for regulated financial institutions since 2024. This work later evolved into Prividium. "The entire company is now focused on one goal: building infrastructure for corporations and regulated financial institutions to go on-chain, with privacy at its core."
What is Prividium?
Simply put, it is a 'permissioned' blockchain, the opposite of the public, permissionless, anyone-can-use chain that zkSync has long championed. Permissioned means only approved institutions can access it; regular users cannot.
Matter Labs' website describes Prividium as an Ethereum platform for financial institutions and fintech companies, currently running pilots with Deutsche Bank and UBS.
The irony of this pivot lies in Gluchowski himself.
His X bio reads "Freedom maximalist," believing in "Freedom → Progress → Prosperity." zkSync's technology was previously treated by the crypto community as a public good. In 2024, when Matter Labs attempted to trademark "ZK," it faced collective opposition from zero-knowledge researchers and withdrew, arguing that such technology should not be monopolized by any single entity.
Now, this company is actively shifting its focus from a public chain for retail users and developers to a permissioned chain serving licensed banks.
The $458 Million Question, the Community Turns Instantly
Gluchowski probably anticipated the reactions under his post.
Matter Labs has raised approximately $458 million in total funding, backed by well-known institutions like Dragonfly and Blockchain Capital. Its Series C round in 2022 alone raised $200 million. The community's reaction is split. One side expresses excitement about the Prividium direction, while the other side directly questions where the money went. A widely shared comment reads: "Can you explain this? You raised $450 million to develop products. Where is the money? Why are you still fundraising while laying people off?"
This is not the first time Matter Labs has been questioned over layoffs.
In September 2024, the company laid off 16% of its staff, 24 employees, reducing total headcount to 126. At the time, the company repeatedly emphasized that its "financial situation remains strong," and the layoffs were to "stay lean," not due to lack of funds. The wording for both rounds of layoffs is highly similar, citing a "mismatch between team structure and current needs."
The problem is, when a company that has raised nearly half a billion dollars and is still fundraising conducts layoffs twice in two years, the persuasiveness of the "not due to lack of funds" claim gets repeatedly eroded.
$ZK Down 93%, Token Holders Bear the Brunt of the Pivot
The most direct cost of the strategic pivot falls on retail investors in the secondary market.
The $ZK token is currently priced around $0.019, while its all-time high shortly after launch in June 2024 was $0.27, a drop of approximately 93%. For the vast majority of its time since launch, the token has traded below its issuance price. Its current market cap is around $180 million, ranking it outside the top 150 cryptocurrencies.
The token's awkwardness lies in the fact that its value capture logic is disconnected from the company's new direction. Prividium serves banks, following an off-chain business model like "enterprise licensing fees."
A Survival Strategy in the L2 Red Ocean
Zooming out, Matter Labs' pivot is also a snapshot of the intense competition within the entire Ethereum L2 sector.
The Ethereum Layer 2 network space (scaling solutions running on top of the mainnet for faster and cheaper transactions) has seen a flood of players in recent years: Coinbase's Base, Arbitrum, Optimism, Polygon—all vying for the same pool of developers and users. zkSync was once the most active among ZK-based L2s, but after its airdrop in June 2024, users quickly fled. Active addresses dropped from a peak of over 200,000 in July to a 7-day average of around 30,000 by year-end. In a homogeneous, undifferentiated general-purpose track, pivoting to the higher-margin, less crowded niche market of "serving banks" is a commercially understandable decision.
But this decision comes at a cost. It means abandoning some of the earliest believers in the "permissionless, for everyone" narrative—those who held $ZK because of it. Matter Labs has chosen a more realistic and profitable path, at the cost of dismantling the very signpost it once erected.
Gluchowski ended his post by addressing those who left: "Thank you for everything you built here, and for the standard you set."
This sentence could also describe the company itself.
