A week before Parity’s annual meeting, employees received news that the company would lay off most of the employees, but a week later the annual meeting was still held as scheduled. The entire holiday was like a surreal and disgusting "Hunger Games".

A week before Parity Technologies headed to the Mediterranean island of Mallorca for its annual retreat, its 385 employees received some shocking news: the company was laying off most of its staff.

But several employees told DL News that departing employees will still attend the five-day retreat at the Iberostar Cala Domingos Beach Resort from October 9 to 13, as flights have already been booked. A representative for Parity told DL News that the company chose to go ahead with the event even after announcing the layoffs.

What was planned to be a fun week of talks, workshops, and meetups turned into a discussion about the breakup of Parity, who will survive the elimination, and what will happen next.

“This is like a surreal, sick joke,” one Parity employee who attended the retreat said in a text message. “It feels a bit like the Hunger Games.”

Internal Conflict

Parity Technologies is a blockchain infrastructure company responsible for developing the Polkadot blockchain.

Polkadot and Parity are now embroiled in internal conflict as funding dwindles and employees decry top executives paying themselves lavish salaries, according to several current and former employees.

“Executives are paid a lot but don’t deliver much in the way of real results,” Eric Wang, Parity’s former head of strategic growth initiatives, who left the company in January, told DL News. “Parity is broken.”

It’s a dramatic turn of events for one of the most touted projects in the DeFi space.

Polkadot launched in 2020 with a good pedigree and great promise. Ethereum co-founder Gavin Wood founded Polkadot to address the limitations of the blockchain he helped create, such as difficulty in scaling.

Over the next three years, talented developers and DeFi enthusiasts flocked to Polkadot, and at the same time, Polkadot reached its peak market value (approximately US$54 billion) in November 2021, becoming a perennial top 10 company in the cryptocurrency field.

'A challenging step'

In response to a request for comment from DL News, Parity did not deny or confirm the layoffs, nor did it address the issue of management salaries.

Parity said it expects “continued growth” of participants in its network and further adoption of the Polkadot blockchain. A spokesperson said the company is committed to decentralizing Polkadot’s development and called the situation a “challenging step” for the company.

“Thank you to our team members who have played an instrumental role in getting us to where we are today,” a Parity spokesperson said in an emailed statement to DL News. “While this is a challenging step for Parity, it is a necessary one for Polkadot.”

Given Parity’s focus on growing Polkadot’s user base, employees were caught off guard by the layoffs and requested anonymity to protect themselves during a sensitive time.

Employees said only the company's core engineering, developer relations, ecosystem operations and Asia teams were spared.

Spain Retreat

These were the questions that should have been answered at the retreat in Spain. But it was hard for the team to let go of the stress of the upcoming layoffs.

“It seemed like they had a say in the decentralization plan,” said one employee who attended the meeting. “Some people even cried while giving their presentations on stage. A lot of people left early.”

According to multiple employees who attended the retreat, Wood did not attend, leaving many angry and confused. The Polkadot and Parity founder was also absent from an all-hands meeting where employees were informed of the impending layoffs, according to employees.

Employees who spoke to DL News said they believed the decision was made by Wood.

“Many employees felt he was not clear on his priorities and was not helping to promote Polkadot,” one employee said.

Wood did not respond to DL News' request for comment.

Falling behind competitors

Employees also said Parity Chief Financial Officer Fahmi Syed left the company a day before the layoffs were announced. Syed’s LinkedIn profile shows he remains the company’s CFO.

Fahmi Syed declined to respond to DL News’ request for comment.

Wood founded Parity Technologies to help commercialize the Polkadot network. It plays a similar role to IOHK, the commercial enterprise that developed the Cardano blockchain.

But Polkadot has lagged behind its competitors. Polkadot’s DOT cryptocurrency is down about 18% this year, compared with Ethereum’s 32% gain.

Parity is partly funded by the Web3 Foundation, another organization founded by Wood. The Web3 Foundation also announced layoffs, affecting about 40% of its employees, according to a Parity employee.

The group is based in Zug, Switzerland, and has between 100 and 200 employees, according to job search site SignalHire.

“Companies are still spending like it’s a bull market”

In a post on its official X account on Oct. 10, Parity said it was “removing its listing functionality” in an effort to decentralize development of the Polkadot ecosystem.

Parity has not publicly acknowledged the layoffs, but shortly after the X post was published, an employee at the Parity press office told DL News that the company would be “experiencing staffing changes in the coming months.”

The layoffs came as the company ran out of cash, according to Parity employees, who said a hiring spree over the past 12 months had left the company in financial trouble.

One employee said company leadership should have done a better job managing costs in a bear market. “The company is spending money like it’s a bull market,” the employee said.

Others blamed the layoffs on excessive salaries paid to executives, saying executives routinely received more than $1 million in cash.

“At one point, a VP of digital marketing accidentally emailed his salary to the entire company, showing he made about $700,000,” one employee said.

On site, employees worried about what would happen to the Polkadot ecosystem, which some have been working on for seven years.

Some said that employees’ biggest concern is that without Parity as a guiding force, talent will flee the Polkadot ecosystem.

“Decentralization sounds great, but if there’s no unified strategy or no one is in charge, no one knows what’s going to happen,” the employee said.

On the other hand, the employee believes that layoffs could be a positive in the long run. “Getting rid of all these employees and decentralizing can only be a good thing because the bar is set so low,” he said.

Others involved in the Polkadot ecosystem appear to have dropped out entirely. The Web3 Foundation was supposed to attend the Parity retreat, but canceled its flights after the layoffs, according to the same person. “No one showed up,” the employee said.

There is no timeline for the layoffs, so Parity employees are still in limbo. But most importantly, employees still can’t explain the terrible timing of Parity’s massive layoffs.

“Why fire everyone before pulling out?” one employee said. “It was just a dumpster fire.”