Eclipse Labs is burning its ships. Just weeks after its token launch, the L2 developer has replaced its CEO and executed deep layoffs, abruptly abandoning its infrastructure-only model to build its own consumer applications in a fight for relevance.
Summary
In an X post on August 15, Layer 2 developer Eclipse Labs announced a brutal corporate restructuring, replacing high-profile CEO Vijay Chetty, known online as 0xLitquidity, with former Product Lead Sydney Huang (0xSydney).
The announcement detailed a “voluntary departure” for Chetty and a 65% reduction in workforce, a move the company stated was necessary to “align resources with our updated strategy.”
According to the announcement, the new strategy involves a sharp pivot from being a neutral infrastructure provider to prioritizing the in-house development of a “breakout application” on its own network.
Sydney Huang, the new CEO, detailed the drastic shift as a direct response to a harsh new reality in the Layer 2 landscape. Huang stated that while the mission to build infrastructure for real world applications remains, the focus must evolve. “The market has shifted: interesting technology alone is no longer enough, and scale is meaningless without users,” Huang wrote.
This admission underscores a critical juncture for the entire sector, where the initial wave of funding for speculative technology is receding, and giving way to a demand for sustainable business models, actual users, and verifiable revenue.
The decision to build a flagship application in house is a bet that Eclipse can itself create the demand for its own high throughput infrastructure, rather than waiting for external developers to do it.
The move comes nearly one month after the protocol’s token generation event, a milestone that often serves as a reality check for new networks. The ES token, designed to power the Eclipse ecosystem as its native gas asset and governance mechanism, has faced a challenging market reception.
Since becoming transferable on July 16, the token’s value has declined significantly, reflecting broader market skepticism and a lack of immediate utility driving demand. S has lost more than 65% of its value, slumping below $0.16 according to CoinMarketCap data.
This post TGE performance likely accelerated the internal decision to change course, moving from a model reliant on speculative token incentives to one focused on tangible product delivery.
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