Snapchat’s parent company, Snap Inc., is reportedly closing shop on its Web3 ambitions amid recent layoffs calling for a 20% reduction in its workforce.
Jake Sheinman, one of the team’s founders, announced the news on Wednesday in a tweet that the company had made the decision to shutter his team. He also stated that he would be leaving the company as well.
“After ~4 years at Snap, today is my last day,” Sheinman wrote. “As a result of the company restructure, decisions were made to sunset our Web3 team. The same team that I co-founded last year with other pirates who believed in digital ownership and the role that [augmented reality] can play to support that.”
Snapchat already enables creators to use augmented reality filters on Snapchat, which allows them to add persistent “holograms” on top of the real world. These AR filters are otherwise known as “Lenses” on the Snapchat platform and can be used to add all manner of characters, avatars and other elements to what users can see through their devices for entertainment.
In July, Snap said that it intended to begin experimenting with nonfungible tokens and allow its creators to incorporate them into its platform as Lenses. NFTs are a type of crypto asset based on blockchain technology that represents the ownership of digital items such as artwork, music, files or video game items, which allows them to be bought, sold and traded.
Web3, otherwise known as the decentralized web, uses blockchain technology to build peer-to-peer apps and token economies where financial transactions happen without the need for middlemen such as banks. NFTs are one application of Web3 that allow people to own ephemeral things such as images or AR filters.
Proponents of Web3 say that NFTs could usher in a new way for creators to monetize their work by enabling ownership mechanisms where they did not exist before and attaching software contract-driven royalties when trades and sales happen between users on marketplaces.
During 2021, the NFT market raked in a $41 billion trading volume, although after crypto markets plummeted in 2022 during “crypto winter” NFT sales volumes tumbled 25% between the first quarter and second quarters of this year from $10 billion to $8 billion.
Although Snap is disbanding its Web3 team, it is not abandoning its interest in augmented reality. In a letter sent to the Snap community about the restructuring and layoffs, Chief Executive Evan Spiegel named AR a priority for the company.
“We are restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality,” Spiegel wrote. “Projects that don’t directly contribute to these areas will be discontinued or receive substantially reduced investment.”
Snap is disbanding its Web3 team at a time that other social media companies are building up their own.
Reddit, the “front page of the internet,” launched a storefront for limited-edition NFT collectible avatars on its social media website that can be used as profile icons by users in July. The customizable avatars, cartoonish portraits that stand in for profile portraits, are NFTs that are stored on the blockchain and can be traded between users on marketplaces.
Twitter launched NFT-based profile pictures in January this year for Twitter Blue subscribers, who receive a “soft hexagon” portrait. Reddit
Meta, the parent company of Facebook and Instagram, began testing NFT features on Instagram with a pilot program in May and then expanded them internationally to more than 100 countries in August. Mark Zuckerberg, chief executive of Meta, has also been extremely vocal about his support of NFTs on Meta’s upcoming virtual reality and “metaverse” platforms.