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The crypto industry is bubbling with a quiet optimism these days—and with good reason. The price of Bitcoin has doubled since the start of the year, and last week’s guilty verdict for Sam Bankman-Fried offered a much needed sense of closure from the ruinous events of 2022. But in one corner of the industry, Crypto Winter feels colder than ever.

I’m referring to the once-thriving NFT sector, which fell off a cliff last year and is still falling. How bad is it? Well, on Friday, OpenSea used the hype around the Bankman-Fried trial as cover for slipping out the bad news that it is laying off 50% of its staff. As a reminder, OpenSea is the flagship brand in the NFT world and early last year raised a $300 million Series C round at a $13.3 billion valuation. It would be a miracle if its value is even half that today.

OpenSea’s troubles are partly its own making. This includes the decision to stop enforcing creator royalties, which ensure that artists get a cut whenever their work is sold on the platform. This came in response to the rise of competitors like Blur, whose platform is designed for trading NFTs in batches, and now accounts for 70% of all volume. But the decision to join Blur and others in reneging on royalty promises poisoned OpenSea’s relationship with many leading artists, who have chosen to withhold their work from the platform.

The upshot is that OpenSea today is adrift strategically as both traders and artists turn their back on the platform, while any plans to issue a token—long anticipated by hardcore crypto types—are clearly on ice. The company’s CEO is putting on a brave face, tweeting that the layoffs are part of a new and improved “OpenSea 2.0” but offering no specifics on the plans to turn things around. It doesn’t help that there have long been rumors of a troubled corporate culture at OpenSea—reflected in a former top executive’s recent conviction for insider trading.

Many of OpenSea’s problems are specific to the company, but it is also contending with broader issues facing the NFT market as a whole. The most glaring of these is that the idea of spending hundreds or even millions of dollars on a digital monkey (or whatever) has no appeal for most people, who would rather blow their money on, well, anything else. And while some NFT collections—such as Bored Apes or Cryptopunks—have become the sector’s equivalent of blue chips, these too continue to drop in value. It doesn’t help that the NFT market is becoming ever more diluted as companies, eager for a quick buck, continue to drop new and unwanted collections every week.

Despite all of this, don’t count NFTs out. The ability to mint and transfer a unique asset on the blockchain has promising applications—particularly when it comes to stuff like coupons, credentialing, and fan clubs. Even as the market for NFT art implodes, companies like Starbucks keep dabbling in the technology. NFTs are here to stay in one form or another—but it will be a long time, and possibly never, before we see people throwing around millions of dollars to own digital monkeys again.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

Lawyers and other advisors to bankrupt crypto firms have earned around $770 million since the onset of Crypto Winter in 2022. (WSJ)

The recent crypto rally has brought an increase in day trading, but it is far below 2021 levels, in part because there is less volatility for traders to exploit. (Bloomberg)

China is unleashing its first major crackdown on pig-butchering—a scam that can, but often does not, involve crypto—in places like Myanmar and Cambodia. (WSJ)

Hong Kong is taking steps to approve its first spot ETF for Bitcoin. (Bloomberg)

Elon Musk, a past booster of Dogecoin and Bitcoin, said none of his companies would ever create their own cryptocurrency. (The Street)