The compensation landscape in the crypto industry is undergoing a notable shift, as highlighted by a recent survey conducted by Variant and Union Square Ventures. This survey, which focused on businesses within their investment portfolios, sheds light on emerging trends in employee compensation within Web3 startups in 2023.
Key findings from the survey include:
Shift from Tokens to Equity: Historically, crypto companies have been known for compensating employees with tokens. However, the survey reveals a significant change in this practice. While token-based compensation was predominant since 2013, with no equity offerings before 2018, the trend has reversed in 2023. New hires are now three times more likely to receive equity than tokens. This shift suggests that startups are exploring new incentive mechanisms, possibly moving away from a heavy reliance on tokens.
Competition for Talent: About 50% of the respondents indicated that their primary competition for hiring comes from other crypto startups, while 25% see Web2 organizations as their main competitors. This reflects the competitive nature of talent acquisition within the crypto space.
Hiring Trends in Bear Markets: The survey suggests that it is easier to recruit within the Web3 space during a bear market compared to attracting new talent to the crypto industry. This could be due to various factors, including the perceived stability of established companies or the cautious approach of professionals during market downturns.
Dominance of Engineers: Engineers form the backbone of these startups, comprising 50% of the workforce. They also tend to be compensated more generously than their peers both within the companies and in the broader market. According to the survey, senior-level Web3 engineers earn a 23% premium, while early-career engineers receive 27% more than their counterparts in the general market.
These findings indicate a maturing of the crypto industry, with companies increasingly adopting traditional compensation structures like equity, possibly in response to market conditions and the evolving regulatory landscape. The shift also reflects a broader trend of professionalization and standardization in the crypto and Web3 sectors, aligning them more closely with established norms in the tech industry.
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