Mance Harmon, the CEO and co-founder of Hedera Hashgraph, published an update in recent days according to which the project will reduce operations and cut personnel, reducing costs in several areas and optimizing resources.
After releasing Open Access, the beta mainnet that allows anyone to create accounts, last September, Hedera decided to focus on future developments, but at the same time reduce operations to ensure sufficient funds for development.
Hedera Hashgraph is a very innovative project conceived by CTO Leemon Baird, as it is not really a blockchain but a DAG (Directed Acyclic Graph) that allows high throughput speeds and immediate settlements supported by high decentralization. In addition to value transfers, it supports smart contracts written in Solidity (the language created by Vitalik Buterin, the creator of Ethereum) and can be used as a distributed storage system.
Nevertheless, the protocol has also attracted a lot of criticism because it is in fact “closed source” due to the fact that it does not allow forks not supported by the foundation, and is also determined to legally prosecute anyone who wants to fork Hedera.
The staff cut will affect 10 positions involving employees and consultants, in order to concentrate resources on activities that are essential for Hedera’s growth. The announcement continues with the financial situation of the project:
“Hedera raised approximately $124 million from December 2017 to August 2018, which after accounting for taxes, transaction costs, and the 10% payment to Swirlds, resulted in net proceeds of approximately $83 million. We maintain a robust cash position of more than $31 million as of January 1, 2020“.
Swirlds is a private company dedicated to protecting intellectual property and other assets to build the platform and services supporting Hedera Hashgraph.
From the site’s FAQ, it can be read that Mance Harmon and Leemon Baird each received $200,000 in 2018, but will not receive any additional salaries or compensation from Swirlds.
However, controversy has already appeared over the financial management of the project on socials like Reddit, which denounce that even if the operations were to be reduced to just $2.5 million a month, the project would only have a year to live before the funds would run out. This is also because the HBAR token has suffered a 90% loss since its public launch in August.
New fundraising and proposed delay in the issuance of the tokens
The project hopes to raise more funds by selling the foundation’s HBAR tokens to companies and large corporations, which, according to Mance, continue to show interest in Hedera, without of course adversely affecting the market.
In addition, the company will encourage investors to extend the token release by 25% in exchange for 10% of the sum of the tokens sold and those used for network fees in 2020.
The token release will also be delayed for executives and advisors who started working on Hedera before December 2017 in order to provide greater visibility and certainty to the Hedera community about the sale of HRA by the project board.
It remains to be seen whether these measures will provide sufficient liquidity for Hedera Hashgraph to address the developments necessary over the next few years in the smart contract platform sector, which is becoming increasingly competitive.