Steemit Inc., a social media platform built on a decentralized database that rewards contributors with cryptocurrency payments, has laid off 70 percent of its workforce as the cryptocurrency downturn has affected its bottom line.

Founded in 2016, Steemit is often described as a blogging platform built on top of its own blockchain, but it’s somewhat closer to Reddit with a payment function. Users create content or share links while other users, in supporting content they like, tip users with the STEEM cryptocurrency.

Like other startups that use cryptocurrencies at the center of business models, STEEM has seen the value of its cryptocurrency drop since the beginning of the year — in this case, a stunning 96 percent from its all-time high.

“Given the weakness of the cryptocurrency market, the fiat returns on our automated selling of STEEM diminishing and the growing costs of running full Steem nodes, we have been forced to lay off close to 70 percent of the team,” Ned Scott, founder and chief executive officer of Steemit said in a statement late Tuesday. “The remainder of the team is staying on to focus primarily on reducing the costs of the infrastructure running steemit.com and our public APIs, and ensuring that the community can remain informed of developments.”

Scott added that “in order to ensure that we can continue to improve Steem, we need to first get costs under control to remain economically sustainable.” While a reasonable argument, if a somewhat rare goal for a startup founder, Steemit’s troubles are arguably more representative of the broader market than of the company alone.

A report in October noted that blockchain companies were switching to traditional venture capital as initial coin offerings have rapidly declined in popularity. And that was before the wipeout in cryptocurrency markets that started in mid-November.

“The project’s troubles will surely call into question the current feasibility of running projects with real operating costs on top of cryptonetworks with highly volatile cryptocurrencies,” The Block rightly noted.

Image: Steemit