New crypto hires are more likely to receive equity rather than tokens, Variant and USV research reveals.

New hires in the cryptocurrency space are more likely to receive shares rather than tokens, according to a new survey conducted by venture capital firms Variant and Union Square Ventures.

To better understand what trends could emerge in 2023, which has been heavily impacted by the market downturn, the two cryptocurrency companies conducted a survey of companies in their investment portfolios.

Based on feedback gathered from conversations with employees at 32 web3 startups, the survey revealed a series of business implications: The majority of respondents said the bear market had not affected their hiring plans. Engineers dominate headcount and are compensated better than their peers. Corporate workforces are becoming increasingly geographically diverse.

While Variant and USV’s survey paints a fairly optimistic picture, many cryptocurrency companies have laid off large numbers of employees in 2023. Famous blockchain companies such as Binance coinbase, Dapper LabsOpenSea and Chainalytic both laid off employees during the year.

But according to reports from Variant and USV, it wasn’t all bleak on the recruiting and compensation front for 2023. “The data we collected suggests that cryptocurrency companies are not spending 2023 lamenting a bear market,” wrote survey co-authors Tom Dils, Calder Zwerling and Matt Cynamon. “Rather, they took advantage of market limitations to further decentralize operations, experiment with new compensation models, and increase the number of engineers.”

The main contents of the survey are as follows:

Equity compensation becomes popular

Research from Variant and USV suggests that unlike in the past when cryptocurrency companies tended to reward employees with tokens instead of assets, the reversal is now true.

“By 2023, new hires were three times more likely to receive equity rather than tokens,” the report said. From 2013 to 2018, employees typically received token compensation, but equity compensation was non-existent, the report said.

Variant and USV were reluctant to describe the new compensation method as a trend, but the survey indicated the change was significant. “While it is too early to describe this as a trend, the data suggests startups are experimenting with new incentive mechanisms that may make them less reliant on tokens than in previous cryptocurrency market cycles,” the report said.

Competition and Salaries

According to the survey, “Nearly 50% of survey respondents said they compete almost exclusively with other cryptocurrency startups for new hires.” Meanwhile, 25% said they compete primarily with web2 organizations. “This means that it is easier to recruit within web3 than attract new entrants to the cryptocurrency industry during a bear market,” he added.

Not surprisingly, with cryptocurrencies still evolving rapidly and becoming increasingly integrated, engineers dominate the workforce at the startups surveyed, making up 50% of employees. According to Variant and USV, engineers tend to be better paid than their internal colleagues or professional colleagues working outside of cryptocurrency. According to the survey, “Top-level web3 engineers earn a 23% premium, and early-career engineers earn 27% more than their mainstream counterparts.”

Variant and USV also found that startups typically have far fewer marketing and sales professionals compared to engineering staff. “The relative lack of sales-focused roles is a reminder that web3 is still in its early stages of construction,” the survey authors wrote.

Beyond America

While 70% of the startups surveyed are headquartered in North America, more than half of their employees live outside the U.S., the report said. Companies retaining staff outside the U.S. are not new in the cryptocurrency space, but the scope of geographic spending has increased over the past few years, the survey found.

According to the report, “56% of employees hired in 2020 or prior to 2020 are U.S.-based. However, for employees hired in the past three years (2021-2023),” that number drops to 46%.

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