Is Polygon's M&A strategy a "contrarian" move? What does the 30% staff reduction and $250 million acquisition signify

Two pieces of news announced by Polygon this week are sparking discussion in the market. One is about approximately 30% reduction in staff, and the other is a $250 million investment in Coinme and Sequence. CEO Marc Boiron explains that the total team size will remain stable through acquisitions, but these seemingly contradictory measures appear to be part of a larger strategic shift.

Underlying this is a significant pivot in Polygon’s overall strategy.

Why are reductions and acquisitions happening simultaneously?

On the surface, cutting staff and expanding seem to be opposing actions. However, a closer look reveals this as part of an organizational “refresh” process. The targeted reductions are in existing business lines, and the vacated positions are allocated to the acquisition teams. This is not just about operational efficiency; it reflects a major shift in business focus.

The true nature of the assets acquired for $250 million

Coinme was founded in 2014 and handles cryptocurrency and fiat currency exchanges, operating ATMs at over 50,000 stores in the US. Its greatest value lies in its money transfer licenses across all 48 states, which are difficult to obtain domestically. These licenses are assets accumulated over years by major companies like Stripe.

Sequence provides wallet infrastructure and cross-chain routing. It enables users to transfer assets between chains with a single click, without needing to worry about bridging or gas fees. Its clients include chains like Polygon, Immutable, and Arbitrum, and it is also working with Google Cloud.

Polygon envisions combining these assets into an “Open Money Stack,” a stablecoin payment infrastructure. The goal is to sell to B2B clients such as banks and payment companies. The three-layer structure will consist of fiat on/off ramps (Coinme), user-friendly wallet functions (Sequence), and a payment layer (Polygon itself).

A declaration of defeat in the L2 market

The landscape of the L2 market by 2025 is becoming clear. Base has established overwhelming dominance. From an initial TVL of $3.1 billion last year, it has grown to $5.6 billion, accounting for 50% of the entire L2 market share. Arbitrum maintains around 30% but has stagnated. Dozens of other L2s have seen user activity almost vanish after airdrops ended.

Base’s success is obvious. Coinbase has over 100 million registered users, and users naturally gravitate toward its products. For example, the Morpho lending protocol on Base saw deposits grow from $354 million to $2 billion. The reason is its integration into the Coinbase app, allowing users to access services without understanding the underlying L2 or protocols.

Polygon lacks such entry points. Its previous 20% staff reduction in 2024 was due to a bear market contraction, but this time is different. Having funds on the books while reducing staff indicates a strong strategic shift.

Polygon once spoke of a story centered on corporate hiring—collaborations with Disney, Starbucks, Instagram under Meta, Reddit… Four years later, most of these have gone silent. Starbucks’ “Odyssey” program ended last year.

Polygon recognizes that direct competition with Base is unlikely to succeed. While their technologies can catch up, their user bases cannot.

The stablecoin payment market is growing but highly competitive

The stablecoin market is indeed expanding. By 2025, its market cap will exceed $30 billion, a 45% increase year-over-year. Use cases are evolving from arbitrage between exchanges to international remittances, corporate finance, and payroll.

However, the competitive environment is already overheated.

Stripe acquired Bridge for $1.1 billion last year and recently gained issuance rights for USDH on Hyperliquid. PayPal’s PYUSD holds a 7% share of stablecoins on Solana. Circle is promoting its Payments Network. Major banks like JP Morgan, Wells Fargo, and Bank of America are also preparing to issue their own stablecoins.

Polygon founder Sandeep Nailwal stated in a Fortune interview that these acquisitions are shaping the competitive landscape with Stripe. However, considering the scale (Stripe’s $1.1 billion vs Polygon’s $250 million), customer bases (Stripe has millions of merchants, Polygon is developer-focused), and accumulated assets (Stripe’s years of payment licenses and banking relationships), they are not on equal footing.

Nevertheless, Polygon’s strategic direction may differ. Stripe’s approach is to vertically integrate stablecoins into its closed-loop ecosystem. Polygon aims to build open infrastructure that banks and payment companies can use to develop their own businesses. Even though both target similar customers, their structural strategies are fundamentally different.

Risks and concerns cannot be ignored

Personnel reductions are common in the crypto industry. Major companies like OpenSea (50%), Yuga Labs, Chainalysis, and ConsenSys (which cut 20% last year and are reducing again this year) have all downsized. Many of these were passive contractions driven by capital shortages.

Polygon’s approach is different. It is actively reducing staff while having funds available, and investing in new businesses—an active strategic shift.

However, acquired assets carry inherent risks. Coinme’s core business is crypto ATMs. Last year, California regulators fined it $300,000 and pointed out violations, including allowing withdrawals exceeding the $1,000 daily limit. Washington State was even stricter, issuing a ban until December last year.

The CEO states that their compliance status is “beyond requirements,” but regulatory penalties remain a stark reality.

The story of POL tokens will change

Until now, the narrative around POL was “more chain usage = higher token value.” Post-acquisition, Coinme will generate actual fee income from each transaction. This is not a token story but a real business revenue, expected to exceed $100 million annually.

If realized, Polygon will shift from a “protocol” to a “company,” gaining traditional metrics like revenue, profit, and valuation. This is rare in the crypto industry.

However, concerns are also significant. The pace of traditional financial institutions entering the space is accelerating, shrinking the window for crypto-native companies.

There is an industry adage: “Bear markets are for building, bull markets are for harvesting.” Polygon’s current challenge is that it is still in the building phase, and the harvesters of a bull market may no longer be Polygon.