Matter Labs, the company behind the zkSync Ethereum layer-2 network, cut staff on Tuesday and said it is committing the entire organization to Prividium, an institutional on-chain privacy infrastructure platform it began building in 2024.

Matter Labs co-founder and chief executive Alex Gluchowski confirmed the reductions in a post on X Tuesday afternoon, framing the move as a skills realignment rather than a cost cut.

“In 2024 we began building for regulated financial institutions,” Gluchowski wrote. “That work became Prividium, and the entire company is now committed to one goal: building the infrastructure that brings enterprises and regulated financial institutions onchain, with privacy at its core.”

Gluchowski said departing employees had been offered financial support and that the company is coordinating job placement through an opt-in talent list shared with outside employers. He did not disclose the number of positions eliminated.

The zkSync token, which has a market cap of $115 million, is up 4.3% in the past 24 hours, according to CoinGecko.

What Prividium Is

Prividium is Matter Labs’ institutional-grade stack for on-chain privacy and compliance, built on top of the ZK cryptography that underpins zkSync. Where zkSync was designed as a general-purpose Ethereum rollup for DeFi and consumer apps, Prividium targets banks, asset managers, and other regulated entities that require transaction confidentiality alongside audit-trail access for compliance purposes.

Gluchowski described the pivot as a response to specific product feedback from institutional customers, saying the company has “learned a great deal about where our customers need it to go.”

L2 Specialization Pressure

The pivot follows a broader wave of layer-2 and ZK-project consolidations. Hyli wound down its ZK blockchain project earlier this year, citing weak market traction for general-purpose ZK infrastructure. Botanix shut down its Bitcoin L2 Spiderchain after a year of mainnet operation.

The pattern points to a maturing layer-2 market where broad horizontal platforms face pressure to find defensible verticals or exit.

For Matter Labs, the institutional privacy vertical carries a clearer revenue thesis: regulated entities pay for compliance tooling, and ZK proofs offer a technically credible path to selective disclosure, the property that lets a counterparty prove a transaction is lawful without revealing its full details.

As of publication, Gluchowski’s post and the Matter Labs X account have made no statements about the future of the zkSync network or its ZK token as a separate product line.