The Breakdown - Coinbase's AI Layoffs, a16z's $2.2B Fund, and Strategy's $12.5B Loss | The Breakdown

Episode Date: May 6, 2026

David covers three Wednesday stories: Coinbase laying off 14% of staff, a16z Crypto raising $2.2 billion, and Strategy losing $12.5 billion as CEO Phong Le floats selling bitcoin. We also unpack the AI-first layoff narrative, the potential return of the infra supercycle ($6B+ raised across crypto VCs in 2026), and why a Cambrian explosion of DATs and ETFs might absorb whatever Saylor has to offload. Enjoy! -- TIMESTAMPS: (00:00) Intro (01:17) Coinbase Layoffs (07:15) Nexo Ad (07:50) Coinbase Layoffs (Cont.) (10:30) a16z Crypto Fund 5 (15:17) Nexo Ad (16:09) a16z Crypto Fund 5 (Cont.) (22:30) Strategy Losses FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW SPONSORS › NEXO Nexo is the premier digital wealth platform. Receive interest on your crypto, borrow against it without selling, and trade a range of assets. Now available in the U.S with 30 days of exclusive privileges. Get started at http://nexo.com/breakdown Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

It is Wednesday, May the 6th, and this is The Breakdown. I'm your host David Canales, and we have a few stories happening around crypto, happening around the internet for you this morning. First, we're going to take a look at the Coinbase layoffs from yesterday and what's going on with that. We're also going to look at some brutal losses posted by strategy in the first quarter of the year, which probably to be expected considering Bitcoin is not exactly pumping very hard. But interesting to note that it might even be selling Bitcoin soon, or so it might seem.

We're going to have a look at that. We're also going to be looking at crypto VC funds are back. A.C. Z has raised a bunch of money. And it's not the only one this year. So perhaps crypto is not as dead as Pomp might like to say it is. All right. This is a breakdown. Without further ado, let's get to it.

This episode is brought to you by Nexto. Step into a new era of digital wealth. Earn interest on your digital assets. Borrow against them without selling and trade. all in one platform. Get started at nexus.com slash breakdown. Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. All right, up first. Let's take a look at

this Coinbase stuff. So the headline is that Coinbase just laid off 14% of its staff to focus on AI efficiencies and all that sort of thing. The news was broken at least on Twitter by Brian Armstrong in an email that he sent to all employees at Coinbase. Why now, he says, two forces are converging at the same time. We need to be front-footed to respond to both. First, the market, so market conditions. Second is AI is changing how we work. He says, over the past year, I've watched engineers use AI to ship in days, what used to take a team weeks. Non-technical teams are now shipping production code, and many of our workflows are being automated. The pace of what's possible with a small focus team has changed dramatically and accelerating

and it's accelerating every day. I mean, it's a very long post that essentially comes down to, hey, crypto is not exactly pumping right now and we need to streamline our workforce as the same as it did in 2022 and 2023. So it's not exactly out of the ordinary that Coinbase would have these cyclical layoffs. And the same goes across even finance more broadly. They do it every year, even if, you know, the, the, the, justification, or at least the publicly stated justification in recent times has been, hey,

where we're really good at using AI, so we don't need these people anyway, is essentially what a lot of these companies are saying. And whether or not that's true is dependent on how bullish you are on AI and whether or not you believe this is like AI washing. But I digress. Something interesting to note is that at least what Brian is projecting is that they are, they're hustling. So they say that they've flattened our org structure to five layers max below the CEO and C-O. I mean, leaders will own much more with as many as 15 plus direct reports. So, okay, they have leaders with maybe more than a dozen direct reports and also no more pure managers. So every leader at Coinbase must also be a strong and active

individual contributor. Managers should be like player coaches getting their hands dirty. alongside their teams. And okay, that's perfectly fine. But something that does give me pause is what he just said about non-technical employees shipping code. Let's go back to that part. Yeah, non-technical teams are now shipping production code, which, okay, if it's like a copy update on the app or like a new button that does something, then okay, then I mean,

I'm not really interested in that stuff. but if there is non-technical team shipping code for one, the America's biggest crypto exchange, then that makes me worry a little bit. And I'm hopefully that perhaps Brian Armstrong is, I don't want to say stretching the truth, but embellishing the reality that actually you do have a backstop, a human senior software engineer backstop

that is making sure that the clawed output of that code is up to scratch. But I mean, we already have, we already have examples of, of let's go back to this Amazon story. So let's just quickly jump to this, you know, and I know this is not directly relevant to Coinbase, but it's just perhaps it's a cautionary tale. Amazon's AI code broke production. Don't let yours be next. This is a story from March when an AI-assisted code change triggered 1.6 million website errors

and 120,000 lost orders. Three days later, a separate incident caused a 99% drop in orders across North American marketplaces. Amazon called it high blast radius. NGD speak for everything is on fire. So like I just hate to, I mean, we know how interconnected to crypto space is and we know how much like the forefront of some price discovery happens exactly on Coinbase.

And not to mention like ETF functions, you know, all that kind of stuff. And if we have non-technical team shipping code that is related to that stuff, then I would inherently worry about that. And I would expect that we are going to see some kind of snafu over the next year. If not at Coinbase, then at another smaller crypto exchange that might be reading Brian Armstrong's tweet about how AI forward they are and how efficient they're being because of AI. and then perhaps that exchange, perhaps it will be another smaller exchange that something will happen.

But I would expect that we're going to have some kind of avoidable snafu just because of this relentless energy around founders in C-suits, C-sweets, not wanting to miss out on efficiency gains from generative coding. But perhaps I'm just being a little bit too bearish on the whole thing. and actually AI is smarter than everyone else. But hey, what can you do? So, I mean, reading into this, I'm inclined to just say, well, look, layoffs happen all the time.

If it wasn't AI that wasn't going to be the reason that it was just going to be straight up market conditions or it was going to be some other org change or shifting strategy or just the need to call the middle managers. So you can have fresh eyes on a lot of these products. that they're shipping out and all that kind of thing. So, yeah, the most interesting thing here is that Coinbase is apparently shipping code with non-technical teams reviewing it, at least going by what Brian Armstrong is saying,

which, I don't know, perhaps we don't really need that level of AI adoption right now. But no worries. Step into a new era of digital wealth with NXO, the premier digital assets wealth platform. Earn interest on your digital assets. borrow against them without selling, trade a wide range of cryptocurrencies, all in one place. Nexo is now available again in the U.S. with an evolved product suite tailored to today's market. For a limited time, new U.S. clients can unlock 30 days of exclusive wealth club premier benefits, including enhanced interest rates, reduce borrowing costs, and up to 0.5% crypto cashback on trades.

Get started today at nexo.com slash breakdown. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Yeah, hopefully everyone from Coinbase, who was a face, by those layoffs lands on their feet. But I'm sure that there's plenty of teams out there that are looking to snap those people up. Something else I wanted to point out related to that

is that we have this tweet here from a couple of weeks ago, April 22, from the head of platform at Coinbase, Rob Wittoff, I want to say. In the last 12 months, we've seen a 27X increase in non-engineers using dev tools like Claude, OpenCode and Cursor to build and automate how we work. The goal is to turn everyone into a builder and safely, he has that bolded and italicized, reduce the distance between idea to execution to near zero. Trust is our most important asset in Coinbase.

So this is fueled by a massive effort in quality guard rails and simplification. Without much more exposition about what those guard rails and quality controls are. So I just think it's quite interesting that we're seeing this tweet come two weeks, before we have layoffs and then and then and then Armstrong positioning the company is a very AI centric hub for code production and shipping as quickly as possible. So yeah, I mean, maybe that will give you a little bit more context about what the atmosphere is like at Coinbase, which, you know, I mean, crypto is just incredibly interesting because it is the intersection of code and money and it's just coinbase's influence i mean what what are the stats again i'm just going to pull it up

one sec yeah so here he here's from i mean this is q3 in 2025 it's just all i could pull up really quickly but coin base custody's 300 billion in user assets which is something like 12 or 13 percent of crypto's entire market cap is custodied on coinbase uh on the same code that non-technical people are apparently shipping shipping code to so you know my opt my opt my opt my opt my Optimistic read here is that actually it's non-critical code that non-technical Coinbase employees are shipping code to, which I have to hope that is the case. If that is the case, then it's much less impressive to me that there's these like minor fixes and minor bugs on stuff that doesn't actually handle the crypto that is being managed by AI, which, okay, that's cool. I mean,

it could have been any other software that could have helped those people manage those that code as well so i mean okay so it's just a little bit more context there about uh about the scale of the production code that coinbase is is working with um okay what do we have next all right we have a new fundraise here from a 16 z crypto uh fund five and this is a blog post from chrisddixon uh and the other people involved in running the fund um it says crypto cyclists tend to follow a pattern A wave of speculation pulls in attention to capital. Some of it gets wasted. Some of it funds infrastructure that wouldn't otherwise get built.

When the noise dies down, what's left is usually more useful than it looked at the peak and more durable than it looked at the trough. Okay, we have A16 Z Cryptos Fund 5, which has raised $2.2 billion to inject into what seems to be a new wave of infra investing. So they say that this is why we're announcing our new Crypto Fund 5. It is built for this moment. And then we have a link here. What does the link say? They link to a Chris Dixon blog post from February that says it's the long game for crypto, which is essentially making out that the policies like the Genius and Stable Act

that are working the way through Congress will eventually lead to, an explosion in payments and stable coins and defy and all that kind of stuff. So the founders were backing with this 2.2 billion fund are working on the part of the cycle that gets less attention and we believe produces more of the lasting value, turning new infrastructure into products people use every day. That is how every important computing platform has eventually mattered and it is how crypto will too. So it looks to be a repackaging of the infrastructure meta. I am hoping that does not mean we are going to see a bunch of more alternate layer ones and more layer twos for Ethereum.

But instead, that infrastructure, I suppose, has to do with, you know, agent-to-agent payments and all that kind of stuff. And they do have some of that in here. These properties are showing up in real products, in payments, in financial services, in creator platforms, in decentralizing infrastructure, in new ways for people and machines to coordinate. In practice, this means sending money globally in an instant, holding dollars without relying on a bank, tokenizing assets so they can move frictionlessly anywhere, tapping into composable networks that others can build on,

and embedding these capabilities in applications everywhere. So, okay, I mean, for one, we can already send money globally in an instant. We have on chain rails and we have stable coins. We can't hold dollars per se without relying on a bank because you're just using stable coins as those dollars because we don't have CBDCs or whatever. But I suppose we can already do that. tokenizing assets so they can move fritelessly anywhere. That's happening.

So that's cool. tapping into composable networks that others can build on. I mean, okay, that's cool too. And embedding these capabilities in applications everywhere. So I'm not too sure what is new coming out of this fund, but I suppose that's okay. It is just a maturing of the strategies involved in building up these infra businesses specifically for the AI agent economy,

which is still getting off the ground. I just want to say that I love the fact that the machine to machine payment stuff is coming back around and I know we're used to it by now. But I mean, does anybody remember Iota? Does anyone remember the Internet of Things that in 2016, 2017, I mean, Iota was the big one. Iota was in the top five coins or something like that because they were obsessed with this idea that smart fridges had to pay other smart fridges or something like that in order to balance the amount of butter that are in the that are in the fridge or whatever it is and that

didn't really go anywhere i mean i know and i know that it was that stable coins weren't really a thing and and and you know and but we had this already and then it's like nearly 10 years later we're coming back around to wait machines can actually use crypto and everyone has to pay for APIs and whatever. So I guess that makes a degree of sense. But what's also really cool is that it's not just A-16Z that is that is raising money. There's also Horn Ventures. Let's pull that up. Let's take a moment to talk about NXO. Nexo delivers a premier digital assets wealth platform designed to help clients build, manage and preserve their wealth, earn interest on your digital assets, access crypto-back credit without selling your holdings, trade with advanced tools,

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Yeah, so here is Horn Ventures and this is, for those unfamiliar, Katie Horn used to be at A16Z. And this is only on May 4th, so only two days ago. She announced that her firm had raised $1 billion to inject into the crypto space. And let's see what she had to say in terms of what the focus is going to be. Three areas that were following closely, the new financial infrastructure, The core plumbing of global finance, payments, bank, and capital markets, custody, foreign exchange is being rebuilt for a world that is digital global and always on. Building the next generation of financial services from scratch includes crypto, but it is bigger

than that tool set alone and in general will mean using better technology, fewer intermediaries and no legacy constraints. Okay. The second one is new assets and markets. So tokenization is kind of the thing in a lot of the derivatives associated with those tokenizations, which that does make sense, considering the rise of high. hyperliquid and prediction markets and then and then the agentic economy so and i'm not the first one to point this out here's this is a here's a tweet that i came across here on uh here uh that's six

billion plus in fresh crypto vc funding closing or raising right now and i think that these are numbers for all of 2026 to date so dragonfly raised 650 million at the start of the year parify capital 125 million horn ventures there's the one billion a 16 z uh 2.2 billion b cap uh which is blockchain capital, apparently they're raising 700 million. Paradigm is supposedly rumored to raise 1.5 billion for AI and robotics. So perhaps not directly related to crypto, but that is just rumored for now. The thesis is the same across the board. Stables, RWA's AI agents transacting on chain 24-7.

VC money is chasing the infra to bring IRL finance and autonomous economies on-chain at bare valuations, infrasupercycle. Very optimistic read there. And yeah, I mean, if all of the crypto space is relying on this idea that there is going to be billions of AI agents needing to make micro payments on ultra cheap chains for AI calls and buying data per use or compute per use, you know, I'm not too sure that it is really going to have the desired effect that people are. expecting. We know that on-chain rails cannot handle that amount of activity at all. I mean, if we had 5 billion people on chain, transacting every day, making micro payments on Ethereum or even an L2 or on Solana, I would expect that there would be a lot of congestion and fees would credit be incredibly high and it would remove the impetus for AI agents to use on chain rails

at all because it would be just be too expensive. At that point, it would be cheaper to use a credit card or it would be cheaper to use Swift or anything. It might even be cheaper to just a mail in payments or dare I say it, go back to the subscription model that we are trying to escape. So if the infrastructure for AI agents is more high throughput chains and stuff like that, then I don't know if we're ever going to break through that bottleneck, at least in the next couple of years. We're going to need some kind of advancement with quantum computing you or to boost the throughput significantly. Again, I'm beating my head against a logical wall when it comes to what we are meant to expect from more investment in infrastructure if the idea is to macro payment max for AI agents. I'm just hoping that we can all have some kind of realism here about what it entails.

But hey, I'm not the one raising the money and I'm not the one in spending the money. So please, if I am just not bullish enough on this whole thing and you have a thesis on how more investing in infra is meant like specifically on chain infra. If it's off chain infra, then that makes a lot of sense. and if there's some way that you can have finality on on-chain payments for the eugenic commerce sector that is a combination of off-chain and on-chain, and then we can really have the throughput needed to serve everyone's autonomous AI agents that are shipping code and microtransacting for data, then hey, then maybe that might make a lot of sense and maybe that's where all this is headed.

But hey, if I'm missing something, as always, just yell at me on Twitter and tell me that I'm wrong. But in the meantime, let's jump over to the Blockworth Research platform because we have a cool funding in an M&A analytics tab. So let's have a look. And it does seem that this is updated with at least the A16Z stuff. Yeah, we've got the Horn Venture stuff in here too. So let's have a look at the chart for total crypto deal activity. Let's blow this up a little bit.

And we can see, I mean, May, it's only the 6th of May, so we're not even a full week into May. And this column here on the right, on the far right, is pumping, considering we've only had a week of May. So we're up about a third on April already, and we're heading towards about a third away from March. So if this trend continues, if there are more fundraisers confirmed, we could be heading into may being the best month for 2026 so far, but of course it's really far below what was happening in mid-2020 and late 2025 when in October the total M&A count was almost 20 billion. And right now in May 26, we're at about 7.6 billion. So still some ways to go, but it's not like CryptoVC is dead at all.

But hey, if that can be the fuel that lights the fire for a bull market, it in 2027 or late 2027 fueled by the seeds of these massive fundraisers, then, hey, there's, there's no way that you could, that you could be upset with that. But okay. All right, what have we got next? All right. And yeah, I mean, this is, I mean, it's, it's bearish if you believe that strategy is inherent to the valuation of Bitcoin, which it definitely has influence on the price of Bitcoin at least on the way up. But Strategy has posted some pretty brutal losses for the first quarter of this year. Let's have a look. This is from CNBC. Yeah, Strategy posted a $12.5 billion net loss in the first quarter due to the slump in the Bitcoin price during the beginning of

the year. This is from Fongle, CEO of Strategy. He says, our ability to sell Bitcoin either to buy US dollars or sell Bitcoin to buy debt if it's accreditive to Bitcoin per share is something that we would consider doing going forward. And I mean, they've flagged some similar stuff before. It's, I mean, I know that Strait that Saler really likes to bullpost himself, never selling or will buy the top forever, Laura, that kind of stuff. But this seems to be the strongest implication that that might become a reality if Bitcoin's price continues to at least go sideways and even down a little bit. We will sell Bitcoin when it's advantageous to the company, he said during the earnings call. We're not going to sit back and just say, we'll never sell the

Bitcoin. We want to be net aggregators of Bitcoin, increasing our total Bitcoin, but more importantly, increasing our Bitcoin per share because we think that is what's going to be the most decreative long term for MSTR, which I mean, it's brutal to see strategy say this stuff. I believe right now their cost basis is 75.5K per coin. So at 80K, we're a little bit ahead, but, you know, that is being extremely optimistic that we aren't headed for more downside in the near future. So Saylor actually said this on the earnings toll as well. He compared strategy to a real estate development company.

You know, the Bitcoin is digital real estate kind of thing. If you bought land for 10K an acre and you sold it at 100K in acre and then you bought more land with profit or if you sold at 100k and acre to pay some interest expense on debts that you use to buy more land, nobody would say that's bad for the price of real estate. And no one would say that proves the business doesn't work. Real estate development companies literally exist to be. buy land cheap and sell it expensively, he added, we're like a Bitcoin development company. And, okay, I mean, that is just turning strategy into a fund, isn't it?

I mean, you know, perhaps, perhaps my layman's brain is misinterpreting that, but he's essentially saying, hey, sometimes we'll buy Bitcoin low and sell it high and then all the times we'll hold it until maybe we need to sell it. This is just a fund to me. But, all right. So let's just have a look at the latest on MSTR as a digital asset company, as a digital asset treasury company. So here we have on the Blockworth Research Platform.

We have this Bitcoin Treasury Company's chart, which is by BTC per share, which Saylor says is the most, or at least strategy says is the most important metric apart from how much Bitcoin they actually hold. We can see that there is 100, for, strategy, there's 189 Bitcoin per share, which is far and above number two here, which is CIPO. CIPO is actually Adam Bax Bitcoin Treasury firm that was can to equity partners before. And micro strategy's Bitcoin per share is going in the right direction, at least.

It has been higher than it is, but since basically February, it's been trending upwards. But of course, the main thing that everyone is wondering is if strategy can buy so much Bitcoin and the price of Bitcoin goes up as strategy accumulates, then what's going to happen to the price of Bitcoin when they start offloading it? And to that, I tend to be a little bit optimistic in that if strategy has indeed overextended itself in terms of what it can do to accumulate Bitcoin, then there should be other firms that haven't over extended themselves and can just buy sailors coins. Let's take a look at how the ETFs are doing because this relationship between

DATs and ETSs has always been somewhat fascinating because sometimes they tend to operate in different directions. So, okay, let's just pull up the crypto ETFs tab on the Blockworth's research platform to see if we can have any insight into what's happening on the other side of the DAT coin, the crypto ETS. So let's have a look on the daily. We are looking at quite a big spike in inflows on May 4, which is really good for the ETS because there's a few days of outflows and then a big big spike of inflows. And in general, it looks like we are headed towards a little bit more accumulation from the ETS, at least compared to what was happening in February. So,

you know, there could be the case that, yeah, if strategy has to sell, then there might be other market participants that are interested in buying. And we do see that somewhat reflected also, just within the DAT companies. I mean, there's news here that, that one, I mean, it's not just strategy that might be selling Bitcoin. We have recent news out yesterday that French chipmaker sequins dumped half of its Bitcoin as Treasury hype meets reality. So they have mounting losses and debt obligations. So they had to reverse their strategy of Bitcoin accumulation, or at least Bitcoin holding. So, okay, it's not just strategy.

But then if you look a little bit closer in the headlines, there is actually a separate Bitcoin treasury company that is actually buying. So here we have the smarter web company tops up Bitcoin position leading to some increases in its share price. So they added another 27 Bitcoin to its treasury, taking total holdings to about 2,800 Bitcoin. And it has a 10-year plan strategy of acquiring Bitcoin. And okay, these numbers are relatively small, especially compared to the amount the strategy is doing. But so, I mean, this is what I mean is that the more digital asset treasury companies that we have and the more companies that are interested in accumulating Bitcoin, and just more ETFs and all of that kind of thing,

then we're going to have a diversity of strategies, financial health, and velocity around buying. So I am, I mean, for one, I'm almost certain that it's a very easy call to make that the price of Bitcoin would go down if strategy really starts selling at scale. But at the same time, there has been a massive Cambrian, explosion in digital asset companies and ETFs and institutions. I mean, not just in the US, ETFs around the world. There's a lot in Europe that are accumulating Bitcoin too.

So the market has expanded to be a much healthier and diversified place than what it was when strategy started buying Bitcoin in August 2020. So whatever happens with strategy in the next six months to a year, it could be bad for that particular company. and it would certainly, I'm almost certain, would be bad for the price of Bitcoin within the parameters of when strategy is selling, depending on how much it needs to actually offload to satisfy its financial situation. But I am optimistic that there are just more companies out there that are taking that into consideration and would use that opportunity to buy the dip and beef up

their own individual buying strategies. That's my take. But apart from that, I mean, there is a few smaller stories happening around crypto right now. You know, speaking of the Agenic Meta, Solana and Google Cloud launched a stablecoin payment service for AI agents, which sounds quite bullish to me about the Agenit Commerce meta. We also have Western Union launching its own stable coin. I believe in the Philippines to start with. So, yeah, more on the fintech side of crypto and that is truly expanding. In terms of the most interesting thing, I think we've covered that to date.

I'm looking forward to checking back in on adoption of the AI agentic commerce side of crypto and whether or not these Google Cloud initiatives have moved the needle there. But perhaps we'll save that for Friday. In the meantime, look after yourselves and please smash like and subscribe. If you're watching this on YouTube, do the equivalent if you're listening to this on Spotify or Apple Podcasts, share it, leave comments for us. I read them all. So please, if you just, I would love to hear from you.

In the meantime, yeah, I said it, but I'll say it again. Look at off yourself. Goodbye.