Web3 developer activity still grew in the last quarter of 2022, according to a new report, despite crypto market volatility and stacks of negative headlines.
Ethereum, one of the largest layer-1 (L1) blockchains in the crypto ecosystem, had a 453% increase in mainnet smart contract deployments in the fourth quarter of 2022, signaling high developer momentum amid crypto market volatility, according to Alchemy’s Web3 Development Report.
“As we saw in Q3 as well, web3 devs are long-term committed to building out this ecosystem because they believe in the technology,” Jason Shah, head of growth at Alchemy, said to TechCrunch. “That durable belief, paired with more reliable infrastructure, better tooling and increasing consumer adoption every quarter, is compelling devs to dig their heels in despite unfavorable market conditions.”
The global market capitalization of the crypto market has fallen from over $2 trillion at the beginning of 2022 to about $800 billion by the end of the year, according to CoinMarketCap data. The two biggest cryptocurrencies, bitcoin and ether, fell 14% and 8.77%, respectively, from the beginning to the end of the fourth quarter.
“Specifically in Q4, developers appear to be entering a period where deploying more smart contracts is relevant given product maturity, and post-Merge, there is renewed confidence and more affordable deployment costs,” Shah said.
In September 2022, the Ethereum network went through a system upgrade, dubbed “The Merge,” which shifted the blockchain from proof-of-work (PoW) into proof-of-stake (PoS). The multiyear plan was one of the most talked-about events of 2022 and attracted both developers and investors.
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Ethereum-focused developer tool downloads also rose 16% quarter over quarter, while Goerli testnet smart contracts, a web3 application developers use to test applications before launching on mainnet, rose 187% during the same time frame, the Alchemy report showed.
The metrics are a combination of both publicly available data (i.e., NPM downloads for SDK libraries and Dune for Blockchain data) and internal Alchemy data (i.e., API usage, Alchemy Ventures and Alchemy University) that “best represent the stages of a developer’s journey from ideation to scaling their dApp,” Shah said.
And the growth wasn’t limited to Ethereum.
Layer-2 (L2) bridging solutions, like Arbitrum, Optimism, StarkNet and zkSync, which aim to scale Ethereum, also grew 43% quarter over quarter and spiked 155% in year-over-year growth, the report stated.
“This report was heavily focused on [Ethereum virtual machine], which uncovered major growth on Ethereum L1 along with L2s like Polygon, Arbitrum and Optimism,” Shah said.
Other L1 blockchains, like Solana, saw astronomical growth, Shah said. “With greater than 1,000% growth in active Solana teams on Alchemy and API usage surging to 277% quarter over quarter, the Solana ecosystem continues to impress.”
There are benefits to developers building on Solana, like “super high” transactions per second, incredibly low gas fees (less than 1 cent per transaction) and a strong marketplace, Shah added. “So this doesn’t come as a surprise.”
“The web3 dev community is seemingly unflappable,” Shah said. “They’re as focused and motivated as ever to build the future of this ecosystem while honestly acknowledging the unnecessary setbacks we have seen in 2022.”
Some of those setbacks include the collapse of the Terra/LUNA ecosystem in May 2022 and the demise of one of the (once) largest crypto exchanges, FTX, in November 2022.
However, going into 2023, there might be a slower pace of growth, Shah noted.
“We expect developer activity to continue to increase, though potentially at a slower rate given decreasing investment in web3 companies,” Shah said.
In general, many investors are trying to put last year’s chaotic crypto market behind them and look to the future. But the competition in the market will continue to grow as investors write fewer checks and become more selective in a “wait and see game,” TechCrunch previously reported.
Even if growth slows, free access to educational web3 platforms, which help developers onboard and build new skills, and easier-to-use tooling could help accelerate the community.
“We think developers will continue to pour into the space,” Shah said.
