The global web3 developer space grew in 2023, according to a new report, regardless of the ongoing bear crypto market and regulatory headwinds in the U.S.
It was especially a home run for Ethereum, one of the most well-known layer-1 blockchains. The blockchain saw software developer kit (SDK) installs increase 31% year over year to 106.4 million downloads in 2023, up from 81.4 million in 2022, according to Alchemy’s Web3 Development Report for 2023.
The total Ethereum SDK installs have increased consecutively over the past five years, the report said. The number included SDK packages like ethers, web3, hardhat, truffle, foundry, eth, alchemy-sdk, viem, userops and wagmi. In 2022, there was an overall increase in developer activity. A separate report by Electric Capital found that the number of monthly active crypto developers declined 25% last year.
“It’s been great to see confirmation of the cliché that bear markets are for building,” Jason Windawi, protocol specialist at Alchemy, told TechCrunch+. “During the depths [of the downturn] it was easy to wonder if that’s true; we knew it was, but it’s good to have this data to show that.”
The global market capitalization of the crypto market rose 113.75% from roughly $800 billion at the beginning of 2023 to $1.71 trillion by the end of the year, according to CoinMarketCap data. The two biggest cryptocurrencies, Bitcoin and Ether, increased 166% and 90.75%, respectively, during the same time frame.
Ethereum is where the liquidity is and where a lot of developers start their journey, Windawi said. But it would be “foolish to count out other chains.”
The report also showed “clear growth” across layer-1 blockchain Solana. Solana’s total transfer volumes for decentralized exchanges, NFTs and USDC on the blockchain topped Ethereum in the fourth quarter of 2023, while memecoin hype brought its DEX volume over $9 billion. As for developers, Solana’s 2023 Hyperdrive hackathon had over 900 projects, an increase of 63% from its Riptide hackathon in 2022, the report stated.
There was also growth for Ethereum Virtual Machines (EVMs), which are basically computers that are focused on powering that blockchain. Some EVM-compatible blockchains like layer-1 blockchains Avalanche and BNB chain have their own networks that can deploy developers’ codes onto Ethereum. There’s also layer-2 blockchains built on top of Ethereum — like Polygon, Optimism and Arbitrum — that focus mainly on scaling the blockchain.
There were over 240 million smart contracts created by Ethereum-focused layer-2 blockchains, with 158.34 million created on Polygon alone, the report found.
While the issue of scaling Ethereum isn’t fully solved, there have been huge strides toward it. “It’s been a major roadblock to scaling, and it’s been addressed aggressively [in the past] and will be more this year, too,” Windawi said.
And as the data showed, it’s not just limited to Ethereum. “We’re seeing exciting projects using a lot of different stacks in compelling ways,” Windawi said. “Where developers are using tools and what kind of libraries they’re downloading doesn’t necessarily mean that’s where they end up [long term] or what they’re building.”
A major theme for developers last year was also “account abstraction,” or ERC-4337, which was introduced in the third quarter to improve the crypto experience. To date, about 1.8 million deployments for account abstractions have transpired with over 53% happening in the fourth quarter of 2023, introducing new features like sponsoring blockchain gas fees for users or simplifying login steps, according to the report.
Many people have argued that crypto’s onboarding process, or even using web3 dApps day in and day out, is not a friendly experience. Sometimes a person will have to pass through a handful of applications and approve even more transactions just to get one objective done.
But in order to make it simple, developers have to “get complex first” through the back end, to make the front end look as simple as possible, Windawi said. “Account abstraction is real; it’s coming and we’re excited to be a part of that.”
Note: The report used the following sources for data collection: Alchemy’s data, Dune’s verified smart contracts, npmjs.com (SDK installations and metadata) and Coingeck for token prices.