Open-source software developer activity in crypto peaked last June and fell 11% by Dec. 15, according to a new report from crypto venture firm Electric Capital.
The firm's annual report argues assessing developer numbers and activity, an often overlooked metric for cryptocurrency projects, provides a leading indicator for where future value in crypto will be created.
From its November 2021 peak, crypto's total market capitalization fell by 71% from $2.9 trillion to $860 billion by the end of the same period, according to Coinmarketcap and CoinGecko.
"Developers build killer applications that deliver value to end users, which attracts more customers, which then draws more developers," Electric Capital said in its report.
Overall, the industry’s total number of monthly active developers rose 21% in 2022 to 23,343 from 18,416 the prior year, suggesting developer activity remained "sticky" relative to the plunge in digital asset prices. This report comes as crypto firms have already laid off an estimated 2,600 workers in January, according to Yahoo Finance's tally.
The crypto ecosystem for the second-largest cryptocurrency, ether (ETH-USD), remains far and away the largest by developer activity, with 1,873 full-time developers.
Following Ethereum, Polkadot (752), Cosmos (511), Solana (383), and Bitcoin (300) round out cryptos 5 largest ecosystems by full-time developers.
With at least 140 full-time developers, Polygon (253), Kusama (250), NEAR (205), Cardano (163), and Tezos (147) round out the top 10 largest ecosystems.
“We're seeing the same thing this cycle that we saw in the last cycle [2017-2020]," Electric Capital partner Mari Shen told Yahoo Finance.
"Even when prices fall, developers do not proportionately respond," Shen explained, suggesting that the feature makes developer trends in crypto ecosystems a less rate sensitive way to judge a crypto project's health.
The venture firm analyzed 124 million "code commits," or updates including additions, revisions, and other changes made during 2022 to crypto-specific open-source software. The study breaks out total developer activity into full-time, part-time, and volunteer workers with full-time serving as the strongest signal for how a crypto ecosystem's developer community holds up during a bear market.
Notably, the findings are based only on crypto programming done on public projects, which doesn’t account for the ranks of software developers working on private projects for crypto firms. A spokesperson Binance, for example, told Yahoo Finance its total developer headcount is more than 2,100 engineers.
According to the report, 28% of all monthly active developers work on either Ethereum or Bitcoin as of Dec. 15, 2022.
Through last year, Ethereum's developer community size continued to dominate other crypto ecosystems. Its 2.5 times larger than the next largest, Polkadot, due in part to hosting a larger number of decentralized finance (DeFi) applications and NFT projects, according to Shen.
Ethereum saw its full-time developers rise by 9% year over year to 1,873 from 1,712. Based on how its developer numbers hold up compared to the other 200 largest crypto ecosystems, the report also found Ethereum was better at retaining developers than any other ecosystem.
Bitcoin’s monthly active developers, in contrast, dropped 4% from 312 to 300.
"Ethereum and almost all other [crypto] ecosystems are more prone to [market] cycles and how prices change," Shen said. "Even though its developer ecosystem isn’t growing, I would argue that [Bitcoin] is actually very healthy. I don’t think you need intense growth to sustain the bitcoin protocol."
Overall, crypto’s total monthly developers has more than doubled from 10,893 since Electric Capital’s first developer report in August 2019.
As Shen explained, crypto as we know it today started fourteen years ago with one developer — bitcoin’s creator Satoshi Nakamoto — who essentially worked for free.
"It's a very different industry. A lot of [developers] are frankly, true believers… It has this kind of ideology around it, which I think means when prices drop there’s still a reason to build these things," Shen said.
Click here for the latest crypto news, updates, values, prices, and more related to Bitcoin, Ethereum, Dogecoin, DeFi and NFTs
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Darius Miles, the ex-Alabama basketball player maintains his innocence after being charged with capital murder, per his attorneys.
The group has identified $1.6 billion of digital assets associated with FTX.com and $181 million connected to FTX US.
Bug reports are “really an art,” an Immunefi developer told CoinDesk.
Hedge funds trading crypto currencies tracked by index provider BarclayHedge ended 2022 down almost 50%, the research firm said on Tuesday, a sign that the collapse of the cryptocurrency exchange FTX continues to ripple through the industry. FTX filed for Chapter 11 bankruptcy protection in the United States in November following its spectacular collapse that sent shivers through the industry. Ben Crawford, head of research at BarclayHedge, said since FTX fell to pieces, the conversation around trading crypto currencies had become polarised and that "true believers" in crypto were "cranking up their evangelizing to 11."
The European Union’s MiCA crypto bill will now be put forward for parliamentary approval in April after first being delayed to February.
Developers are mainly focusing on alternative ecosystems to Bitcoin and Ethereum, helping them grow faster, the VC firm said in a report.
Both exposure to customers in the crypto space and a decision to reduce this exposure have been key headwinds for Signature Bank shares.
Nexo has sued the Cayman Islands Monetary Authority to overturn its rejection of Nexo's application to register as a virtual asset services provider.
The firm will back blockchain projects that could achieve mass adoption.
A meltdown in cryptocurrency markets over the past year has seen the bank bleed cash, forcing a business restructuring and mass layoffs.
The Securities and Exchange Commission of Thailand issued new rules for cryptocurrency custody services on Tuesday.
HashKey's investments will focus on advancing blockchain initiatives in emerging markets.
Expects to release its DEX aggregation router in the first quarter.
Co-led by Pantera and Archetype, the funding round is targeted towards building out decentralized validator technology (DVT) on Ethereum.
NRG Energy (NRG) closed at $32.15 in the latest trading session, marking a +0.85% move from the prior day.
Looking to track indexes, investors withdrew a net $926 billion from actively-managed funds in 2022, their worst year ever, Morningstar said on Tuesday in a year-end report that excluded money-market funds and covered data back to 1993. Passive funds took in $556 billion last year, Morningstar said. Although the amount was about 42% lower than their net deposits in 2021, "investors appear to be buying passive funds in both good times and bad," Morningstar said.
In the latest trading session, HF Sinclair (DINO) closed at $52.40, marking a +0.75% move from the previous day.
In the latest trading session, Ardmore Shipping (ASC) closed at $14.22, marking a +0.85% move from the previous day.
Founders of Three Arrows Capital, a crypto hedge fund whose bankruptcy in June resulted in potentially billions of losses for investors and creditors, are seeking to raise up to $25 million for their new business.
Mikhail Fedorov says he wants to make his war-torn country the leading jurisdiction in the world for virtual currency after a successful fundraising campaign.
