A new report from the crypto-focused VC firm Electric Capital on January 17 analyzing crypto developer trends estimates the total number of monthly active cryptocurrency developers has dropped by 24% over the past year, with a significant percentage of the quitting developers being newcomers.
Despite the reported decrease in monthly active developers, the report indicated that veteran developers with two or more years in the field surprisingly grew by 52% over the past five years (annualized). In contrast, newcomers with less than 12 months of experience dropped 52% YoY, a loss Electric Capital attributed to the record influx of new crypto developers in 2022.
The conclusions are barely surprising, considering the relatively challenging nature of the crypto and web3 development industry. While a newbie with less than one year of experience is likelier to quit for an alternative niche, the relatively stellar pay is enough to keep experienced coders reined in.
The Research Findings are Largely from Fingerprinting Open-Source Projects
The Electric Capital January – December 2023 Developer Report is available to the public on DeveloperReport.com, with a summary detailing the contents. Also, the report has some interesting insights, with its compilers spending a few pages describing and defending their methodology.
The venture capital firm collected data by fingerprinting over 485 million code commits on 818,000 open-source repos, making the conclusions only realistically relevant for open-source analysis. Currently, there is no reliable way to fingerprint private repos. The VC firm believes it may not be necessary, as the cryptocurrency market is significantly open-source anyway.
While admitting the presence of code-committing bots on GitHub cryptocurrency projects, Electric Capital clarified it detects and excludes them for a fairer assessment. The firm also tries to prevent duplication by collapsing developers with multiple accounts into one, hopefully improving the integrity of its data.
A Deep Dive into the Report
The massive 181-page report analyzes the activities of open-source crypto developers to come up with a behemoth of statistics and conclusions about the state of cryptocurrency development in 2023. The report reveals a worrying 24% drop in total cryptocurrency developers. Also, the report attributed the issue to the massive influx of blockchain devs during the Bitcoin 2022 rally. With the newcomers quickly realizing the rigors of crypto development, they bailed, leaving more experienced veterans in the business.
Talking about veterans, crypto developers with over two years of experience hit a new all-time high, recording a 52% annualized growth rate over the past five years. With this segment of developers committing the most code on crypto projects, the drop in total developers should barely make a dent in the development of most projects.
Additionally, the report revealed that a rising percentage of crypto developers now support multiple blockchains, with around 30% of devs supporting more than one chain. For context, only 3% of crypto developers supported more than one blockchain in 2015, marking a 1000% growth from eight years ago. Similarly, crypto devs supporting more than three chains reached an all-time high in 2023, growing to 17% of all developers.
While speaking to TechCrunch on January 17, Maria Shen, General Partner at Electric Capital, revealed that while the report implies a massive drop in crypto developers, it does not have a proportionate impact on the cryptocurrency development field.
According to findings, 75% of code commits are from crypto developers with over one year of experience, a demographic that grew by 16% YoY. So, the massive drop in newcomers is not a lot anyway.
Rounding up the report summary, Electric Capital pointed out a worrying trend of the United States losing developer share YoY, with the US now only contributing 26% of global crypto developers. In contrast, West Africa, South Asia, Latin America, Eastern Europe, and Southern Europe all gained market share since 2018, collectively recording 20% growth since 2018.
The market share loss will (expectedly) continue as other regions adopt cryptocurrencies and crypto development. With crypto firms leaving the US market in droves amid harsh and predatory regulations, the American industry dominance is unlikely to stop dwindling anytime soon.