Some may feel a thaw in Crypto Winter as Bitcoin flirts with its highest price in over a year. But tokens aside, the icy market that defined 2022 seems far from over when it comes to software development.
The number of active developers working on open source crypto projects has fallen 22% over the past year, according to a report by venture firm Electric Capital. Analysts found that there were 21,300 active developers in June, up from 27,200 a year earlier.
A decline in crypto developers over the past year could be attributed to more compelling opportunities elsewhere, self-described DeFi addict and crypto analyst Miles Deutscher said on Twitter:
“Even though prices have risen since January, developer activity has slowed down,” he said. “This can be attributed to […] developers switching to other booming tech sectors like AI.”
Electric Capital’s Report Highlights
The report defines those who have left the crypto space as developers who have not contributed to a project in more than two months. Compared to the total number of active open source crypto developers, 7,730 may seem substantial, but the report notes that newcomers are responsible for less than 20% of all code commits.
Most of the confirmations come from open source developers who have more than a year of experience working with crypto, according to Electric Capital, and that number has risen from 11,300 to around 13,100 in 2022, a gain of almost 16% among the most experienced crypto crew.
The report found that fewer developers are also exploring crypto projects for the first time. Last May, 2,900 developers entered the space compared to 5,900 that month a year ago, which was close to an all-time high for monthly entrants.
Deutscher pointed out that fatigue and less money from venture capitalists could also be at play:
“Despite prices rising since January, developer activity has exhibited a downturn. This may be attributed to:
• Developers switching to other booming tech sectors like AI
• Fresh VC funding declining
• Budget constraints/fatigue.”
Winds of Change in Crypto Developments
Institutional investors are also increasingly looking at AI. A survey by JP Morgan found a palpable shift in sentiment in February, with traders saying AI is likely to have more influence than cryptocurrency in the next three years.
A shift in preferences among venture capitalists from crypto to AI is well underway as well, according to Mysten Labs co-founder and CEO Evan Cheng. He said that products leveraging AI have greater appeal to consumers, unlike those in crypto, and are tailored to people already within the digital asset space.
However, an exodus of new talent from the digital asset space is not necessarily a warning sign, the report suggests. Newcomers have dominated the digital asset space after the previous two spikes in the crypto markets, only for that momentum to return to the veterans each time.
The report found that fewer developers are also exploring crypto projects for the first time. Last May, 2,900 developers entered the space, as compared to 5,900 that month a year ago, which was close to an all-time high for monthly entrants.
On July 6, Enrique Herreros, Software Engineer at Electric Capital in Madrid, tweeted the following:
“Market cycles also explain dominance between Newcomers, Emerging, & Established crypto devs. Newcomers dominate around market peaks:
• 6 months after Jan 2018 market peak (June 2018): 70% dominance
• 7 months after Nov 2021 market ATH (June 2022): 60% dominance.”
By Marina Meza
