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Frontend Development

Open Source Blockchain Development Strong, Despite Funding Cuts

Funding of Web3 companies has declined 25.6% year-over-year, though developer interest remains strong.
Aug 5th, 2022 3:00am by
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If you only focus on the headlines, the Web3 space looks pretty dire over the course of 2022. Funding of Web3 companies has declined 25.6% year-over-year when comparing the first half of 2021 to the first half of this year. Cryptocurrency valuations are down by as much as 80%. On the other hand, open source Web3 projects are still going strong according to a study published by Telstra Ventures data science team this week.

Developer Contribution Study Methodology

The Telstra Ventures study analyzed 1,000 active organizations contributing to more than 30,000 Bitcoin, Ethereum, and Solana open source projects on GitHub, as defined by the Crypto Ecosystems taxonomy established by Electric Capital at the end of 2021, along with projects identified by cryptocurrency project and token aggregators.

Telstra Ventures limited projects to those with a minimum of 100 stars in related GitHub repositories and active contributions through July 2022. In an interview with The New Stack, Jonathan Serfaty, Head of Data Science at Telstra Ventures said, “We looked at contributors from an organization standpoint. For example, we looked at the specific repository that holds the Ethereum project. We looked at the Ethereum organization contributors. And we looked at the Ethereum ecosystem, which includes all of the surrounding EVM-compatible projects.” Telstra Ventures plans to re-run the report on regular intervals to continue monitoring the health of the Web3 open source community.

Findings from the Telstra Ventures Study

I asked Serfaty if there were any surprises in the data from the study. He said, “There’s a very core group of developers and even through past declines that core group has continued to stay active in building out the project they believe in regardless of what the cryptocurrency market is doing.”

The study indicates that Ethereum is growing with a 24.9% compound annual growth rate of contributors through the market volatility of the past 4 years beginning January 1, 2018, which is illustrated in the chart below. You may also notice that Ethereum developer contributions have risen slightly from where they were in July 2021, despite the massive price volatility.

Graph comparing Ethereum price to developer contributions

Yash Patel, General Partner at Telstra Ventures said, “When you think about traditional equity markets and crypto prices, which are down 70% or more from a year ago. We are interested in the developers who are continuing to build. We take comfort in the fact that the declines in contributions are relatively small vs. the price speculation that you’ve seen in the financial space.”

One thing I found interesting is the overall size of the developer ecosystem across Bitcoin, Ethereum, and Solana. Ethereum remains the largest blockchain in terms of developers actively contributing to projects, with approximately 2100 active developers. Bitcoin, the most mature of the blockchains measured has around 400 developers actively contributing to projects, while Solana has slightly less than 300 active contributors as of the end of July.

Be sure to read the full Telstra Ventures study on Bitcoin, Ethereum, and Solana. If you are curious about developer activity with other blockchains, the Electric Capital Ecosystem Browser includes a much broader set of blockchains and protocols, with 96,436 repositories being tracked across 3845 ecosystems.

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