Web3 dev activity surges 453% in Q4 while consumer confidence in crypto crashes

Even in an industry known for its relentless pace of innovation and turn-on-a-dime market conditions, the last quarter of 2022 was wilder than anyone could have imagined. 

Web3’s hallmark highs and lows were on full display in Q4. On one hand, developers leaned into trustlessness – deploying smart contracts at rates resembling the peaks of 2021. On the other, the implosion of major crypto exchanges rocked the foundations of consumer trust.

To borrow a line, it was the best of times and it was the worst of times. Allow us to explain.

By examining three core indicators (libraries, smart contracts, and dapps) we can extrapolate an accurate measure of developer activities across every vertical. Layer in macro-market conditions, industry milestones and consumer trends from trusted resources like CoinMarketCap, DappRadar, Dune, Nansen and SolScan, and the state of the web3 landscape quickly comes into focus. ‍

As a refresher:

While assets on centralized exchanges plummeted 45%, smart contracts deployed skyrocketed 453% (4.6 million total), according to Dune Analytics – showing a stark contrast between trust in custodians vs. trustless products being built on-chain. 

Ethereum mainnet smart contracts increased 453% in the fourth quarter of 2022 compared to Q3.

At the same time, crypto consumers are driving unprecedented outflows across the industry’s largest exchanges. Across the top centralized exchanges alone, more than $2.6B of ETH was withdrawn, according to Dune.

Additional quarter-over-quarter comparison highlights include:

Popular Ethereum libraries and developer tools like Hardhat grew 16% Q/Q and 86% Y/Y.

Our own platform and survey data confirmed increased dev activity and highlighted a positive outlook despite being in the thick of crypto winter.

In December we surveyed 985 Alchemy developers, and of those, 94% said they were committed to building in web3. What’s more, following the launch of Alchemy University in October and November – as FTX unraveled – more than 100k applications poured in, indicating strong interest in building web3 development skills.

94% of web3 developers expressed a bullish industry sentiment despite a prolonged bear market.

If there’s one key takeaway from the above analysis it’s this: despite the schemes and scandals that bruised consumer confidence in crypto throughout Q4, the ecosystem is growing as a result of developer resilience, creativity and belief in blockchain-based technology.

Methodology

This report strives to provide an accurate and useful representation of web3 development. The following sources were used for data collection purposes:

Web3 Javascript library weekly downloads were used as a proxy for developer activity here. This metric is helpful but imperfect due to the ability for the library to be downloaded multiple times by the same user intentionally or unintentionally. However, it provides one signal for directional guidance. Additionally, the growth of various blockchains on Alchemy is purely relative; certain chains are significantly larger as measured by active teams and daily requests.

Phase 1: Ideation and Interest

Before building web3 applications, developers signal interest in building through means including education and market surveys. This section highlights data points around developer sentiment.

Alchemy Developer Survey

In Q4 2022, Alchemy surveyed developers across Alchemy’s Free, Growth, and Enterprise tiers to gather insights into platform usage and web3 market outlook. In total, approximately 1,000 respondents (985 to be exact) provided feedback, yielding insights during an unpredictable time in the industry.

Are developers bullish or bearish on the future of web3 in 2023?

58.2% of  web3 developers surveyed by Alchemy are “To the Moon 🚀” and another 36% respond “bullish”, while the remaining 5.8% of respondents expressed “Bearish” and “Dumpster Fire” sentiments.

What are the major concerns web3 developers face in 2023?

58% of 947 free and growth tier customers are concerned about funding, 31% are concerned about tooling, 25% about staffing, and 8% of respondents listed other sources of stress in 2023.

58% of web3 founders are concerned about funding in Q4 2022.

Alchemy University

Alchemy University offers free web3 development courses including a free, 3-week JavaScript crash course and free, 7-week Ethereum Developer Bootcamp. 

How many people signed up for Alchemy University’s free web3 development courses?

Alchemy University was launched in October 2022, and since it then over 100k applications were received and more than 20,000 people enrolled in the early access programming.

Over 100,000 people applied to Alchemy University's free Ethereum Developer Bootcamp in Q4 2022.

This interest from web3 developers desiring to learn Ethereum development suggests sentiment remains positive regardless of token price action since the market downturn in 2022.

Alchemy Ventures

Alchemy’s company mission is to provide developers with the fundamental building blocks they need to create the future of technology. Alchemy Ventures accelerates this mission by dedicating financing and resources to the most promising teams growing the web3 ecosystem.

What types of web3 products are developers building in 2023?

According to Alchemy Venture portfolio companies, the next generation of promising web3 portcos are focused on building developer tools (35%), infrastructure (15%), security (15%), gaming (15%), DeFi (15%), and wallets (5%).

Alchemy Ventures maintains their investment velocity in Q4 2022 compared to Q3.

Despite macro headwinds, investment velocity continued with a steady pipeline of seed stage investments including 20 deals in Q4, which is on par with Q3’s 20 new Alchemy Venture investments.

Phase 2: Local Web3 Development

Once developers have an idea of what they want to build, they typically start building on their local computer because it is faster and easier than building directly on a testnet or a mainnet blockchain.

This section of the report analyzes how much the most broadly used web3 developer tools have grown in the 4th quarter among developers including web3 libraries like ethers.js, web3.js, web3.py, and Integrated Developer Environments (IDEs) like Hardhat.

How many Ethereum SDK installs happened in 2022?

In 2022, Ethereum SDK installs, which includes ethers.js, web3.js, hardhat, and web3.py grew 87% compared to 2021, and installs grew 16% in Q4 compared to the third quarter of 2022.

Total Ethereum library installations and core developer tools are up 16% in Q4 2022.

Total Ethereum Core Tool Downloads by Year

Source: NPM Trends

What is the most popular Ethereum SDK in 2022?

In 2022, ethers.js was installed 1.1 million times, which is a 122% increase compared to 2021 and an 11% increase in Q4 compared to Q3. Compared to the second most popular Ethereum SDK, ethers.js was used 92% more than web3.js in 2022 (571,600 downloads).

Ethers.js Downloads by Year

Source: NPM Trends

How many times was web3.js downloaded in 2022?

In 2022 web3.js, the second most popular Ethereum SDK used in local development, was installed 571,600 times, which is a 32% increase since 2021 and in Q4 a 3% decrease in total installs compared to Q3 2022. 

Web3.js Downloads by Year

Source: NPM Trends

What is the most popular Python SDK for Ethereum development?

The most popular Python-based Ethereum library is web3.py, which was downloaded 18,600 times in 2022, a 127% increase compared to 2021, which saw 8,200 downloads, and a 34% increase compared to Q3 2022 installs.

Web3.py Downloads by Year

Source: NPM Trends

What is the fastest growing Integrated Developer Environment (IDE) in 2022?

Hardhat is the fastest growing web3 IDE in 2022, in which it amassed 163,200 installations, a 217% increase since 2021 when it was downloaded 51,500 times, and Hardhat saw a 12% increase in Q4 2022 compared to the 3rd quarter.

Hardhat Downloads by Year

Source: NPM Trends

3. Testnet Developer Activity

Before launching applications into a production environment on mainnet blockchains, web3 developers will deploy applications from their local development environment to a testnet (i.e. test network to refine their product on a blockchain that mirrors the mainnet environment without spending real ETH.

Increased testnet activity is a signal of more developers bringing products out of proof-of-concept stages and getting their products ready for real users and production use cases. 

How many Goerli testnet smart contracts were deployed in Q4 2022?

In the fourth quarter of 2022 Goerli, the primary testnet after The Merge, saw an all-time high of 2.7 million smart contracts deployed, which was a 187% increase compared to Q3 2022 and a 721% Y/Y increase compared to 2021.

Total Goerli testnet contract deployments grew 187% in Q4 2022 and 721% since Q4 2021.

Goerli Smart Contract Deployments by Quarter

Goerli Faucet Website Visits by Quarter

Alchemy’s Goerli faucet (goerlifaucet.com) saw an all-time high in visits growing 154% in Q4 2022 compared to Q3 2022.

Alchemy's Goerli faucet saw record numbers of unique visitors during Q4 2022.

Much of this demand for Goerli ETH and Goerli testnet development was a result of multiple test networks being deprecated throughout The Merge (e.g. Ropsten, Kovan, and Rinkeby), which forced developers to migrate their applications to Goerli.

In 2022 popular Ethereum layer 2 blockchains also migrated their testnets to Goerli such as the Arbitrum Nitro Testnet and Optimism’s Goerli testnet.

How much Goerli ETH was distributed to web3 developers in 2022?

Alchemy received 7.6 million requests for Goerli ETH from 2.9 million unique wallet addresses, and delivered over 1.1 million gETH to web3 developers in 2022.

Alchemy delivered over 1 million Goerli ETH tokens across 2.9 million unique wallet addresses.

Although it is free to use, developers need to request free Goerli ETH to pay for gas on Goerli testnets across Ethereum, Arbitrum, Optimism, etc.

Source: Alchemy

4. Mainnet Developer Activity

Developers deploy tested applications to the Ethereum Mainnet when the product is ready to serve real users in a live environment. This section of the report focuses on smart contract deployments on Ethereum, Solana Programs (i.e. smart contracts on Solana), and layer 2 bridging activity from Ethereum to Optimism, Arbitrum, Starknet, and zkSync.

How many smart contracts were deployed on Ethereum in 2022?

In 2022, over 7.75 million smart contracts were deployed on Ethereum, including 4.6 million in the fourth quarter alone, which represents a 453% increase in smart contract deployments compared to Q3 2022.

Total Ethereum smart contract deployments by quarter since Q1 2020.

Ethereum Smart Contract Deployments by Quarter

How many Solana programs were deployed in 2022?

As of January 1st, 2023 there were 1,148 unique Solana programs with at least one unique interaction, which represents a 173% increase since January 1st 2022 (421 unique Solana programs) meeting the same criteria.

A Solana program is executable code that performs a specific set of instructions. Solana programs are similar to how smart contracts work on Ethereum, and provide similar insights regarding the developer growth on Solana.

Source: Solscan Analytics

How many users bridged from Ethereum to a Layer 2 blockchain in 2022?

In 2022, 1,021,000 unique users bridged from Ethereum to Optimism, Arbitrum, Starknet, or zkSync, and 443,000 unique users bridged during the 4th quarter of 2022, a 155% increase compared to Q3 2022.

Total Layer 2 bridging activity across Arbitrum, Optimism, Starknet, and zkSync since Q1 2021.

With cheaper transaction fees and more scalable transactions per second, many developers and consumers are using layer 2 blockchains. To build and use L2s, users must bridge ETH and other ERC20 assets to L2 blockchains.

These statistics highlight a growing interest in using L2s to perform tasks that have been historically done on Ethereum mainnet.

Source: Dune

5. Scaling Developer Usage

As web3 products attract real users and find product-market-fit, developers need to scale their systems to support the increased consumer demand. This section looks at production-grade usage from Alchemy products, new dapps, and data points from Alchemy chain partners.

Total growth for Alchemy's core products: the Alchemy SDK, NFT API, and Enhanced APIs.

How fast is the Alchemy SDK growing in Q4 2022?

SDK requests using Alchemy’s SDK were up 433% Q/Q showing the interest in simpler web3 developer tooling.

While web3 libraries like ethers.js and web3.js support the main Ethereum API methods, the Alchemy SDK simplifies the process of using core Ethereum libraries into a single line of code, while adding additional functionality through the NFT API and Enhanced API endpoints.

How fast is the Alchemy NFT API growing in Q4 2022?

NFT API requests grew >1000% Y/Y and 132% Q/Q showing the increased interest from NFT product developers and consumers.

Alchemy’s NFT API makes it easy for developers to query NFT-related API endpoints across Ethereum, L2s Arbitrum and Optimism, sidechains like Polygon, and the popular Ethereum testnets.

How fast are Alchemy Enhanced APIs growing in Q4 2022?

Enhanced API requests grew > 1000% Y/Y and 75% Q/Q showing developers are using complex blockchain queries to build products.

Alchemy’s Enhanced APIs are a suite of API endpoints such as Trace APIs, debugging APIs, webhooks, websockets, token APIs, transaction APIs, and transfers APIs.

How many web3 dapps exist in 2022? 

As of December 2022, DappRadar has registered 16,102 dapps across all chains, which is a 16-fold increase since 2018, and a 32% increase compared to Q3 2022.

Total dapps registered on DappRadar increased 32% Q/Q in Q4 2022.

The top three dapp categories on Dapp Radar are:

The fastest growing category is social dapps which saw a 105% increase Y/Y and a 58% increase compared to Q3 2022.

Source: DappRadar

Alchemy Dapp Store Growth

Q4 2022 also saw the release of the Alchemy Dapp Store, a free directory of web3 developer tools and consumer applications. To date, the Dapp Store has published over 1,300 dapps and tools across 10 blockchains and 100s of categories with new products being added every week.

Some of the top Alchemy Dapp Store tools and dapps since its December 2022 launch.

Alchemy Chain Partner Growth (2022)

Alchemy supports multiple blockchains in addition to Ethereum including Polygon, Arbitrum, Optimism, Solana, and their test networks. This section of the report highlights the growth observed from each chain partner on the Alchemy platform.

Active developer teams building on Alchemy in Q4 2022 is up across every supported chain.

How fast are Polygon developers growing on Alchemy?

Active teams developing on Polygon grew 389% compared to 2021, and Polygon API usage grew 200% Y/Y.

One standout application on Polygon is Lens Protocol which saw more than 110,000 new profiles and 99,000 NFT holders since their 2022 launch.

Source: Alchemy & Polygon

How fast are Arbitrum developers growing on Alchemy?

Active teams developing on Arbitrum grew 718% Y/Y and Arbitrum API usage on Alchemy grew 900% compared to 2021. 

One popular application on Arbitrum is the decentralized exchange aggregator, Slingshot, which saw more than 56,000 wallets swapping tokens on their L2 DEX aggregator in November 2022, up 80x Y/Y.

Source: Alchemy & Slingshot

How fast are Optimism developers growing on Alchemy?

Active teams developing on Optimism and using the Optimism API grew 1000% year-over-year compared to 2021.

Optimism Quests are simple educational activities users can complete in exchange for rewards. Since the program launched in September 2022, over 421,000 people participated and over 3.1 million NFTs were minted.

Source: Alchemy & Optimism

How fast are Solana developers growing on Alchemy?

Active teams developing on Solana grew 1000% Y/Y, and doubled in Q4 compared to 2022 Q3. Solana API usage also grew 1000% Y/Y and 277% in Q4 compared to Q3 2022.

Source: Alchemy

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