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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.
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 Across the top centralized exchanges alone, more than $2.6B of ETH was withdrawn, according to Dune.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:
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.
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.
This report strives to provide an accurate and useful representation of web3 development. The following sources were used for data collection purposes:
Before building web3 applications, developers signal interest in building through means including education and market surveys. This section highlights data points around developer sentiment.
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.
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.
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.
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.
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’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.
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%).
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.
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.
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.
Source: NPM Trends
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).
Source: NPM Trends
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.
Source: NPM Trends
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.
Source: NPM Trends
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.
Source: NPM Trends
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.
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.
Alchemy’s Goerli faucet (goerlifaucet.com) saw an all-time high in visits growing 154% in Q4 2022 compared to Q3 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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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
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
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
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.
This report is for informational purposes and does not constitute investment, legal, or tax advice. You should not put undue reliance onany statements of historical trends or interpret them as guarantees of future performance or results.
In addition to providing information based on our internal sources, this report contains statistical data and estimates that are based onpublic information. You should not give undue weight to such data or estimates as we have not verified them.
We make no representations or warranties as to the accuracy or completeness of the data presented nor do we commit to updatingsuch data after the date of this report. By reviewing, sending, receiving, or sharing this report, you acknowledge that you will be solelyresponsible for your own assessment of the market, our company, and the other organizations mentioned, and you will conduct yourown analysis and be solely responsible for forming your own view of any potential future performance.
As indicated on our website (www.alchemy.com), we have a business relationship with certain chains including Ethereum, Polygon,Optimism, Arbitrum, and Solana. However, this report is not intended to promote the token of any particular chain.