Developers Keep the Candle Burning During Chilly Crypto Winter

Although the ongoing crypto winter has started to feel like an ice age, new data from Web3 developer platform Alchemy suggests that builders are trudging ahead and continuing to deploy on-chain.

In its Web3 Development Report looking at the fourth quarter of 2022, Alchemy wrote that this past year saw token trading drop but development on Ethereum grow. Non-fungible token (NFT) trading volume was down by 94% year over year, the report said, while the total value locked (TVL) in decentralized finance (DeFi) protocols fell by 77%. Major cryptocurrencies, including BTC, ETH and SOL, dropped by 65%, 68% and 94% respectively.

And while the fallout from FTX’s collapse in November led to significant losses that rippled across industries, morale amongst Web3 developers remains high. The number of smart contracts deployed on the Ethereum mainnet increased by 453%, the report said, following the Ethereum merge at the end of the third quarter. And in a survey of 985 developers conducted by Alchemy, 94.2% reported feeling optimistic about the future of Web3.

“Web3’s hallmark highs and lows were on full display in Q4,” Alchemy wrote in a press release accompanying the report. “On one hand, developers leaned into trustlessness – deploying smart contracts at rates that resembled the peaks of 2021. On the other, the implosion of major crypto exchanges rocked the foundations of consumer trust.”

Jason Shah, head of growth at Alchemy, told CoinDesk that while the fall of FTX contributed to the sharp decline in some figures last quarter, positive developer sentiment highlights a growing separation between cryptocurrencies and decentralized tools.

“It’s the tale of two cryptos, with centralized exchanges and financial fraud alongside builders and decentralized technological architecture,” said Shah. “And these are very different worlds, frankly, that are becoming increasingly decoupled.”

Shah also noted that among the smart contracts deployed this past quarter, there was 58% increase in the amount of social decentralized applications (dapps) built in the fourth quarter.

“It suggests to us that there's probably a more sustainable and natural set of internet products that are being built around that social sector,” said Shah.

Read more: Despite Crypto Bear Market, Web3 Developers Are Still Building, Study Shows