Developer Trends in Crypto: Ethereum Dominates, Layer 2 Solutions Surge

In
a
comprehensive
analysis
of
developer
trends
within
the
cryptocurrency
ecosystem,
it
has
been
revealed
that
Ethereum
(ETH)
continues
to
hold
its
position
as
the
leading
platform
in
terms
of
developer
activity.
However,
the
rise
of
Layer
2
solutions
is
creating
significant
shifts,
particularly
following
the
Dencun
upgrade,
according
to

CoinShares.

Summary
Findings

The
findings
indicate
several
key
trends:

• 
  Ethereum
  remains
  the
  dominant
  ecosystem
  but
  has
  seen
  a
  slight
  decline
  in
  core
  contributors
  due
  to
  increased
  participation
  in
  Layer
  2
  solutions
  and
  competition
  from
  alternative
  Layer
  1
  (alt
  L1)
  platforms.
• 
  Layer
  2
  ecosystems
  are
  experiencing
  significant
  growth,
  particularly
  after
  the
  Dencun
  upgrade,
  with
  Base
  leading
  in
  both
  developer
  contributions
  and
  transaction
  activity.
• 
  Wallets
  and
  Exchanges
  have
  seen
  the
  largest
  rise
  in
  contributors.
• Pure
  play
  
  Derivatives
  platforms
  have
  seen
  the
  largest
  drop
  in
  contributors.

The
study
underscores
the
complexity
of
valuing
blockchain
ecosystems,
noting
that
developer
activity
can
serve
as
both
a
lagging
and
leading
indicator
of
a
platform’s
potential
success.

Methodology

The
data
for
this
analysis
was
sourced
from
Electric
Capital’s
open-source
GitHub
taxonomy,
which
is
regularly
updated
to
reflect
new
ecosystems
and
sub-ecosystems.
The
methodology
employed
includes:

• Scraping
  all
  ecosystems
  as
  per
  the
  taxonomy,
  with
  a
  static
  snapshot
  used
  for
  control.
• Collecting
  the
  total
  commits
  and
  unique
  developers
  contributing
  to
  each
  repository
  within
  each
  ecosystem.
• Including
  only
  ecosystems
  with
  at
  least
  50
  active
  developers
  in
  the
  last
  30
  days.
• Defining
  an
  active
  developer
  as
  someone
  who
  has
  contributed
  at
  least
  10
  times
  in
  the
  last
  three
  months.

This
approach
aims
to
provide
a
more
accurate
trend
by
excluding
short-term
contributors
or ‘crypto
tourists.’

Ecosystem
Summary

Ethereum
leads
with
approximately
3,500
unique
developers
over
the
last
30
days.
The
Cosmos
Network,
a ‘blockchain
of
blockchains,’
also
ranks
highly
due
to
its
numerous
sub-repositories.
Additionally,
six
Ethereum
Layer
2
solutions
make
the
top
20
list,
bolstered
by
the
Dencun
upgrade.

Despite
an
overall
upward
trend
in
total
commits,
the
number
of
contributors
has
been
stagnant
or
falling
since
early
2023,
indicating
a
lack
of
new
builders
entering
the
crypto
space.

Top
Risers
and
Decliners

Notable
top
risers
include
dYdX,
Aptos,
XRP,
and
Ledger.
The
rise
in
Exchanges
and
Wallets
contributors
is
driven
by
competition
in
the
Ethereum
space
and
on
Solana,
as
platforms
vie
for
user
capital
and
market
share.

Top
decliners
include
Lightning,
facing
competition
from
other
Bitcoin
Layer
2
solutions,
and
Algorand,
Polygon,
and
Tendermint.
Declining
categories
also
include
DeFi
Platform
and
Derivatives
contributors,
the
latter
possibly
due
to
categorization
limitations.

Top
5
Market
Cap
Ecosystems

Ethereum
and
BNB
Smart
Chain
show
the
largest
declines
in
developer
activity
among
the
top
5
ecosystems
by
market
cap.
The
decline
in
BNB
activity
is
attributed
to
external
factors,
while
Ethereum’s
decline
is
due
to
competition
from
alt
L1s
and
the
rise
of
Layer
2
solutions.

Ethereum
Layer
2’s

The
Dencun
upgrade
has
significantly
boosted
Layer
2
activity.
Key
metrics
demonstrate
this
growth:

• 
  TPS
  (Transactions
  Per
  Second):
  45
  →
  340
• 
  Daily
  Transactions:
  3.4
  million
  →
  15.2
  million
• 
  Daily
  Active
  Addresses:
  780
  thousand
  →
  1.82
  million

Base
has
emerged
as
the
leading
Layer
2
solution,
with
the
highest
TPS
and
ambitious
plans
for
further
network
upgrades.
Backed
by
Coinbase,
Base
is
expected
to
maintain
its
lead
in
developer
contributions
and
transaction
activity.

Conclusion

The
analysis
highlights
the
dynamic
nature
of
developer
activity
across
the
crypto
ecosystem.
While
Ethereum
remains
dominant,
the
growth
of
Layer
2
solutions
and
the
shifts
in
developer
focus
provide
valuable
insights
into
where
innovation
is
likely
to
arise.
Continuous
monitoring
and
periodic
updates
to
the
methodology
will
ensure
the
accuracy
and
relevance
of
future
analyses.

Image
source:
Shutterstock