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

Some have seen the current crypto bear market as a good time for developers to build new products, and a new report by Web3 developer platform Alchemy shows that may already be happening.

The data shows the number of smart contracts deployed on Ethereum increased by more than 40% since the end of the first quarter, despite the price of ether falling about 60% since the start of 2022.

While decentralized finance (DeFi) total-value locked (TVL) has fallen 69% and non-fungible token (NFT) trading volume has fallen 88% from the third quarter of last year, the amount of Ethereum library installations have increased 178% in 2022.

Jason Shah, head of growth at Alchemy, told CoinDesk that the biggest takeaway from the data is that prices no longer serve as the only incentives to enter the space. Instead, developers are flocking to Web3 for the technological capabilities.

“I think the best representation of that is the fact that software developer kits (SDK) and smart contracts have more than doubled in their usage in the last year,” said Shah.

The data also shows that in September, 17,736 smart contracts were deployed – an all-time monthly high. Shah attributes this to the Ethereum Merge and an increased enthusiasm for building decentralized apps on the new proof-of-stake chain.

“It's definitely bringing a lot more developers into the space, a lot more brands, frankly, who are conscious of the environmental impact of proof-of-work,” said Shah.

Although this crypto winter has been touted as a good time to build Web3 products, it hasn’t been this way in previous bear markets. Alchemy’s data shows that the number of smart contracts deployed between 2018 and 2019 fell by 45%, while in 2022 so far that number has increased by 50% from last year.

Shah attributes this difference between bear markets to three key components: increased long-term conviction in the digital asset space, a larger number of Web3 educational resources and more advanced developer tools to encourage building in the space.

“As a result [of these components], there's no longer the same obstacles that people may have had that led them to lose a little bit of faith in 2019, which you see in the data,” said Shah.

CORRECTION (Oct. 13, 16:47 UTC): A previous version of the story identified Jason Shah as product lead at Alchemy. He is the head of growth.