(Bloomberg) -- Software developers are flocking back to the cryptocurrency world at a level not seen since the market last peaked three years ago.
The number of new developers increased this year for more than three months in a row for the first time since 2017, according to a report from Electric Capital, a venture firm that invests in crypto startups. That marks a reversal of a sharp two-year decline in developer interest that followed the 2018 plunge in digital token prices and the collapse of initial coin offerings.
This year, with Bitcoin on a tear -- more than doubling in price and surpassing the previous all-time high this month -- and with many so-called decentralized finance, or DeFi, projects taking off with promises of easy money, coders have dived back in. The number of new monthly crypto developers rose 15% in the first 10 months of the year, according to Electric. More than 80% of all active developers began their work in the last two years, the firm said.
While crypto price moves are often fueled by pure speculation, developer activity is one of the best barometers of a project’s promise and health. Crypto projects that are gaining momentum may be more likely to succeed.
“Developers are one of the signals of quality in a crypto ecosystem,” said Maria Shen, a partner at Electric, which analyzed 89 million code commits across more than 276,000 code repositories. “In order for there to be network security or applications, developers need to build. Many projects like smart contract platforms rely on developers joining their ecosystem to be successful. Ethereum clearly has more activity and this is why other platforms fight for developers. You need developers to build applications and have activity on chain.”
Coders are especially gravitating to Ethereum and DeFi applications. Ethereum has seen more than 300 join per month, Electric found. Monthly active developers focused on DeFi -- letting app users lend, trade and borrow their coins -- have ballooned by 67% since January, the report said. While the total pool of active crypto developers is about 9,000 a month, DeFi attracted more than 900 developers in October.
“In decentralized finance, developers have seen they can launch a protocol and very quickly get usage,” Shen said.
Bitcoin monthly active developers grew by more than 70% in the last three years, but their numbers are down nearly 12% in October year-over-year, Electric found.
While developers flocked to top-200 projects by network value, all others lost supporters. Among projects that managed to draw more developers was Ethereum rival Polkadot and Tezos, and DeFi projects such as crypto exchange Uniswap and tools provider Chainlink.
EOS, which claims to have raised $4 billion through an ICO, has seen its developer interest decline by 45% in the third quarter, with only 107 developers remaining, Electric found.
©2020 Bloomberg L.P.
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