Some may sense a thaw in the Crypto Winter as Bitcoin flirts with its highest price in over a year. But tokens aside, the icy market that defined 2022 appears far from gone when it comes to software development.
The number of active developers working on open-source crypto projects has fallen 22% over the past year, according to a report from venture firm Electric Capital. Analysts found that there were 21,300 active developers in June, compared to 27,200 the year before.
A decline in crypto developers over the past year could be attributed to more compelling opportunities elsewhere, self-described DeFi addict and crypto analyst Miles Deutscher said on Twitter.
“Despite prices rising since January, developer activity has exhibited a downturn,” he said. “This may be attributed to […] developers switching to other booming tech sectors like AI.”
Open-source developers work on projects where code is posted publicly online, leaving their footprints in software repositories through commits. By looking at the source and frequency of developer activity over time, it’s possible to glean insights about industry trends.
A majority of developers who left the crypto space did so with little experience under their belts, the report states. Newcomers—those who have worked in crypto for less than a year–made up a majority of departures from the digital asset space, adding up to 7,730 logging off since last June.
The report defines those that have left the crypto space as developers that haven’t contributed to a project in more than two months. Compared to the overall number of active open-source crypto developers, 7,730 may sound substantial, but the report notes that newcomers are responsible for less than 20% of all code commits.
A majority of commits come from open-source developers who have more than a year of experience working with crypto, according to Electric Capital, and that figure has grown to around 13,100 from 11,300 in the past year—a gain of nearly 16% among crypto’s more seasoned crew.
The report found that fewer developers are exploring crypto projects for the first time as well. This past May, 2,900 developers entered the space compared to 5,900 that month a year ago, which was near an all-time high for monthly entrants.
Deutscher posited that fatigue and less money from venture capitalists could also be at play.
Indeed, institutional investors are also increasingly eyeing AI instead. A survey conducted by JP Morgan found a palpable shift in sentiment in February, where traders said AI will likely be more influential than crypto over the next three years.
A shift in preferences among venture capitalists from crypto to AI is well underway too, according to Mysten Labs co-founder and CEO Evan Cheng. He said products that leverage AI have broader appeal to consumers, as opposed to those in crypto that cater to people already within the digital assets space.
However, an exodus of fresh talent from the digital assets space isn’t necessarily a warning sign, the report suggests. Newcomers have dominated the digital assets space after the two previous peaks in crypto markets, only for that momentum to shift back to veterans each time.
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