When it comes to the growth and success of a platform, developer engagement is a crucial factor. The more developers that are dedicated to building applications that provide real value to users, the more likely it is that the platform will see increased adoption and even more developers drawn to its ecosystem. Despite the crypto market downturn in 2022, developer activity remained robust, with monthly active developers in the crypto space growing by 5% year-over-year, even as crypto prices declined by 70%.
In recent years, we've seen new ecosystems emerge beyond the original heavyweights of Bitcoin and Ethereum. Platforms like Solana, Polkadot, Cosmos, and Polygon have experienced incredible growth, attracting over a thousand developers to their communities. And emerging platforms like Near, Sui, Aptos, Starknet, Mina, Osmosis, Hedera, Optimism, and Arbitrum have also seen impressive developer growth, with over 50% YoY increases in active developers.
As of December 2022, the crypto developer community counted 23,343 monthly active developers, with full-time developer numbers growing. These numbers are clear indicators of the growing strength and value of the crypto space. They are a testament to the continued efforts of the developers working to bring decentralized solutions to the masses.
Ethereum’s Shanghai Upgrade
The Shanghai Upgrade is the next major milestone on Ethereum's roadmap. It will enable stakers/ validators to withdraw their ETH from the Beacon Chain, allowing them to cash out the funds they had previously locked up. This will impact the total ETH supply and could therefore affect the market demand. In September of 2022, Ethereum transitioned from a Proof of Work (PoW) mining mechanism to a consensus mechanism known as Proof of Stake (PoS).
Proof of Stake is a much more efficient alternative to the energy-intensive PoW system used by Bitcoin. With PoS, users can lock up their ETH to run validator nodes that help validate and secure the blockchain. Each validator receives newly created blocks from other validators on the Ethereum network. With the Shanghai Upgrade, stakers can now withdraw their ETH, unlocking a significant amount of liquidity.
The big question on everyone's mind is what will happen to ETH's price when the withdrawal period begins. It is currently estimated that 14% of all ETH tokens are staked, so when these tokens are unlocked, stakers may opt to sell their holdings, decreasing ETH's price. On top of that, staking ETH may be more attractive to users who aren't interested in utilizing liquid staking protocols, as they now have the opportunity to stake ETH directly on the Ethereum blockchain. This could potentially drive demand for ETH due to the enhanced staking conditions.
When Ethereum usage increases, the supply of ETH is decreasing due to the burning of tokens when individuals use decentralized finance (DeFi) applications, move tokens, or use liquidity pools. This trend is evident in the 6,660+ ETH that has burned since the merge. If this bullish trend continues, the amount of ETH burned will likely increase significantly.
What’s Happening in the Space?
Reality Labs, the Metaverse division of Facebook, reported a staggering USD 4.2 billion loss in the fourth quarter of 2022. This loss contributed to $13.7 billion in losses across the year. Originally founded as a social media platform, Facebook has since expanded its reach to include platforms such as WhatsApp and Instagram. 2021 saw the company transition to its new name, Meta, and a subsequent shift in focus to exploring the Metaverse. Reality Labs generated $2.16 billion in revenue for the year, with $727 million coming in the fourth quarter. Despite this, the figures marked a slight decline from the previous year.
Since I launched the newsletter, the prices of Bitcoin and other altcoins have been steadily climbing. Investors are clearly pleased with the outcome of the Federal Reserve's meeting, which ended yesterday afternoon. The rate hike was the smallest the Fed has done in nearly a year, and the US dollar has been gaining strength over that time. Unfortunately, these factors have harmed the crypto market. When interest rates increase, safer assets become more attractive, causing people to abandon riskier options like digital assets, which are difficult to value.
California DMV has recently implemented the Tezos blockchain to digitize car titles for drivers in the state. This is a much-needed breakthrough as the DMV has become notorious for its long lines and lack of efficient services. The blockchain will digitalize car titles and facilitate a smoother process for title transfers between owners.
Super Bowl Crypto Ads
The Super Bowl has consistently been one of the most viewed events on television, attracting 99.2 million viewers in 2022. With its widespread viewership, it is no surprise that advertising during the Super Bowl is among the most expensive, with a 30-second ad costing approximately $6.5 million.
Last year's Super Bowl saw a large amount of cryptocurrency-related advertising, with companies such as FTX, Crypto.com, Coinbase, and eToro all fighting for a spot during the game. As a result, the event was dubbed the "Crypto Bowl," as these companies collectively invested over $54 million in advertising during the game.
However, the landscape of the cryptocurrency industry has changed since the last Super Bowl. Major centralized exchanges have faced challenges, resulting in layoffs and marketing spending cuts. In this year's Super Bowl, there will likely be fewer, if any, cryptocurrency-related advertisements.
Not Financial Advice
Please note that all opinions in my newsletter are strictly my own and should not be considered financial advice. It is important to conduct your own research and make your own investment decisions. Always consult a qualified financial advisor before making any investment decisions.