Crypto & Blockchain Developer Trends On Layer 1s, Layer 2s, and Layer 3s: What & Where Are They Building?
Developers are the engines that generate value and bring growth to the blockchain, crypto, and Web3 landscape. Coders are constantly building new features, upgrading their protocols, and creating exciting and innovative applications that bring massive value to users and drive new adoption. Despite being a nascent industry, as the cryptocurrency market appreciated in value and blockchain technology became more mainstream, developers from all backgrounds have entered the game to experiment with this emerging field. While the trend of increasing developers has experienced volatility — on average, it has continued to rise over the years.
In this article, we’ll dive into the trends surrounding crypto and blockchain development, do a market analysis on the number of developers, explore what applications are being built, and forecast the bright future for blockchain development using zero-knowledge technology and Layer 3s such as zkLink Nova.
*The data within this article can be found in Electric Capital’s outstanding report that analyzes the state of blockchain development through in-depth data analysis of the entire blockchain ecosystem. We are thankful for Electric Capital’s insightful work.*
In this article, we’ll utilize certain data found in Electric Capital’s report and go beyond the numbers, providing readers with a more qualitative analysis and understanding of the trends developing in front of our eyes.
Crypto & Blockchain Developers Are Spread Across The Globe
Cryptocurrency and blockchain’s global spread and presence can be analyzed by examining the shifting landscape and location of the developer community.
Notably, 72% of crypto developers originate and reside outside of North America’s boundaries, which underscores the blockchain industry’s universal appeal and global reach. Moreover, regions such as South Asia, Latin America, Eastern Europe, Western Africa, and Southern Europe have collectively grown their developer share by over 20% since 2018. In contrast, the United States has lost 14% of its developer share since 2018, but still accounts for 26% of crypto developers worldwide.
Looking beyond the numbers, it’s evident that an international, decentralized, and creative movement has emerged — characterized by diverse talent, cross-border collaboration, and networking at worldwide events such as Token2049 in Singapore and Dubai, ETH Denver, Devconnect in Istanbul, and many more.
This diversity and collaboration has resulted in unique financial products and applications being created that solve real-world issues, or simply, applications that Web3 users find entertaining to use.
There’s A Growing Number Of Crypto & Blockchain Developers
The amount of future growth that lies ahead appears promising for the crypto and blockchain developer community. But why? The number of developers has constantly risen over the past seven years. Notably, there were 47,876 new developers in 2023. Despite this overall figure being down from previous bull market highs, the most valuable segment of developers, the “Established” segment, who have over two years of crypto experience and who contribute the most code, continues to steadily grow (see chart below).
Remarkably, the number of “Established” developers is at an all-time high — and has experienced an annualized growth rate of 52% over the past five years. This is significant because experienced developers are more consistent and can write more code. To prove this point, 75% of the code is created by developers with more than one year of crypto experience (this figure includes those who have over two years of crypto development experience). In summary, you cannot replace and overlook experience.
Moreover, developers who have been in crypto for more than one year grew by 16% YoY. On the contrary, “Newcomers” (who have less than 12 months of experience) dropped 52% YoY. This number, however, isn’t surprising due to poor marketing conditions in 2022 and 2023. On top of that, creating new protocols is technically challenging, and building products requires significant financial resources, which many “Newcomers” and start-up projects lack in their beginning stages.
On a more granular level, as of December 2023, there were 22,411 monthly active developers, a 24% drop from the 29,611 figure in December 2022.
This drop can be largely attributed to the bear market where valuations and project resources were being depleted and protocols were halting operations. Nonetheless, in summary, the number of crypto and blockchain developers continues to grow, which means there are more people working on the next dYdX, the next Compound, the next Uniswap and OpenSea, the next Instagram and TikTok, and the next Robinhood.
What Ecosystems & Networks Are Developers Most Active On?
As of Q1 2024, 79% of blockchain developers are working within Bitcoin, Ethereum, or the top 200 ecosystems — with Bitcoin and Ethereum accounting for 40% of all crypto developers.
This is because Bitcoin and Ethereum are the top two blockchains with the highest market caps — and developers prefer to work in more lucrative environments with greater liquidity and more users. The large market cap of Bitcoin and Ethereum not only reflects their value and stability, but also translates into additional liquidity, funding, and opportunities for developers to monetize their DApps.
Just like traditional MNCs, blockchain developers prefer to launch on networks with more economic potential and consumers. By developing Bitcoin and Ethereum applications, projects on these networks tend to attract significant investment and user interest, making them financially appealing platforms for other developers as well — which leads to expanding network effects.
As you can see in the image below, from 2018 to 2023, the number of blockchains has grown rapidly. However, the Ethereum blockchain still remains the primary network of choice that developers work on and collaborate with cross-chain.
Ethereum, because it is the largest smart contract blockchain by market cap, valued at over $400 billion dollars, and with its strong reputation, is where developers have placed their most emphasis. For example, 71% of contract code is initially deployed on Ethereum — and then that code is used or closely copied and modified to other compatible networks for DApp deployment.
However, beyond Ethereum, there are many “Newcomer” developers contributing code to multiple networks (as illustrated in the chart below).
What this means is while developers overall prefer Ethereum, there are still many who are contributing code and deploying applications on other Layer 1 networks such as Polygon, Solana, BNB Chain, Cosmos, and Avalanche — and Layer 2s such as Arbitrum, Optimism, Starknet, zkSync, Scroll, and Base. Therefore, a complex multi-chain and multi-rollup blockchain ecosystem has emerged.
Emergence Of A Multi-Chain Reality: A Trojan Horse Hindering Mass Adoption
The 2023 Developer Report by Electric Capital unveiled a significant, yet troublesome statistic about the blockchain developer community, which is that 17% of all developers now contribute to three or more blockchains.
This has manifested in a situation where the same DApps are now being deployed across different blockchains. An example of this phenomenon in practice is Uniswap. Uniswap has deployed its DEX not only on Ethereum, but also on Arbitrum, Polygon, Avalanche, Celo, Filecoin, and Boba. However, there are advantages and disadvantages in this scenario — and multiple angles need to be unpacked.
First, the already-in-motion trend toward multi-chain DApp development underscores the diverse interests and expertise within the blockchain developer community — which is a positive. This growth, however, is not evenly distributed across all ecosystems and projects.
While some blockchain projects have seen a significant influx of developers, others have experienced a decline. This selective movement of developers is indicative of a maturing ecosystem where individuals are increasingly prioritizing projects that align with their values, technical interests, and the potential for significant impact. Consequently, this dynamic reflects a deeper layer of strategic decision-making among developers, who are not merely seeking opportunities for contribution, but are also evaluating the long-term viability and vision of the projects they choose to engage with.
Second, while the blockchain ecosystem expanding to multiple alt-Layer 1s and Layer 2s was an overall positive sign for the industry — in the sense that developers and creators began exploring with different technologies, development frameworks, code, APIs and SDKs, and ecosystems — it still didn’t solve the inherent issues surrounding blockchains and their inability to speak to one another, have full interoperability, and compete with the speeds and functionalities of traditional Web2 apps.
Ethereum Layer 2 Development Trends: Optimistic Rollups & The Rise Of ZK Technology
So far we have unpacked the geographic diaspora of Web3 developers, we have analyzed the number of developers and trends of where they are choosing to deploy their code, we have introduced a fact that not all blockchains are fully perfected and capable of facilitating mass adoption, and we have provided the data showing that Ethereum remains the king of crypto development.
Nonetheless, while Vitalik Buterin’s Ethereum remains the most widely used blockchain for smart contracts and DApps — it suffers from scalability issues. In particular, as more applications and users have emerged over the years, the Ethereum blockchain has experienced significant congestion, leading to slow transaction processing, revealing the limitations of the network’s capacity to scale.
To address Ethereum’s scalability limitations, the developer community began exploring and building various scaling solutions — with Ethereum Layer 2 Rollups proving to be the most promising options.
In particular, Arbitrum, Base, and Optimism have emerged as some of Ethereum’s top Layer 2 scaling solutions, which implement Optimistic Rollups to provide higher throughput and greater scalability to Ethereum. These networks also share the most developers with Ethereum because of their EVM-compatibility.
In addition, there are other Layer 2s such as Polygon zkEVM, Scroll, Linea, and zkSync, which employ ZK Rollups to provide scalability to Ethereum. As a result, two different rollup paradigms have emerged: Optimistic Rollups and ZK Rollups.
All these networks mentioned above, despite their tech stacks, are EVM-compatible, which means they share the most developers with Ethereum, and can easily deploy their DApps, both of which indicate an interoperable and collaborative environment for developers between EVM chains and EVM-compatible chains.
However, despite this positive development with EVM-compatible Layer 2s that scale using innovative rollup technologies such as Optimistic Rollups and ZK Rollups, the issues of DApp interoperability, DevX, UX, and asset fragmentation remain unresolved.
In particular, despite being “under the Ethereum umbrella,” these Layer 2s are isolated, lack interoperability, face liquidity shortages, and often witness high user churn — which combined together, have left users with a poor UX and developers with the difficult and costly choice of having to deploy their DApps on multiple chains and rollups to stay competitive in the market.
Layer 2s succeeded in their scalability missions, but to address the issues of asset fragmentation within the Ethereum ecosystem, and creating a more simplified development environment, Layer 2s have fallen short. As a result, the concept of Layer 3s to solve these aforementioned Layer 2 shortcomings has now come to the forefront of blockchain discussions worldwide.
Developing On Layer 3s: zkLink Nova’s Advantages & Use Cases
Despite Layer 2s playing an instrumental role in scaling the Ethereum network, they’ve introduced a variety of challenges such as liquidity/asset fragmentation, isolated user silos on specific rollups, increased trading costs for cross-rollup assets, a complex user experience, and an unfriendly and non-interoperable DApp development environment.
This is where Layer 3s come into play. Many are now proposing that the next big leap in the evolution of Ethereum’s blockchain is with Layer 3s. Layer 3s can be defined as a third layer built on top of Ethereum Layer 2 Rollups that can aggregate fragmented liquidity, deliver higher scalability, lower gas costs, and provide greater DApp customizability.
zkLink Nova is Ethereum’s first and only Aggregated Layer 3 zkEVM Rollup Network. zkLink Nova is built on top of both Ethereum’s base layer and its Layer 2 Rollups, and is powered by the ZK Stack and zkLink Nexus’s technology.
Through asset aggregation and unification — secured by zero-knowledge proofs and multi-chain state synchronization, zkLink Nova aims to reunify the divided liquidity within the Ethereum ecosystem. As a result, applications running on zkLink Nova have access to all of Ethereum’s native assets across the interconnected Layer 2s and Ethereum’s Layer 1 — allowing users to trade and transfer multi-rollup assets with interoperability. By leveraging zkLink Nexus and ZK Stack, zkLink Nova also eliminates the issue of asset security and deposit fraud. In particular, all transactions are finalized on Ethereum after completing ZK verifications and multi-rollup state synchronization, thus inheriting Ethereum’s security.
To provide icing on the cake, zkLink Nova is EVM-compatible and stack-agnostic. Therefore, developers can use Solidity, Vyper, and Hardhat, libraries like Ethers and Web3.js, or wallets like Metamask and Rabby. All contracts and tools that worked on Ethereum and Ethereum Layer 2s also work on zkLink Nova with minimal modifications. Developers can easily reuse functionality others have already built. Most importantly, by forking onto zkLink Nova’s Layer 3, DApps can (theoretically) have access to liquidity from Ethereum, Arbitrum, Polygon zkEVM, Optimism, Scroll, Linea, Mantle, Metis, and Manta, for example, (essentially any Ethereum Layer 2 that’s integrated with zkLink Nova).
In summary, as zkLink Nova develops and expands, and liquidity aggregation and asset interoperability improves, there will be more innovations and use cases on zkLink Nova’s Layer 3. For example, complex cross-chain DeFi protocols, cross-chain NFT marketplaces, multi-chain gaming, and metaverse platforms. zkLink Nova, like a nova phenomenon in space, allows for the linkage between two dying stars, unifying them into a single power source that brings new energy to the ecosystem and facilitates infinite possibilities.
zkLink’s Layer 3 Value Proposition & Use Cases For Developers
At the moment, the most common use cases in crypto are still predominantly DeFi and NFTs (as portrayed in the chart below).
But with the development of Layer 3s such as zkLink Nova, developers can now begin exploring applications beyond the financial space, such as gaming, high-performance DeFi, as well as other features such as privacy, gas customization, and liquidity aggregation.
In addition, Layer 3s such as zkLink Nova will be able to host applications that necessitate higher throughput and require a network that can facilitate a massive user base with large data capacity, such as for medical related applications, entertainment, ICT, and AI, among others. With zkLink Nova, many of these applications have the potential to be realized.
zkLink Nova aims not to take a small step forward for Ethereum, but rather make the giant leap that pushes the industry to new heights.
Currently, zkLink Nova possesses a first-mover advantage and has fostered an ecosystem of over 60 partners in less than 30 days. zkLink Nova, unlike other Layer 2 and Layer 3 solutions and proposals, provides developers with a more attractive offering due to its ability to aggregate fragmented liquidity, as well as its EVM-compatibility, thus allowing developers to easily build their applications on top of zkLink Nova.
Lastly, zkLink Nova is the most user-friendly blockchain solution on the market — this is because it spares users from the tedious and cumbersome process of expensive and risky asset bridging. Now, users can have their multi-network assets on a single platform, which allows them to engage with hundreds of applications of their choosing without having to switch ecosystems and networks. zkLink is the only true Layer 3 that’s creating real value for users and pushing the industry forward.
We welcome all developers and users to come and explore!
For developers and builders interested in deploying on zkLink Nova, we have an ongoing Ecosystem Grants Program that we welcome you to apply for. Please see our blog for more details.
