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Thursday, 04 August 2022 02:34

Telstra Ventures analyses the crypto currency market

By Telstra Ventures

COMPANY NEWS: Data-focused venture capital firm, Telstra Ventures has released a new report showing that Web3-developer interest has remained strong despite the crypto bear market driven by the implosion of the terraUSD (UST) stablecoin, the bankruptcy filing of crypto-lender Celsius and the liquidation of hedge fund Three Arrows Capital.

The report states:

The crypto contagion — fuelled by the collapse of Terraform Lab’s UST stablecoin, Celsius Network (CEL) pausing withdraws and Three Arrows Capital defaulting on its loans — has been especially rough on digital currency holders and crypto startups looking for funding.

Since January, a 60% loss in crypto market cap wiped $1.3 trillion, and VC investments tumbled 25.6% to about $9.3 billion, down from a record $12.5 billion invested during last year’s first half, according to Crunchbase News.

Unflustered by prices and investments declining across the board, Telstra Ventures conducted health checks on three top blockchain ecosystems -- Ethereum, Solana and Bitcoin – by applying data science tools and methodologies to open source developer communities.

Led by Donghai He, PhD, Telstra Ventures’ data science team analysed 1,000 active organisations contributing to more than 30,000 open source Web3 projects (See last slide for full methodology), revealing:

  • Blockchain developers’ participation in Web3 communities remains robust, as measured by compound annual growth rates in the number of unique active contributors per project and per ecosystem each month.
  • Venture and corporate investors are well aligned with 7 of the top 10 most active projects across key ecosystems.
  • Only 4 to 5 of the top 10 most active projects in each ecosystem are backed by venture and corporate investors, suggesting unfunded opportunities remain.

According to Telstra Ventures General Partner Yash Patel, blockchain developers’ commitment to Web3 ecosystems forms the basis for the sector's medium- and long-term viability, despite short-term price fluctuations - and he contends developers’ decisions about which protocols to use will be driven by use case and will point to the winning protocols.

Telstra Ventures report notes that the Web3 ecosystem continues to thrive:

Ethereum remains the largest and strongest developer community
Ethereum’s contributor community has grown at a 24.9% compound annual growth rate over the past 4 years since Jan 1, 2018.
Since Ethereum’s peak of price in Nov-2021, the number of monthly active contributors has a drawdown of 9.0%.

Solana is growing rapidly and is on the heels of Ethereum

Solana’s contributors have grown at a 173.0% compound annual growth rate over the past 4 years since January 1, 2018.
Since Solana’s peak price of $204.35 in Nov 2021, the number of active contributors has a drawdown of 21.0%.

Bitcoin continues slow and steady growth through price volatility.
Bitcoin has seen a 17.1% compound annual growth rate in the number of contributors during the past 4 years since January 1, 2018.
Since the peak of price of crypto Bitcoin in October 2021, the number of active contributors has grown 8.2%.

Institutional investors are aligned with robust blockchain development in each of the three primary ecosystems, and investment opportunities remain
7 of the 10 fastest growing projects are backed by VCs or by corporations.
4 or more of the 10 fastest-growing repositories in each ecosystem are backed by VCs or corporate investors.

Ethereum is the strongest & largest community
Ethereum's upcoming merge will transition from proof of work to proof of stake, which implies the network will be able to process over 100,000 transactions per second, which is much faster and more scalable than currently. Developers’ excitement is helping fuel the recent price rally, and we expect more innovations to come as different chains try to outdo each other.
Ethereum’s contributor community has grown at a 24.9% compound annual growth rate over the past 4 years since Jan 1, 2018.
Since Ethereum’s peak of price of more than $4,800 in Nov-2021, the number of monthly active contributors has a drawdown of 9.0%. This compares to an x% drop in price during the same

Solana developer community is growing rapidly
The Solana developer community began taking shape in late 2017, and the first block was created in 2020.
Solana is growing 173.0% compound annual growth rate of contributors during the volatility of the past 4 years since Jan 1, 2018. Since Solana’s peak price of over $200 in Nov 2021, the number of active contributors has a small dip and drawdown of 21.0%.

Steady growth for Bitcoin's developer community
Bitcoin has seen a steady growth in the number of active developers over the past eight years. Bitcoin’s contributor community has seen a 17.1% compound annual growth rate during the past four years since January 1, 2018.
Since the peak of price of crypto Bitcoin in October 2021, the number of active contributors has grown 8.2%.

Telstra Ventures outlines the methodologies followed for the report. and says its data science team analysed 1,000 active organisations contributing to more than 30,000 open source Bitcoin, Ethereum and Solana projects in the Web3 ecosystem, as defined by Electrical Capital in their 2021 report.

Telstra Ventures says that to be considered in the study, projects have a minimum 100 stars in related GitHub repositories and had active contributions between January and April 2022.

Monthly active contributors were tabulated at the repo level based on the number of unique contributors to that repo in a month. At the organisation level, total unique contributors were tabulated based on the total unique contributors who committed to any organic repos (not forked from other repos) within that organisation in a month. For a Web3 ecosystem, the total unique contributors who contributed to any organic repos (not forked from other repos) were tabulated within that ecosystem in a month.

GitHub activity growth rate is defined as the aggregated one-month and 12-month percentage change in the total number of stars, forks, commits and unique contributors for each repo.

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