If you’re a blockchain enthusiast, developer, or investor, this phrase is music to your ears. In Q2 2023, the Web3 landscape has seen a whirlwind of growth, innovation, and challenges.
This report, created by Alchemy, provides a detailed analysis of the trends, statistics, and emerging technologies in the Web3 space.
Web3 Development Report: Alchemy Dapp Store Statistics
Alchemy’s Dapp Store, a directory of Web3 developer tools and applications, has become a hub for innovation. In Q2 2023, over 330 new applications were approved, hosting over 2,000 dapps across popular blockchains. The fastest-growing niches include:
- Web3 Data Tools: Tools for reading, storing, indexing, and transforming blockchain data.
- Blockchain Auditing Companies: Firms that verify the security of smart contracts.
- Smart Contract Wallets: Crypto wallets utilizing Account Abstraction infrastructure.
Popular companies like Space and Time, Arbitrary Execution, Verichains, Subsquid, and Token Terminal have recently launched on the Dapp Store.
Image credit: alchemy.com
Alchemy Developer Survey Results
Alchemy’s annual Web3 developer survey reveals insights into what engineers are building, their challenges, and how the industry can support emerging needs. The 2023 survey, with 625 respondents, highlighted interests in:
- Smart contract security
- Account abstraction
- ZK-rollups
- Smart contract development
- AI
The biggest challenges were identified as:
- Funding
- Awareness
- Regulation
- Resource Bandwidth
With the increased scrutiny from regulators and the current bear market, young Web3 startups are concerned about raising money and optimizing their runways.
Image credit: alchemy.com
Web3 Development Report: Growth in Libraries and SDKs
Developers are increasingly using Web3 libraries like ethers.js and SDKs like the Alchemy SDK. Ethereum libraries grew 37% Y/Y, with 26.8 million downloads in Q2 2023. Web3 wallet SDK installs also saw a massive growth of 196% Y/Y.
Web3 Development Report: Testnets and Smart Contract Deployments
The Sepolia testnet is approaching parity with the Goerli testnet, while the latter is declining due to scarcity and secondary markets. Ethereum smart contract deployments grew 64% Q/Q, and L2 smart contract deployments grew 1106% Y/Y.
Web3 Development Report: Layer 2 Dynamics
Layer 2 blockchains are gaining traction, with L1 gas usage by L2s increasing 88% Q/Q. Despite a flat volume of L2 bridging, the adoption of L2s shows real staying power.
Image credit: alchemy.com
Web3 Development Report: Developer Activity Across Networks
Developer activity across networks like Polygon, Arbitrum, Optimism, Starknet, Solana, and Astar is growing at an impressive rate. From Polygon’s 74% Y/Y growth to Arbitrum’s 213% Y/Y growth, the bear market hasn’t deterred builders from developing on these platforms.
Web3 Development Report: Account Abstraction Adoption
Account Abstraction was a major theme in Q2 2023, with UserOps growing 11,837%, users growing over 27,000%, and Paymaster volume growing 5,182%.
Ethereum and L2 Smart Contract Deployments
The resurgence of Ethereum smart contract deployments is a healthy signal that development velocity is increasing. Growing 64% Q/Q compared to Q1 2023 and 277% Y/Y compared to Q2 2022, the Ethereum network continues to be a hotbed for innovation.
Layer 2 blockchains are not far behind, with smart contracts on L2s like Optimism, Arbitrum, and sidechains like Polygon growing 1106% Y/Y compared to Q2 2022. These L2 solutions provide users with cheaper transaction fees, more transactions per second, and faster confirmation times, explaining the continued strength from L2 smart contract deployments.
Image credit: alchemy.com
Web3 Development Report: L1 Gas Usage and Layer 2 Bridging
L1 gas being used by Layer 2 blockchains is increasing at a rapid rate: 88% Q/Q compared to Q1 2023 and 383% Y/Y compared to Q2 2022. This trend indicates the rise of L2 developer and user activity, with the total amount of L1 gas consumed by L2s expected to continue to increase.
Interestingly, users bridging tokens to layer 2s remained flat Q/Q, decreasing only 0.25% Q/Q. This flat volume of L2 bridging, despite low NFT and DEX trading volumes, gives confidence that while trading activity across the industry is down, the adoption of L2s has real staying power.
Developer Activity on Various Networks
The Web3 development landscape is diverse, with various networks experiencing significant growth:
- Polygon: Active Polygon developer teams building on Alchemy grew 74% Y/Y since Q2 2022, with total requests sent through Alchemy increasing by 33% Y/Y.
- Arbitrum: Active Arbitrum developer teams building on Alchemy grew 213% Y/Y since Q2 2022, with total requests sent through Alchemy increasing by 295% Y/Y.
- Optimism: Active Optimism developer teams building on Alchemy grew 205% Y/Y since Q2 2022, with total requests sent through Alchemy increasing by 110% Y/Y.
- Starknet: Starknet saw 10x TPS performance gains due to focused optimizations led by their core development team.
- Solana: Active Solana dev teams building on Alchemy grew 56% Y/Y since Q2 2022, with total requests growing 164% Y/Y.
- Astar: Active Astar developer teams building on Alchemy grew 175% Y/Y since Q2 2022, with the total number of requests sent through Alchemy growing 7%.
Web3 Development Report: Account Abstraction and ERC-4337 Statistics
Account Abstraction was a major theme in Q2 2023, with quarterly user operations (UserOps) growing 11,837%, users growing over 27,000%, and Paymaster volume growing 5,182%. This explosive growth indicates a strong desire for AA support on Ethereum and L2s.
Image credit: alchemy.com
A Closer Look at Wallet SDKs and Testnets
The growth of Web3 wallet SDK installs is remarkable, growing 196% Y/Y in Q2 2023 with a total of 11.1M downloads. Wallet SDKs analyzed include Coinbase Wallet, Rainbow, Web3 Onboard, and Web3 Modal, which developers use to connect consumers to blockchain networks.
In the testnet landscape, the Sepolia testnet is growing rapidly, approaching parity with the total number of requests sent through Alchemy compared to the Goerli testnet. With the deprecation of the Goerli testnet and the monetization of Goerli ETH, many developers are migrating towards Sepolia as the default testnet.
Web3 Development Report: The Future of Smart Contracts and Layer 2s
Smart contracts on layer 2 (L2) blockchains like Optimism, Arbitrum, and sidechains like Polygon grew 1106% Y/Y compared to Q2 2022, and saw a 302% increase Q/Q compared to Q1 2023. These features, along with a maturing ecosystem of applications and adoption from users, explain the continued strength from L2 smart contract deployments.
Layer 2 bridging statistics for Q2 2023 show a flat volume, decreasing only 0.25% Q/Q. This stability, despite low NFT and DEX trading volumes, gives confidence that the adoption of L2s has real staying power.
The Web3 Development Report for Q2 2023 provides a comprehensive view of the current state of blockchain technology, highlighting the growth, innovation, and challenges faced by the industry. The insights and data presented in this report offer valuable insights for developers, investors, and enthusiasts alike, painting a vivid picture of the dynamic and ever-changing world of Web3.
Image credit: alchemy.com
Q2 2023 Outlook
The Web3 development report for Q2 2023 paints a picture of a thriving ecosystem, filled with innovation, growth, and challenges. From the rise of Layer 2 blockchains to the growing interest in smart contract security, the Web3 space is evolving at a rapid pace.
For more detailed insights, download the Q2 2023 blockchain development report, which includes additional data on DeFi Volume, NFT Volume, and Web3 Use Cases.
Source: linkedin.com
