At the risk of sounding like a broken record, projects live and die off developer momentum. The crypto space is at an interesting juncture: existing layer-1 smart contracting blockchains are gaining momentum as an endless list of projects are built on top of them (think Synthetix and Maker on Ethereum), while a new basket of layer-1s are just starting to launch. It’s a battle of vertical versus horizontal competition where the former has innovative dapps and stronger communities while the latter arguably has better base layer tech.
You can’t build on top of a layer-1 until the foundation’s cement is somewhat dry, so it’s always worth taking a look at the developer activity of these chains to identify trends. Below, we compiled GitHub commit and star data from notable chains. Those to the left are ordered by funding size (smallest to largest) since their token is not liquid and to the right chains are ordered by their projected market cap 10 years in the future to normalize for early high issuance schedules.
Of chains with illiquid tokens (a rough proxy for those that don’t have a live mainnet), ETH 2.0’s clients stand out, likely given this is an aggregate of 7 teams building various clients for the next iteration of Ethereum. As a quick aside, the list of ETH 2.0 clients is down from 9 and we expect it to consolidate to 2-3 main clients over time. NEAR, Casper Labs and CELO also stand out as well while Ava Labs has the least activity and funding.
On the liquid token side, Blockstack and Handshake stand out given their strong activity and lower Y+10 market caps (smallest Y+10 market cap of the liquid tokens). Notably, Algorand and Polkadot have high Y+10 market caps but limited GitHub activity. Granted, Polkadot is focused on Kusama right now (relay chain test net) and Algorand has some explaining to do. We excluded chains like LTC, XRP and others since they are not general purpose, programmable chains.
GitHub data isn’t perfect as projects can have multiple repositories and a lot of code is built on top of these projects (SDKs, user interfaces, wallets, etc). Some data can even be gamed. But it is one lens we can use to compare developer momentum versus size.
Competition is heating up between layer-1s despite vertical competition gaining momentum. We’re seeing projects built on existing layer-1s frankly attract more attention in my opinion than smart contracting blockchains. I’ve personally heard more about Synthetix, Uniswap, Kyber and Maker (on Ethereum) than I have about Spacemesh, Kadena or Cardano (layer 1s).
Eventually, core developer activity will slow as the key layer-1s are solidified and devs move to build on top of these platforms, so don’t be scared if base layer-1 developer work slows as these projects mature (though we shouldn’t see this for a few years).
You don’t need massive data to understand the momentum of vertical competition. For a developer, building on an established layer-1 versus a new one is clear – there is better documentation, a community to answer questions, composable building blocks to use and it may be easier to create a sustainable business model (a Daap that charges fees or has a token that actually helps bootstrap adoption i.e. SNX).