While flipping through channels over the weekend, I briefly landed on this year’s Major League Baseball Draft. As the draft progressed, I began to think about digital assets.

Baseball and crypto are not the most obvious (or even tangentially related) connections. But that’s just how my brain works. I’m a sports fan as well.

Anyone familiar with drafts will know that teams choose players based on their expectations for them in the future. This is true in almost every sport you see on television.

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Baseball is different from other professional leagues in that players who are drafted today might not play on a major league pitch for at least 3-4 years, if not more. In the years between draft day and debut, players are in lower leagues for development.

Altcoins, on the other hand, are new players. While Bitcoin ( ETH ), Ethereum ( BTC) and established digital assets like ether are veterans in their field, altcoins like newly drafted players. Altcoins are, in all but name, prospects. They have a long way to go before they achieve success, if ever.

How can one assess a cryptocurrency’s potential? What is even worth looking at and where should one begin?

My starting point is the developer’s activity, for better or worse. This is a good sign for protocol growth, and it shows where developers are allocating their intellectual capital. The general thesis is that value accumulation and price appreciation can follow where development takes place.

My data source is the Developer Report by venture capital firm Electric Capital. This report aims to “quantify developer activity” across crypto and Web3 eco-systems.

What I found

Cryptography is losing new developers

It is important to know if there are any players in the market before you evaluate them. Google’s search trends show that “bitcoin” searches and “cryptocurrencies” searches are now half as common as they used to be a year earlier. According to Electric Capital, the number of active developers in the space has decreased by 22% over the last year, and by 8% since January. The number of “new developers” has decreased by 18%, which is worse than the total, suggesting that newcomers are driving the decline.

The picture is more positive when you look at it from a wider perspective. It shows that the two-year and three-year increases were 26% and 92%, respectively. The overall trend is higher but the recent challenges in crypto have had a negative impact on the newer developers. Those who have been working in the field for over a year are still going strong.

While I initially thought that price increases are a result of development growth, the jury is still out, as BTC has soared in spite of this year’s contraction.

I think it’s possible that there is a bifurcation, with bitcoin and ether seeing an increase in developer activity, while smaller protocols, less-known, see the opposite.

Some crypto-protocols have seen massive growth

Three of the 20 largest ecosystems in terms of developers have seen positive growth over the past year, and two are able to trade tokens.


Osmosis

  • one-year developer growth: 56%
  • two-year developer growth: 296%

Osmosis is an interchain DEX built with the Cosmo software development tool. It has seen a 56% increase in developers since last year. The monthly activity also increased by 26% between May and Juni.

The price of OSMO, its native token, has fallen by 36% in the last 90 days and 27% over the past year. The 30-day performance of OSMO was stronger with a price increase of 7%.

Investors who want to be on the forefront of a protocol that shows signs of increasing developer interest could take advantage of this divergence.


Optimism (OP)

  • one-year developer growth: 27%
  • two-year developer growth: 327%

Optimism – a layer-2 chain – also showed good growth. It is a low-cost, rapid scaling solution for Ethereum-based decentralized applications. The OP token, which is its governance token has outperformed developer growth by 127% in the last year. Recent performance has been poor, with a drop of 47% in the last 90-days.

  • one-year developer growth: 4%
  • two-year developer growth: 590%

Starknet is the last network on the list. Its token is currently not for sale. It is worth mentioning, however, due to the new developers who are working on this protocol.

I believe that while not the only way to identify prospects, the number and speed of developers who are working on a particular protocol is a good place to start. It may be a good way to identify the next veteran as more innovation, value and efficiency are introduced.

Nick Baker Here is some news that you should read:

  • BLACKROCK TRURNABOUT: BlackRock’s CEO Larry Fink, at a certain point, was a pretty clear crypto skeptic. Fink is now leading the world’s biggest asset manager to a new direction. He recently applied to list a Bitcoin ETF. Fink said on Fox Business last week that Bitcoin could “revolutionize financial services.” Here is a nice article explaining the industry’s thinking.
  • HERE IT IS: Despite the fact that bitcoin (BTC), has been on a rise in 2023, there hasn’t been much confidence in the crypto world. When the U.S. Government continues to go after industry leaders, and is generally heavy-handed with digital assets, it’s difficult to get excited about the future. Standard Chartered Bank analysts have a bullish outlook, reverting to yesterday’s rah rah. The analysts at Standard Chartered Bank believe that BTC will reach $50,000 by the year’s end (from around $30,000 now) and $120,000 by 2024. The price predictions of big banks are not always accurate. They’re hard to get right. This one is notable, given how gloomy things have been.
  • Privacy: Many crypto enthusiasts and veterans love privacy. Three stories in this week will certainly irritate them. Arkham Intelligence, a data firm, is on the list two times: first with a product that unmasks otherwise anonymous crypto wallets. Arkham Intelligence was leaked the email addresses for their clients. Third item: A CoinDesk exclusive about how BlackRock’s application to create a bitcoin spot ETF is designed to monitor traders.

Nick Baker is the editor.