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Annual Web3 Developer Report by Electric Capital

Electric Capital Releases Annual Developer Report, Gemini and Genesis Charged by SEC With Selling Unregistered Securities, 3AC Founders Seek to Raise Capital for a New Venture, FTX US Ex-CEO Speaks

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Issue Summary: Welcome to Issue #111 of Coinstack, the best weekly newsletter for crypto investors and industry insiders, where we review the top news and reports in the digital asset ecosystem. A lot has happened recently, with Ether and Bitcoin surging 20% since last issue, the SEC charging Gemini and Genesis with selling unregistered securities for their lending offering, the 3AC founders launching a new firm, and the new Electric Capital Web3 Developer Report. In funding news, CyberX and Parfin both announced successful $15M raises.

The performance of the top Layer 1 blockchain tokens since we began writing Coinstack in January 2021

In the Jan 2023 Electric Capital Developer Report, Ethereum maintains its large lead, with more than 2.5x the active developers of any other blockchain. Solana, NEAR, and Polygon grew 40% YoY and have 500+ total monthly active developers. Sui, Aptos, Starknet, Mina, Osmosis, Hedera, Optimism, and Arbitrum grew 50%+ YoY and have 100+ total monthly active developers.

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💵 Weekly Crypto Fundraises & Deals

Here are all the crypto fundraises we heard about this week, ranked by size…

🗞️ Crypto News Recap: The Top 5 Stories

Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 5 stories of the week…

1) 🚩Gemini and Genesis Charged by SEC With Selling Unregistered Securities - The United States Securities and Exchange Commission (SEC) on Jan. 12 charged cryptocurrency lending firm Genesis Global Capital and crypto exchange Gemini with offering unregistered securities through Gemini's “Earn” program.

2) ⚖️ Winklevoss Slams SEC Charges Against Gemini as a ’Super Lame … Manufactured Parking Ticket’ - Tyler Winklevoss, the co-founder of cryptocurrency exchange Gemini, has hit out at the regulator charging the exchange over issuing unregistered securities, arguing they’ve been working in good faith with the SEC for over 17 months.

3) ⚖️ Founders of Bankrupt Three Arrows Capital Pitch New Platform for Crypto Debt Claims - The co-founders of failed cryptocurrency hedge fund Three Arrows Capital are now courting investors for a new venture that looks to capitalize on a growing list of bankruptcies in the space.

4) 🔗 Ethereum Hits 500,000 Validators Ahead of Scheduled Shanghai Upgrade - The number of Ethereum (ETH) validators has hit 500,000, per data from BeaconScan, ahead of March’s scheduled Shanghai upgrade.

    5) 🟩 Silvergate Bank Posts $1 Billion Loss in Q4 2021 - Crypto-focused bank operator Silvergate posted a net loss of $1.05 billion for the fourth quarter, compared with an $18.4 million profit a year earlier.

      💬 Tweet of the Week

      ⚡ Electric Capital Annual Crypto Developer Report

      Electric Capital today released their new January 2023 Developer Report, the industry standard for understanding the landscape across crypto developer ecosystems.

      They fingerprinted 250 million code commits across open-source repositories to create the 2022 Developer Report.

      Crypto monthly active developers grew +5% year-over-year in 2022, despite 70%+ decline in prices.

      There are now 23,343 monthly active developers in crypto

      There are now 23,343 monthly active developers in crypto

      Report Executive Summary

      We are 14 years into the creation of open-source crypto. In the first 7 years, 1,000 monthly active developers wrote code. In the last 7 years, crypto gained over 22,000 monthly active developers.

      1. Monthly active developers grew +5% year-over-year, despite 70%+ decline in prices.

      • 23,343 monthly developers as of December 2022.

      • 471,000+ monthly code commits are made monthly toward open-source crypto.

      • +8% YoY growth in Full-Time developers. Full-Time developer growth is the most important growth signal to track because they contribute 76% of code commits.

      • All-time high of 61,000+ developers contributed code for the first time in 2022.

      2. Crypto network value is back to January 2018 levels, but monthly active developers have increased +297% since 2018. Comparing the previous crypto winter to today:

      • 3x growth in Bitcoin monthly active developers, from 372 to to 946

      • 5x growth in Ethereum monthly active developers, from 1,084 to 5,819

      • Solana, Polkadot, Cosmos, & Polygon grew from fewer than 200 devs to 1,000+ developers.

      3. Major ecosystems are emerging beyond Bitcoin and Ethereum.

      • 72% of monthly active devs work outside the Bitcoin and Ethereum ecosystems.

      • Solana, NEAR, and Polygon grew 40% YoY and have 500+ total monthly active developers.

      • Sui, Aptos, Starknet, Mina, Osmosis, Hedera, Optimism, and Arbitrum grew 50%+ YoY and have 100+ total monthly active developers.

      • 3,901 developers work in DeFi every month across multiple chains, +240% since DeFi summer. 50% of DeFi developers are outside of Ethereum.

      • 900+ developers write code monthly in NFTs across chains, +299% since 2021.

      Go to DeveloperReport.com for more data and the full report

      📊 Key Stats of the Week

      Here are the most important and interesting stats in crypto this week...

      1. Top 10 Contracts on Ethereum Measured by Gas Spent in 2022

      2. 3k+ Monthly Active Developers Work in DeFi

      3. 80% of Newly Created Wallets’ First Transaction Was Related to NFTs

      4. 23,000 Monthly Active Developers Writing Code on Crypto Projects as of December 2022

      5. The Highest Number of New Developers Ever Wrote Open-Source Crypto Code in 2022: 61k+ New Developers

      📝 Thread of the Week - Experiences and Perspective from FTX US’ Previous CEO

      1/49 Many have asked questions about my time at FTX US and why I left when I did. As I indicated earlier this week, I’m happy to begin sharing my experiences and perspective publicly.

      2/49 I worked at FTX US for seventeen months. When my resignation was made public, those unfamiliar with my plans were surprised, and some questioned whether I’d been fired. It seemed as though I’d left a dream job abruptly after a very short tenure.

      3/49 The truth was that FTX US hadn’t felt to me like the dream job it appeared to the industry and media for some time, and my departure was not abrupt.4/49 My relationship with Sam Bankman-Fried and his deputies had reached a point of total deterioration, after months of disputes over management practices at FTX.5/49 And, as a group of my friends, mentors, and investors knew then, I’d felt such a strong conviction to found my own company that it wasn’t worth keeping a “dream job,” no matter the prestige or upside, no matter the risk it posed to my reputation in departing so early.6/49 Sam asked me to join FTX US casually over text in late March 2021. He was my former colleague at Jane Street and I had fond memories of his presence there.7/49 We’d barely stayed in touch over the years, but I’d occasionally read news about FTX’s growth. I was happy to hear from him and interested to learn more about how things were going at FTX.8/49 I’d known Sam to be a conscientious junior trader at Jane Street who’d done well in the programming-for-traders course I taught there, in which he’d been my student. In manager meetings about Sam’s performance the senior traders on his desk indicated he had promise.9/49 Beyond that, he seemed like a sensitive and intellectually curious person who cared about animals, and that endeared him to me.10/49 My negotiations to join FTX US moved quickly, a welcome contrast to the 4-6 months they’d taken for every move I’d made in traditional finance. I’d built software for Jane Street’s crypto desk in 2017 but hadn’t worked on crypto since. I was excited to dive back in.11/49 My first few months at FTX US were wonderful. I worked largely independently of Sam to grow a US-based team and foster a professional environment prepared for regulated businesses.12/49 I made plans with the LedgerX team, built out legal, compliance, and operations departments with first-in-class lateral hires, and began setting up and building a US-regulated retail stock brokerage.13/49 FTX US’s spot exchange was growing in market share. The team was dedicated and productive. Customer feedback was positive. I was excited about the future.14/49 But from the start, I noticed that while Sam was rarely engaged on the US business, decisions impacting the US would come, without warning, from the Bahamas.15/49 Six months into my time at the company, pronounced cracks began to form in my own relationship with Sam. Around then I began advocating strongly for establishing separation and independence for the executive, legal, and developer teams of FTX US, and Sam disagreed.16/49 I saw in that early conflict his total insecurity and intransigence when his decisions were questioned, his spitefulness, and the volatility of his temperament. I realized he wasn’t who I remembered.17/49 I wasn’t sure what accounted for the dramatic change I saw in Sam.18/49 Like many of us, I have family and friends who live with addiction and mental health problems, and I’ve seen how these problems often manifest without much warning in early adulthood. I thought that might be a contributing factor, and initially felt sympathetic.19/49 But I didn’t know Sam well enough personally or have any real time to reflect on the question. I was in a business relationship with him, and he was making a number of decisions about running a business that I disagreed with.20/49 There was tremendous pressure not to disagree with Sam, but I did so anyway. At that time, and for all of my time at FTX US, his influence over the media, FTX’s partners, the venture capital industry, and the traditional finance industry was pervasive and unyielding.21/49 Standing up to an insecure, prideful manager is hard under any circumstance. But it’s nearly impossible when every day, every major voice of culture and commerce deafens you with a narrative that implies if you disagree with your manager *you* clearly must be wrong.22/49 I wasn’t the only one at FTX US who disagreed with Sam and members of his inner circle. FTX US was staffed with experienced professionals from US finance firms, law firms, and regulated exchanges.23/49 Our collective experience and professional acumen were frequently treated as though they were irrelevant and valueless. It was extremely frustrating for all of us.

      24/49 Over the ensuing months, I further argued for enacting a sensible hiring policy, for staffing FTX US with a C-suite of experienced officers, for transparent communication between Sam and FTX US leadership,25/49 for Gary Wang’s and Nishad Singh’s software development responsibilities to be formally identified and shared across a larger group, for the delegation of managerial responsibility and controls beyond Sam and Bahamas-based executives, and other important matters.26/49 Sam was uncomfortable with conflict. He responded at times with dysregulated hostility, at times with gaslighting and manipulation, but ultimately chose to isolate me from communication on key decision-making.27/49 It felt terrible. I sought out information about decisions that had been made behind my back, desperate but trying hard not to show it.28/49 In early April 2022, my eleventh month, I made one last try. I made a written formal complaint about what I saw to be the largest organizational problems inhibiting FTX’s future success. I wrote that I would resign if the problems weren’t addressed.29/49 In response, I was threatened on Sam’s behalf that I would be fired and that Sam would destroy my professional reputation. I was instructed to formally retract what I’d written and to deliver an apology to Sam that had been drafted for me.30/49 That event solidified my decision to leave. I knew an abrupt departure would be harmful to the company and my FTX US reports, and I wanted to best position the company for future success after I left.31/49 So I gradually wound down, finished building and releasing the US stock brokerage, and saw FTX US employees through their mid-year reviews.32/49 And with that, I shifted my focus to the future and to my own company.33/49 The information that is now in the public record – from indictments, complaints, guilty pleas, or otherwise – show facts that even now, after months, are difficult for me to assimilate into reality.34/49 I raised concerns at the company believing that the management and organizational issues I saw were typical of growing start-ups, and that my role, as an experienced financial services executive, was to correct them and unlock the next stage of the company’s growth.35/49 I never could have guessed that underlying these kinds of issues — which I’d seen at other more mature firms in my career and believed not to be fatal to business success — was multi-billion-dollar fraud.36/49 It’s clear from what has been made public that the scheme was held closely by Sam and his inner circle at FTX. com and Alameda, which I was not a part of, nor were other executives at FTX US.37/49 I understand now why they carefully concealed their criminal activity from us. We have extensive professional networks, our own lines of communication with US regulators, and our own authority to speak to US media.38/49 If any one of us had suspected let alone learned the truth, we would have reported them immediately.39/49 Over my seventeen months at FTX US, my colleagues and I dedicated everything to serving the needs of our customers and growing real businesses we believed offered consumers a way to more equitably access financial services that are central to their lives.40/49 Ancient forms of greed and dishonesty destroy trust and corrupt progress. The scale of this particular instance of this lesson is difficult to comprehend, but far from exceptional in the twelve years of my professional experience in finance. It’s a strange dissonance.41/49 After I left FTX US and up until November, nearly every conversation I had with a venture capitalist about my new company eventually came around to the same kind of question: “Is FTX investing? Is Sam okay with you doing this? Do you mind if we confirm with him?”42/49 After that, many conversations eventually came around to the same kind of apology: “We know you weren’t involved in what Sam and others did, but we can’t take on the PR risk of associating ourselves with FTX, no matter how capable you are or compelling your idea is.”43/49 The last few months have provided me with a valuable character study of the industry. Some treated me like an entirely different person overnight, some immediately offered sympathy and support. It will be a difficult experience to forget.44/49 It will also be difficult to forget the frenzied and baseless accusations leveled against me on social media.45/49 For example, that my resignation could only mean I had knowledge of a criminal scheme, even though there’s no evidence of that, and available information shows the scheme was run by a small number of people in another country and began years before I joined FTX US.46/49 Or that I’m seeking a plea deal even though I haven’t been accused of wrongdoing and am not a target in any investigation. Or that while at FTX US I colluded with Citadel to manipulate tokenized stock prices (yes, people are actually saying this).47/49 I’m grateful from the bottom of my heart to those who showed me unwavering trust and support through the turbulence of the last two months.48/49 They helped me cut through the noise and remain focused on the future, even as they themselves had been harmed by the tragedy of FTX’s collapse. I credit them, along with my family, with getting me through the most devastating and destabilizing event of my professional life49/49 I’m extremely honored to have them as partners. The path ahead of me is clear now, and I’m excited to move forward together with them.

      📝 Highlights from the Top Crypto Reports

      Here are the top highlights from the best crypto research reports this week…

      About the Author: Messari brings transparency to the crypto economy. Messari wants to help investors, regulators, and the public makes sense of this revolutionary new asset class and build data tools to drive informed decision-making and investment. This is an excerpt from the full article, which you can find here.


      Transparency in crypto can be a double-edged sword. While it may foster trustlessness and accountability, it can also exclude those who value privacy. Enter privacy-focused blockchain protocols. These networks allow for secure, confidential transactions that safeguard sensitive information while maintaining trustlessness. Aztec Network, a privacy-focused Ethereum Layer-2 (L2), is leading the charge.

      Aztec announced a $100 million Series B led by Andreesen Horowitz in December. They have indicated plans to work toward a testnet launch sometime in 2023. Transparency is at the core of Ethereum’s protocol layer, and Aztec provides encryption for Ethereum accounts and transactions in two ways:

      Shielded transactions for any ERC-20 token

      Shielded DeFi through Aztec Connect

      In 2022, Aztec launched Aztec Connect, a bridge between Aztec’s privacy-secure rollup and Ethereum dapps. It has Aave, Lido, and Curve under its belt, among others. Since its launch, the bridge has seen a gradual increase in total value locked (TVL), with the news of the recent fundraise marking the start of the steep increase.

      The number of daily users on Aztec has remained stable below 1,000 since June despite an increase in ETH deposits, possibly due to the high cost of using Aztec Connect compared to other L2s or speculation around a token. Sending ETH costs $0.07 with Arbitrum, but $0.37 with Aztec Connect, making it one of the most expensive networks. Most deposits on Aztec are small, with 78% being between 0.01 - 1 ETH.

      Apps that deploy on Aztec Connect bypass the need for extensive audits and leverage existing Ethereum contracts. This results in faster deployment, lower costs, and ease of use for developers and projects that want to incorporate privacy features into their products without additional development or testing.

      However, there are also some downsides to ZK-based privacy solutions, such as the high cost of implementing zk-SNARKs on the Ethereum network and the lack of support for certain ZK primitives essential for building scalable and cost-effective ZK systems. As a result, some projects, such as Aleo started as an L2 solution, but ended up building a separate L1 blockchain to address these limitations.

      🎧 Top Crypto Podcasts of The Week

      Here are the crypto podcasts that are worth listening to this week...

      📈 Top Performers This Week

      Here are the top 15 performers in the last week from all tokens with a market cap of $20M+.

      The Top Performers The Last 30 Days

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      📰 The Coinstack Newsletter:

      Tracking the most important blockchain stories of the 2020s, including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Please do your own research. Just our opinions. Not intended as financial advice as we are not financial advisors. We may own some of the digital assets we write about as we believe strongly in the sector. Please do your own research. Published and written weekly by Ryan Allis and Mike Gavela.

      Coinstack is a news and analysis newsletter for the digital asset industry. None of the information here is a recommendation to invest in any securities or other types of investments. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All investments involve risk and may result in loss.

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