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A letter to Electric Capital & Balaji:
Key Takeaways
If the # of crypto developers starts losing momentum and spirals downwards, then all the other charts and metrics don't matter. The priority is to keep growing the number of monthly crypto contributors.
Decentralized task creation will become the primary channel to attract the next wave of developers to crypto. We now have the entire end to end stack to make this possible.
As the next bull market picks up steam and there's a revived interest in crypto, I want a link (probably a Farcaster client) that I can send to my friends who are web2 developers. They should be able to onboard, pick a bounty, and start earning in under 5 minutes.
The letter below is split into 3 sections:
S-tier chart
Open source incentives
Decentralized task creation
S-Tier Chart
On Wednesday, Electric Capital released their 5th annual crypto developer report.
This year, they analyzed 485 million code commits across 818k repositories!
After going through the report, I asked myself: if I had to pick a single graph from the 180 page report to share with you all, which one would it be?
Initially, I picked my top 15 graphs. And then cut down to 10. And then 5. But I couldn't figure it out. I didn't feel inspired to write about any of the ones I had shortlisted.
After a while, I got frustrated and decided to start from the top. And that's when I realized that I had totally ignored the very first graph:
It's the most obvious one but also the most inspiring in my opinion.
I saw a few people on Twitter mention how tiny crypto is and how the # of developers felt trivial. And they're not wrong. I mean, only 22k of the 23 million developers around the world are contributing to crypto!
But that graph can also be viewed from an optimistic lens. What stood out to me is the fact that there has been tremendous developer growth in the last 8 years despite all the craziness this ecosystem goes through: Bitcoin halving cycles, regulatory pressure, hacks, scams, fraud, etc.
Think about it...with only 22k developers, the ecosystem has managed to prove enough value that the largest asset manager in the world has bought 25k bitcoin and is actively trying to sell their ETF.
9,712
Going through the rest of the report was useful to better understand which L1s/L2s have grown, the geographical distribution of crypto devs, the shift towards multi-chain development, etc. But at the end of the day, if the crypto developer graph above starts losing momentum and spirals downwards, then all the other charts don't matter.
So, how can the crypto ecosystem ensure that the # of developers continues to grow?
Well, to answer that, let's explore the ideas of open source incentives and decentralized task creation a bit further.
Open Source Incentives
There was a note underneath the graph that caught my eye:
That got me thinking. For the last 15-20 years, the citadel for software engineers has been to work at a high growth startup or big tech companies like Apple and Google. For most of us, working in tech meant working in silicon valley companies with proprietary software. The folks who were old enough and active in the software industry back in the '80s are the minority who actually understand what it means to build in a open source dominant environment.
TCP, IP, HTTP, SMTP, etc. are all decentralized protocols that were built in the first era of the internet and still serve as core digital infrastructure even today. These networks became a canvas for innovation and paved the path for the next set of developers to build on.
It was in the second era of the internet where proprietary software took the reign. Ironically, the Open Source Initiative was formed in 1998 and the following two decades of the web were primarily defined by closed competitors.
So...why didn't open source win the second battle against proprietary software?
Because it was impossible to compete! Chris Dixon explains it in a blog post from 2017:
Proponents of open systems never had an effective way to manage and fund operating services, leading to a significant architectural disadvantage compared to their proprietary counterparts....These open schemes required widespread coordination among standards bodies, server operators, app developers, and sponsoring organizations to mimic the functionality that proprietary services could provide all by themselves. As a result, proprietary services were able to create better user experiences and iterate much faster.
And this is why most of us have only experienced a software world where the primary objective is to write code in closed repos.
But! As we all know, crypto offers a solution for open source networks to finally fight back.
Through tokens, there is now a way to use financial incentives to facilitate funding and accountability in open source projects.
You're probably thinking, YB I already know that! Optimism has the $OP token and Uniswap has the $UNI token and so on.
Yes, but the epiphany I had yesterday is that the current ~22k developers in the ecosystem care about crypto. They're willing to participate in the weeds of governance models, have an opinion on the nuances of L2s, and are actively rooting for ecosystem growth.
But there's eventually going to be a cap on the number of developers that care.
If we want the # of monthly crypto developers to grow tenfold, we'll need to switch from a values based model to an earnings based model.
Can the crypto ecosystem attract developers by showing them it's possible to earn a significant amount of income by contributing to open source projects?
Decentralized Task Creation
More than 4 years ago, I watched this talk by Balaji on Pseudonymity.
The key point that I have always found interesting is the idea of a tasking economy - a world where it's possible to earn your living (or a nontrivial % of it) through a bounties marketplace.
Of course, as with any Balaji idea, it sounded absurd. I mean who would give up their high salary big tech job to work on "tasks"? His main point in a essay he wrote back in '21 was that if there is enough supply of tasks and a way to complete them in a decentralized manner, then the demand will follow.
But crypto addresses solve only half the problem. Yes, now we can pay people any amount anywhere, but to enable a feed that enriches rather than simply distracts, we need something else: task inventory.
That is, we need individuals or institutions that will create and fund tasks in sufficient volume to fully supplant distracting social media feeds. If we can do that, we can transition from mere social networks to true digital economies, where you open the app, scroll your feed, find a task that suits your skills, and then earn.
I never really gave the idea much thought but it's always lingered in the back of my head. Then yesterday, it hit me: decentralized task creation will become the primary channel to attract the next wave of developers to crypto.
But I've read this piece from Balaji several times in the past. Why is it just now clicking?
Because I think I've finally seen the earliest version of this happening now. Consider the following stack.
The top three got significant attention in the last bull market. Most people active in the industry are well aware of and already use a wallet, decentralized exchange, and an ENS.
But in the last year, it's the bottom three that have caught my attention. We now have a sufficiently decentralized social protocol, a bounties marketplace, and a way to link onchain attestations to wallets.
Look at this simple example above. What are the steps for me to earn onchain?
Make a wallet
Create a Farcaster account
Complete the bounty
Get paid 100 USDC straight to my wallet
In the case that the bounty is paid out in a token I don't want, I can swap on a DEX for my desired token. And if I need to prove that I have experience as a JavaScript developer, then my onchain attestation can speak for me.
Of course, this is a micro example but it shows that the end to end cycle is now already possible!
Imagine this scaled out to millions of bounties for developers. Heck, not just developers but creators, designers, etc. Anyone can hop on, put in the work, and receive direct payments.
With that being said, let's revisit the initial question: how can the crypto ecosystem ensure that the # of developers continues to grow?
I believe the answer to this is to have a dedicated Farcaster client where the sole purpose is to create a social feed of bounties for developers.
This is the answer to Balaji's request for "earning while scrolling".
At the end of the day, if there is a frictionless opportunity to make money, then my belief is that developers won't care if they're contributing to an open source crypto repo. They'll onboard, get the work done, and be delighted to see the USDC racking up in their wallet.
So what does that mean for us in the crypto ecosystem?
Well two things:
Projects need to be outsourcing as many tasks as possible to the open source developer ecosystem. It's no different than Uber's marketplace...we need more drivers! The bounties can be as small or as large as you want. Eventually, we need to get to the point where people can "doomscroll" on a bounties feed.
And we need a "developer front page" to crypto. This is the Farcaster client in my head but it could turn out to be something different. The point is, I want a link to send to my talented developer friends in the web2 world where in under 5 minutes they can get set up, pick a bounty, and start earning.
We're still a ways out from this concept proliferating, but just the fact that now we're able to identify a stack for decentralized tasking is an incredible achievement in itself.
Avichal Garg (founder of Electric Capital) summed it up pretty well:
"There were countless great ideas in 2017, but it was mostly vaporware. By 2019, most people left/gave up.
5 years later, all of those ideas are working and in production.
In another 5 years, most of the world will wake up to the realization that all of the ideas from 2018 are real, working, and scaled up.
We are right on track for a 10-year technology cycle."
He nailed it.
I first learned about the decentralized tasking economy in 2019. And 5 years later, I'm realizing it's now possible to do so in 2024. If things go as expected, by 2028, the idea of developers earning their income through bounties won't be as crazy as it may seem now.
Remember, open source projects are essentially memes. Anyone can use them and build on top of them. There is no private company that can compete with the growth of open source in the long term.
Now, to wrap up, I just wanted to share a simple anecdote from two days ago that inspired this letter. My roommate from college is currently recruiting for jobs and said that he's doing a intro call with Coinbase. I said, "I thought you don't even like crypto?". And he responded, "yea, but they pay a fuck ton and the stock is mooning".
He's a brilliant engineer and Coinbase would surely benefit from having him onboard regardless of what % of his portfolio is in crypto. That's when I realized that in this next bull market, the focus should not be to sell crypto values but rather highlight the endless opportunities to earn some $ by contributing.
That's all for today, hope everyone has a great weekend!
- YB
