If my recent 14 months in the Web3 ecosystem have shown me anything, the answer is yes — in two key dimensions: financial motivation and commitment.
While building the strategy to move the Hedera DLT underneath a fully independently governed open source foundation called Hiero at the Linux Foundation Decentralized Trust— the first Layer 1 to do so — we conducted extensive research across Layer 1 blockchains and their ecosystems and interviewed numerous decentralized application (dApp) builders. That, combined with my 20+ years in the Web 2 developer community, helped me realize the differences boil down to one central factor: crypto and its economic incentives. The abundance of real and perceived economic incentives has created a unique, bifurcated culture between Web2 and Web3, and its effects are felt throughout the developer community.
The Financial Incentives Divide
The sheer number of cryptocurrencies today is astounding. Despite the recent crypto winter that ended in 2022, the total number of cryptocurrencies has grown fivefold in the last three years, totaling over 2 million. The combined market cap of the top 10 cryptocurrencies, excluding Bitcoin, is around $750 billion (Coinmarket). While only a fraction of this goes directly to developers, the financial opportunities in Web3 far exceed those in Web2. The disparity becomes even greater if you include the more than 50 developer grant-giving organizations and dozens of venture studios and incubators.
For example, Web2 developer hackathons commonly offer prize pools of up to $100,000. In Web3, that figure is multiplied five to ten times, with major hackathons regularly exceeding $1 million. These staggering numbers create fundamentally different developer motivations.
A Smaller, More Mobile Developer Base
To put the economic impact at the individual level into perspective, consider the number of developers. Web3 developer activity, tracked by Electric Capital’s Developer Report, has been growing, but the ecosystem remains small. There are roughly 20,000 to 26,000 active open-source Web3 developers, compared to over 100 million GitHub accounts and 284 million repositories, according to GitHub’s 2023 State of the Octoverse report. Even if we assume Electric Capital’s numbers are off by a factor of five, Web3 would still have only around 100,000 developers, a far smaller pool than Web2.
The relationship between the small number of developers and large financial rewards has shaped Web3’s developer culture. They tend to be more mobile and less loyal to specific projects. According to Electric Capital, the average tenure of a Web3 developer is under two years, compared to around four years in Web2. Developers often follow the price of a particular cryptocurrency, moving from chain to chain based on financial incentives. This creates a transient culture, with developers frequently hopping between projects. The report also shows that the influx of new developers follows macro cryptocurrency trends; as the overall value of coins goes up, more developers jump into Web3. But the corollary is also true. As prices drop, the developers leave Web3 or jump to another chain, further reinforcing a transactional culture. This is most true for individual or small dapp builders; core blockchain developers tend to be fiercely loyal. So you have a thin layer of bedrock core developers with an ever-shifting layer of sand dapp builders on top. One repercussion of this has been the limited movement of Web 2 enterprise developers into Web 3, even as the technology and use cases become more established.
The Importance of Developer Loyalty
This mobility comes with consequences. As Electric Capital’s report shows, about 75% of code in Web3 is written by developers with more than one year of experience — a critical threshold for producing high-quality contributions. The same dynamic likely holds true in Web2, where developers with deeper knowledge and experience are essential to long-term project success. The shorter tenure in Web3 impacts the quality and sustainability of projects as developers move on before fully maturing within an ecosystem.
Other factors also contribute to this mobility, such as the functionality of the dApp, the viability and momentum of the chain, and the overall dynamic nature of Web3 ecosystems. However, this transient culture is likely to change as Web3 continues to evolve.
What’s Next for Web3 Developers?
As Web3 grows and matures, the convergence between Web2 and Web3 developer cultures is on the horizon. Looking ahead, there are different activities and incentives that could encourage Web3 developers to adopt some of the more beneficial traits of the Web2 developer ecosystem. The increasing participation of global enterprises in Web3 — particularly in areas like decentralized finance (DeFi) and the tokenization of real-world assets— is slowly bringing more Web2 developers into the fold. As a result, Web3 developers may begin to engage longer term on these enterprise-driven projects, aligning with corporate needs for stability and long-term investment.
There is also much Web3 can learn from Web2 when cultivating long-term developer loyalty. Many blockchain ecosystems, often very insular, could benefit from adopting more consistent engagement activities — whether through better community support and direct engagement, more developer resources, or incentives and rewards beyond purely financial.
Stay tuned for future posts where I will delve deeper into how Web3 ecosystems can better support sustainable developer engagement