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What sort of metrics can you use when you are trying to determine the health of a crypto project?
Perhaps one of the most intuitive yardsticks – particularly in a bear market – is developer activity.
So let us take a look at the major crypto projects that have shown the highest amount of developer activity in past 12 months – and examine just how important this metric really is for smart investors and what drawbacks it has.
Developer activity as a valuation metric
When you are attempting to evaluate the performance of a blockchain or cryptocurrency project, you can look at a number of metrics that help provide insight.
Developer activity is not your only ally on this front. There are also on-chain metrics, valuation ratios and market capitalization markers to bear in mind.
Developer activity really started to take off in popularity during the crypto winter, a time when falling or stagnating prices became an unreliable tool for measuring the growth of a project.
But what exactly is developer activity?
Well, put simply, developer activity refers to the amount of measurable coding effort undertaken by the people who work toward delivering a project or platform.
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Most data aggregators that track developer activity typically monitor of the number of commits posted to GitHub.
GitHub is an open-source repository service where most developers host the code that provides a project’s architectural foundations.
The theory goes something like this: The greater the number of commits, the more developers (or development teams) are actively working on the project.
As such, developer activity is a strong indicator. It shows the project initiators’ level of dedication. And if there is an upsurge in developer activity, this could point to a possible upcoming announcement or a new release coming in the near future.
Top 10 Cryptocurrencies by Dev Activity
Taking a look at data compiled CryptoMiso, which describes itself as a web service that “ranks cryptocurrencies based on the commit history of their most popular Github repository,” can be revealing.
Here are the top 10 cryptocurrencies that have seen the most GitHub commits made in the past 12 months. (Market cap figures are from Coinpaprika data.)
- Insolar (INS) (business-centered blockchain platform; market cap USD 6.7m) 8,519 commits; 37 contributors
- Aelf (ELF) (blockchain-powered cloud computing network; market cap USD 69m) 7,110 commits; 36 contributors
- Holo (HOT) (decentralized exchange; market cap USD 141m) 6,672 commits; 47 contributors
- Lisk (LSK) (open-source blockchain-based platform; market cap USD 239m) 6,271 commits; 62 contributors
- Nuls (NULS) (blockchain-based infrastructural support for businesses and developers; market cap USD 31m) 4,324 commits; 15 contributors.
- Chainlink (LINK) (platform that leverages oracles like Google and Oracle to verify data integrated into smart contracts; market cap USD 1,404m) 3,820 commits; 39 contributors
- Raiden Network (RDN) (off-chain scaling solution for the Ethereum blockchain; market cap USD 8.8m): 3,763 commits; 74 contributors
- EOS (EOS) (smart contract platform; market cap USD 5,100m ) 3,378 commits; 100 contributors
- Zeusshield (ZSC) (decentralized insurance provider; market cap USD 0.56m) 2,957 commits; 7 contributors
- 0x (ZRX) (open-source protocol leveraging smart contract infrastructure; market cap USD 208m ) 3,312 commits; 68 contributors
What about the Big Boys?
It makes interesting reading to see that the biggest coins per market cap are largely conspicuously from this list by their absence. Only EOS (#7 in market cap) devs have been active enough to make the top 10.
Tron, which is knocking on the market cap top 10’s door at #12 has also made it to #11 on the commits charts – and is the only top 20 project besides Bitcoin to have over 100 contributors.
And what about Bitcoin, while we’re on the subject? Well, BTC is down at #17, with 1,810 commits.
Meanwhile, the data shows that Bitcoin’s nearest market cap rival, Ethereum, is way down on the commits ranking, with just 702 commits in the past 12 months – although those were made by over 100 different contributors.
The bottom line: can you trust dev activity as a metric?
Developer activity is certainly important in that it lets you gauge how active a project’s developer community is. It also lets you understand how many bug fixes and improvements are being performed on a cryptocurrency network before you start investing in it.
However, it is not the be-all-and-end-all of metrics. And for those who consider it a silver bullet for making crypto investment decisions, here are a few key drawbacks:
- Activity does not reflect market interest or user demand
- Dev activity stats alone do not provide insight into a project’s level of decentralization
- Dev activity figures are relatively easy to game
A general rule of thumb with crypto investment-related decision is: Do not base your choices on any single indicator.
While it is interesting and can be valuable to learn about which projects are receiving the most commits and have the most active developers, it pays to look at the bigger picture.
But if you are torn between a few very similar projects, dev activity can provide important clues. More activity on a project often means more up-to-date innovations.
And in the fast-moving, ever-evolving crypto sphere, even the slightest of tech advances can mean a whole lot when it comes to predicting future performance.
Learn more: Maybe Blockchain Engineering Is Not a Golden Ticket after All
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