Bessie Liu

An estimated 53% of the total smart accounts deployed were created in Q4 of 2023, a report by Web3 development platform Alchemy shows. 



Of the total 1.8 million deployments since the launch of ERC-4337 at Walletcoin in March 2023, over 960,000 of these smart accounts were created in the past three months.&nbsp;



Will Hennessy, Alchemy’s account abstraction lead, notes that these numbers exceeded initial expectations.



“The Ethereum Foundation just deployed ERC-4337 contracts in March 2023, so this early adoption is faster than expected. It shows how hungry app developers are to solve [user experience] problems like gas sponsorship,” Hennessy said.



Smart contract accounts, unlike traditional wallet accounts in Web3, enable users to create ‘user operations’ instead of simply executing transactions. This means users can customize how they manage their on-chain assets.



Unlike traditional wallets, smart accounts enable users to bundle multiple transactions into a single operation. The result is greatly improved efficiency in terms of both time and cost. This will be especially useful in a number of different scenarios, including trading and gaming.



The standard also revolutionizes transaction fee management by allowing &#8216;sponsored transactions&#8217; — where another entity, such as a decentralized app or wallet provider, can cover the gas fees on behalf of the user. It also allows the use of ERC-20 tokens for gas fees. This is a departure from current methodology, where fees are paid exclusively in the network&#8217;s native currency (ether, in the case of Ethereum).



ERC-4337 enhances security and convenience with features like multi-signature transactions and simplified account recovery. This promises to make on-chain interactions more akin to traditional banking experiences, but with the added security benefits inherent to blockchain. This advancement is seen as a pivotal step towards making Web3 more user-friendly.



User operations are bundled by ‘bundlers’ as ‘meta-transactions’ or ‘meta-data transactions’ to a third-party relayer that sends the transaction to the blockchain.&nbsp;



Read more: <a href="https://blockworks.co/news/what-are-smart-contract-wallets">What Are Smart Contract Wallets? A Beginner’s Guide</a>



Alchemy’s report shows that over 540,000 of these user operations were executed in Q4 last year. This marks a significant increase of 194% when compared to the previous quarter.&nbsp;



In particular, apps including telegram bot Grindery, video streaming platform FanTV, and Web3 social app Cyberconnect were behind the growth in user operations — making up 66% of the growth.



Grinderly’s popularity is likely to be driven by token incentives, the report suggests. Subsequently, it has also increased smart account adoption on layer-2 scaling solution Polygon, which currently dominates the space, with a <a href="https://www.bundlebear.com/overview/all/month">92% market share</a> in monthly active accounts on its network in December.



Token incentives are likely not enough to keep users interested in smart accounts, as information from BundleBear <a href="https://www.bundlebear.com/overview/all/week">shows </a>that weekly retention rates remain relatively low, down to less than 1% after five weeks of opening an account. Though this is the case, Hennessy remains optimistic.&nbsp;



“Last year was an infrastructure phase for account abstraction. The technology was brand new and it took time for teams like Alchemy to build reliable infrastructure. Now the infra[structure] is ready, and with the launch of Account Kit last October, app developers can build AA apps quickly,” he said. “We expect to see development accelerate this year.”



He adds that although user retention may not be high, it is through account abstraction that they were able to try different decentralized apps in the first place. 



“Current retention is primarily determined by how useful the application is. They’re working on new features to continually engage users,” he said.&nbsp;



<h2 class="wp-block-heading">Paymasters remain popular</h2>



Another unique aspect of ERC-4337 is the introduction of paymasters, a tool that enables users to pay gas fees in ERC-20 tokens rather than just ETH or enables users to ask a third party to subsidize these gas fees completely.&nbsp;



An estimated $1.16 million in gas fees have so far been <a href="https://www.bundlebear.com/overview/all/month">covered</a> by paymasters, data from Bundlebear shows.&nbsp;



Alchemy, which itself offers paymaster services, noted that more than 97% of user operations had used a paymaster to pay for transaction fees in the fourth quarter of last year. This indicates that flexibility around transaction fee payment remains a popular demand from users.



“Account abstraction makes it easy for anyone to start using a Web3 app. By lowering the barrier to entry with social login and gas sponsorship, apps are able to onboard more users including those who might have lower intent,” Hennessy said.



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More than 1 million smart accounts have been deployed, Alchemy says

James Cirrone

Alchemy has acquired subgraph platform Satsuma for an undisclosed amount to bolster its endeavors in the blockchain indexing space.&nbsp;&nbsp;



Blockchains house a distributed ledger, and often, that requires storage for a massive amount of raw data. Plus, the advent of layer-2 protocols mean more data is being stored on-chain than ever before.



Engineers spend lots of time indexing and querying — i.e. transforming, processing and storing — the portions of the data set they need in order to build their Web3 apps, Satsuma co-founder and CEO Jonathan Kau told Blockworks.&nbsp;



That time consuming process developers slog through was a key factor in Kau and fellow co-founder Dan Li starting Satsuma in 2022. Their solution? Subgraphs.&nbsp;



Subgraphs eliminate the need for developers to build their own data pipeline from scratch, which can be costly. And for those developing more complicated apps that need to store and display more dynamic information — perhaps something like daily total transaction volume — subgraphs make that much simpler, Kau said.&nbsp;



“Subgraphs make it 10 times easier for an engineer to build a data pipeline without running infrastructure, and without writing a ton of code,” said Kau.&nbsp;



According to Kau, The Graph made open-source subgraphs the norm. Satsuma&#8217;s subgraphs will be folded into Alchemy&#8217;s existing product suite as Alchemy Subgraphs, which will be using a combination of The Graph’s open-source code and its own proprietary code to create a unique product for developers.



Kau mentioned two clients that have already used Satsuma’s subgraphs, including GMX, a decentralized spot and perpetual exchange with over $475 million in total value locked.&nbsp;



“One of the things that they need to display is a chart that shows ticks or prices over time, and this is really hard to get if you&#8217;re trying to use the raw pieces of data,” Kau said, referring to GMX. “They write a subgraph so that they don&#8217;t have to write a data pipeline to get all that data.”



“It saves them a ton of time for their development,” Kau continued.



Treasure, a crypto-enabled gaming ecosystem, is another of Satsuma’s clients. One of its games uses a Satsuma subgraph to display players’ loot and quests while interacting on-chain.&nbsp;



Kau said that operations will continue normally as Satsuma’s services have been folded into Alchemy Subgraphs as of last month.&nbsp;



“The main things that we focus on are improving an engineer’s day to day. Saving them time, saving them money, and of course improving the end users experience — reducing the lag for data to show up and making things faster on the front end interface,” Kau said.



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Alchemy acquires subgraph startup Satsuma

CoinDCX cut 12% of its employees this week, joining the ranks of other centralized crypto exchanges that shrank their staffing costs this year.



CoinDesk <a href="https://www.coindesk.com/business/2023/08/22/indian-crypto-exchange-coindcx-is-cutting-12-of-jobs-as-bear-market-taxes-take-their-toll/">reported</a> that the Indian crypto exchange fired 71 employees out of some 590 staffers.



The founders of the Indian crypto exchange, Sumit Gupta and Neeraj Khandelwal, published a blog post Tuesday explaining the reasons behind the significant layoffs this week.&nbsp;



The two cited the “prolonged bear market” and financial crunches related to onerous crypto-specific taxes.&nbsp;



Gupta and Khandelwal were referring to <a href="https://blockworks.co/news/indian-crypto-trading-volumes-plunge-as-new-tax-rules-kick-in">India’s crypto tax policy that was instituted in July 2022</a>, which mandates investors pay a 1% tax deducted at source (TDS), in addition to a flat 30% tax on profits derived from crypto.&nbsp;



Some exchanges saw 70% decreases in trading volumes in the week following the new legislation, a state of affairs the CoinDCX founders acknowledged was a catalyst for their decision to downsize.



“These factors had a significant impact on our volumes and thus revenues. To adapt, we undertook several proactive measures, including direct cost optimization and investment in automation,” they wrote in <a href="https://info.coindcx.com/announcement/a-tough-decision-for-a-brighter-future-coindcx/">the post</a>.&nbsp;



India’s crypto tax policy was brought to the forefront again when the country’s lawmakers debated its national budget in the early months of 2023. However, the 30% profit tax and the 1% TDS were reaffirmed. The budget also introduced criminal penalties for not paying up TDS, including jail time of up to seven years.&nbsp;



Other crypto exchanges have laid off significant numbers of employees this year.&nbsp;



<a href="https://blockworks.co/news/coinbase-lays-off-950-staff-cuts-operational-costs-by-25">Coinbase kicked off 2023 by laying off 950 workers</a> as part of a bid to shrink operating costs. This represented a 20% headcount reduction and came nine months after the company laid off 1,100 employees.&nbsp;



<a href="https://blockworks.co/news/marketing-pro-joins-segment">Gemini and Luno both made significant cuts</a> to their respective teams in January as well.



Binance, too, has aimed to reduce its numbers throughout the year. The Wall Street Journal <a href="https://www.wsj.com/articles/binance-lays-off-over-1-000-employees-d59ff6ad">reported</a> in July that Binance fired 1,000 employees over several weeks.&nbsp;



While Binance has confirmed that layoffs took place, the company has yet to acknowledge the exact number of affected employees.&nbsp;



<a href="https://blockworks.co/news/binance-us-layoffs">Binance.US also cut staff</a> shortly following <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">the US Securities and Exchange Commission’s filing of a lawsuit</a> against it.&nbsp;



<h2 class="wp-block-heading">Alchemy hires former Stripe exec</h2>



Web3 development platform Alchemy said Thursday that it has hired Guillaume Poncin, Stripe’s former head of Web3 and crypto.&nbsp;



<a href="https://www.linkedin.com/in/guillaume-poncin-012611/">Poncin</a> will serve as Alchemy’s head of engineering. At Stripe, Poncin was responsible for that company’s fiat-to-crypto onramp products.



Poncin has also worked for Google and computer hardware manufacturer Osmo.&nbsp;



Poncin explained in a short <a href="https://www.alchemy.com/blog/guillaume-poncin">blog post</a> that he joined Alchemy because he believes it’s where he’ll “have the most impact in amplifying the adoption of crypto.”



“We are still early in Web3. Right now, most things are difficult. Things break. There’s friction across most of the tech stack, both for developers and for users. But it’s getting better daily,” he wrote.&nbsp;



<h2 class="wp-block-heading">Other notable hires</h2>



<ul class="wp-block-list">
<li>Nansen is <a href="https://twitter.com/nansen_ai/status/1694309210107084946">actively looking</a> for a director of marketing. The on-chain data <a href="https://blockworks.co/news/binance-re-examines-remaining-staff">laid off 30% of its staff in June</a>.&nbsp;</li>
</ul>



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Crypto hiring: CoinDCX blames tax policy, bear market for layoffs

Alchemy dropped its quarterly report assessing the state of Web3 development on Thursday Among other details, the analysis found that Ethereum and wallet SDK installs have reached all-time highs.



Large numbers of developers installing these software development kits shows that there’s still an appetite for app building in the Web3 space, despite the marked slowdown in NFT and DeFi trading volumes — down 41% and 27%, respectively, according to the <a href="https://www.alchemy.com/blog/web3-developer-report-q2-2023">report</a>.



Weekly wallet SDK installs reached 11.1 million in the second quarter of 2023, up 22% on a quarter-over-quarter basis, the report found. Similarly, Ethereum SDK installs were up 7% quarterly, hitting nearly 27 million.&nbsp;



Adding to the picture of confidence, developers created more Ethereum virtual machine smart contracts this quarter than ever before. Across Ethereum, Polygon, Optimism and Arbitrum, the number of smart contracts deployed neared 80 million; a spike of more than 300% from last quarter.



Read more: <a href="https://blockworks.co/news/defi-rebound-crypto-winter">DeFi to rebound after crypto winter, says Web3 report</a>



Blake Tandowsky, Alchemy’s growth analyst, commented on this trend specifically, saying that a layer-2 future is coming.&nbsp;



“What you&#8217;re seeing is the gradual shift of Ethereum from a largely [layer-1]-centric use case environment to a fast-growing [layer-2] environment, and we expect that trend to continue,” Tandowsky said.



The future isn’t entirely rosy for DeFi builders though. Experts say that <a href="https://blockworks.co/news/bitcoin-ether-resembling-2019">market sentiment still hasn’t recovered, and that little attention is being paid to crypto overall</a>.&nbsp;



Alchemy also surveyed 625 Web3 developers to gauge their mood. The top obstacle to growth over the next year in their eyes? Funding.



They also said that concern about capital drying up trumped their worries about how regulation may impact Web3 growth; a fear that lingers despite US authorities actively pursuing numerous high-profile cases to determine the classification of digital assets. Think <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security">Ripple</a>, <a href="https://blockworks.co/news/sec-sues-coinbase">Coinbase</a> and <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">Binance</a>.



Read more: <a href="https://blockworks.co/news/crypto-venture-capital-struggling">Venture capital is struggling, and not just in crypto</a>



The survey also found that developers’ top priorities are smart contract security and account abstraction. In his June <a href="https://vitalik.ca/general/2023/06/09/three_transitions.html">blog</a> post, Vitalik Buterin brought up both of these topics during a discussion about the three transitions Ethereum needs to make to become truly secure and permissionless.



“When we look at the last few years, one of the common feedbacks that we have heard from our developers…is that there&#8217;s still a long way to go on the security frontier,” Tandowsky told Blockworks.



He cited how people continue to lose seed phrases, lose custody of their assets and get locked out of their MetaMask wallets.&nbsp;



<a href="https://blockworks.co/news/what-are-smart-contract-wallets">Account abstraction</a>, the standard for which <a href="https://blockworks.co/news/ethereum-erc4337-account-abstraction-smart-contract">was set by the Ethereum Foundation’s ERC-4337</a> in March, can resolve some of those issues, Tandowsky said.&nbsp;



With Metamask, Coinbase Wallet or any of the myriad of externally owned accounts, he explained that “the only way to like sign transactions…to and from peers or to dApps is by signing with a wallet that has your seed phrase.”



With account abstraction, users could authenticate themselves to send money through alternative, more familiar means, such as a social media account, an email or Face ID.&nbsp;



“We think that will help to increase the retention of people&#8217;s assets and help to bring more users into the space where they may otherwise be scared,” he said.



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Developers undeterred by DeFi and NFT headwinds, Alchemy finds

Jacquelyn Melinek

<div id="highlights-block_6202c392b5ad4" class="highlights">
 <ul>
 <li>In under four months, Alchemy valuation has jumped 191% from $3.5 billion to $10.2 billion</li>
 <li>Over $105 billion in annualized on-chain transactions have been powered by Alchemy to date, up 133% from $45 billion in October</li>
 </ul>
 
</div>



Web3 blockchain infrastructure startup Alchemy has closed a $200 million round earmarked for Web3 developers.



Nikil Viswanathan, co-founder and CEO of Alchemy, announced the raise in a <a href="https://blog.alchemy.com/blog/series-c-1" target="_blank" rel="noreferrer noopener">post</a> Tuesday.&nbsp;



The Series C1 round follows a $250 million Series C round in October, when the company was valued at $3.5 billion. The latest raise brings its valuation to $10.2 billion, a 191% increase.



The latest round was led by existing investor Lightspeed, and Silver Lake joined as a new investor. Previous investors, including a16z, Coatue, Addition, Pantera Capital and DFJ, also participated.



“We’re excited to get to work with thousands of developers and teams building the future of Web3 and help support tens of millions of users all around the world,” Viswanathan said. “As NFTs, DeFi, DAOs, and the emerging metaverse have taken the world by storm, we’ve only gotten more excited, knowing that we’re all just getting started.”



The company aims to make blockchain development more accessible by providing developers tools and infrastructure, Viswanathan said. Over $105 billion in annualized on-chain transactions have been powered by Alchemy to date, up 133% from $45 billion in October.



The figures represent a “massive acceleration of growth in the Web3 ecosystem as a whole,” the team said. Thousands of new Web3 organizations are being launched and scaling quickly, while hundreds of Web2 companies are pivoting to include Web3 strategies.&nbsp;



“We believe Web3 should be accessible to everyone, and the best way to make that happen is by supporting incredibly creative developers who are bringing their ideas to life through blockchain technology,” Joe Lau, CTO and co-founder of Alchemy, said in a statement.



Alchemy has also reinvested in the ecosystem through the launch of a handful of new products and sectors: <a href="https://www.web3.university/" target="_blank" rel="noreferrer noopener">Web3 University,</a> <a href="https://www.alchemy.com/ventures" target="_blank" rel="noreferrer noopener">Alchemy Ventures</a> and <a href="https://blog.alchemy.com/blog/alchemy-equity-investment#:~:text=Launched%20our%20new-,NFT%20API,-%2C%20enabling%20any%20developer" target="_blank" rel="noreferrer noopener">NFT API</a>, among them.&nbsp;



Last month, it partnered with Singapore-based payment infrastructure provider NIUM to expand its Alchemy Pay product and facilitate the flow of capital between traditional financial institutions and crypto networks, Blockworks previously <a href="https://cms.blockworks.co/alchemy-pay-adds-direct-fiat-on-ramps-via-partnership-with-singapore-fintech-nium/" target="_blank" rel="noreferrer noopener">reported</a>.



“2021 was the year developers took Web3 mainstream and created businesses that are transforming the lives of millions,” Viswanathan said. “In 2022, we’ll be doubling down on our commitment to supporting developers globally, making it easier than ever to unlock the potential of Web3.”



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