The early 2020s have seen an explosion of interest in the potential of blockchain technologies, with $41 billion invested into the space by venture capital throughout 2021-2022. In 2021, companies and developers rushed to capitalize on this interest, with 73% of financial services companies agreeing that blockchain and digital assets are a competitive advantage for enterprises and 87% of global business decision-makers considering investing in blockchain technologies in their companies. Despite the slowing macroeconomic climate in 2023, the desire to build and develop blockchain-powered applications remains. Projections of the blockchain technology market, including blockchain infrastructure, middleware, and protocols, could reach as high as $1.5 trillion by 2030.

Blockchain adoption amongst developers is still in its early stages. High levels of complexity and lack of developer-friendly tooling make developing on the blockchain a difficult experience. Modern blockchains serve as a new kind of computer, capable of being programmed in the same fashion as a PC, smartphone, or cloud computer. Programmers are able to write code to ensure the blockchain will operate in a predetermined manner, with one famous example being Bitcoin's commitment to producing no more than 21 million coins. Every new kind of computer needs its own operating system, platform, and tools that make it easy for developers to build new things. 52% of enterprises said that their developers faced a steep learning curve when implementing blockchain technologies and cited limited developer knowledge as the largest obstacle holding them back from adopting them. Bridging this gap is critical for enabling developers and enterprises to build on blockchain technologies.

Alchemy is a blockchain developer platform that offers the tools and infrastructure needed to build, scale, and rapidly iterate on blockchain applications. Alchemy's suite of APIs, tools, and node infrastructure services simplifies the building process on the blockchain, reducing complexity and enabling developers to focus on creating crypto applications. Like cloud computing and infrastructure is now an essential part of the modern Internet, Alchemy is positioning itself as a blockchain infrastructure provider, offering developers and businesses a wide range of services and tools.

Source: Alchemy

Source: TechCrunch

Alchemy was founded in 2017 by Nikil Viswanathan (CEO) and Joe Lau (CTO), who were both Stanford alumni and long-time friends. Having met as fellow teaching assistants at Stanford, Nikil and Joe were teaching a databases class at Stanford the first quarter that Stanford opened the class up to the public online. Instead of the 100 in-person students the class would normally get, Viswanathan and Lau faced the challenge of teaching 100K students. Their first experience working together ended up in the pair writing code to automatically generate PDFs with certificates of completion for all 100K students in the class the night before the end of the class.

After graduating, Viswanathan and Lau continued working together, launching 8-9 products before launching a social app called Down To Lunch, which went viral among high school and college students. Although the app briefly hit the top of the App Store, Down to Lunch ultimately failed to achieve sustained success. As Down to Lunch wound down in the summer of 2017, the pair noticed their friends getting involved in crypto. Lau then convinced Viswanathan to try developing a crypto product to capitalize on the interest and activity at the time.

Their first product was an analytics platform for hedge funds and traders which saw early traction, convincing them of the potential in crypto. But while building out this blockchain analytics platform, Viswanathan and Lau realized that developing a blockchain application was 10-100 times harder than creating any non-blockchain application. Both founders realized that tooling and infrastructure that would normally make development much easier were nonexistent in cyrpto. Lau described the state of blockchain tooling and infrastructure as analogous to “trying to build skyscrapers with picks and shovels.”

In 2017, Viswanathan and Lau decided to pivot and launch the infrastructure they had created rather than the analytics platform they had built the infrastructure for. Although Alchemy saw some initial traction and the founders were convicted about the product, the team wasn’t sure how large the blockchain market would eventually be. After launch, Viswanathan and Lau continued quietly refining their product, raising a Series A in 2019 in the depths of a crypto winter that saw Bitcoin prices fall under $8K. Less than 1 year later, the crypto market exploded, kicking off the start of a bull cycle that served to accelerate Alchemy’s growth.

Alchemy provides a large suite of developer tools and infrastructure for individual operators and enterprises to create blockchain applications. The product suite aims to streamline the process of building, deploying, and scaling blockchain applications. Alchemy’s product portfolio consists of four primary verticals: APIs, chains, SDK, and tools.

Source: Alchemy

Source: YouTube

The list of APIs provided by Alchemy includes the following:

Supernode: Alchemy Supernode is an Ethereum API providing reliability, data correctness, and scalability. It incorporates the functions of a standard Ethereum node with enhanced features. The Supernode simplifies blockchain interaction, providing an accessible and efficient API for Ethereum.

NFT API: Alchemy's NFT API enables developers to fetch and display NFTs easily. This API is used for facilitating the creation and integration of NFTs in various projects. It simplifies developing applications that interact with NFTs on different blockchains.

Notify API: Alchemy’s Notify API allows developers to subscribe to event notifications related to their application. It keeps developers informed about relevant blockchain events in real-time. Its utility extends to monitoring and responding to app activities.

Custom Webhooks: The Custom Webhooks APIs offer developers more specificity than the standard Notify API, allowing them to understand contract-based events beyond transfers. These events include token activities, marketplace trends, and data ingestion processes. Custom Webhooks are relevant for developers who require a comprehensive understanding of events on-chain.

Websockets: Alchemy's Websockets API provides subscriptions to pending transactions, log events, new blocks, and more across Ethereum, Polygon, Arbitrum, and Optimism. It enables real-time monitoring of various blockchain events.

Transfers API: Alchemy's Transfers API can fetch historical transactions for any address without scanning the entire chain. This service simplifies the process of transaction history retrieval. It eliminates the need for indexing every user when looking up transaction data.

Token API: The Alchemy Token API allows developers to request specific token information, including metadata or balances. This API provides a direct way to understand different tokens on a specified blockchain. The service supports developers seeking insights into token specifics.

Transact: Transact is a set of APIs that programmatically make blockchain transactions faster, cheaper, and more reliable. The system handles high gas variance and stuck nonces to manage blockchain transactions effectively. Transact's optimized approach reduces developer complications from high gas prices and transaction processing.

Transaction Simulation: This feature lets developers preview on-chain transactions, ensuring that assets are kept safe. It presents a secure environment for transaction operations. Developers using this product can test and evaluate application transactions in a sandbox without the risk of incurring high fees or irreversible transactions.

Account Abstraction: Account Abstraction provides tools to build, onboard, and scale blockchain applications using smart contract wallet primitives. It eases the process of managing smart contracts. This is used by developers aiming to simplify user onboarding and scalability.

Spearmint: Spearmint is a free web3 allowlist platform that automates security measures for blockchain projects. It provides an additional layer of security, ensuring safe transactions in the blockchain network. Spearmint is used as a tool for safeguarding blockchain-related activities.

Chains

Alchemy supports a wide array of blockchains to ensure developers can interact with their preferred chain. Customers can also request that Alchemy offer support for additional blockchains. Blockchains supported by Alchemy include Ethereum Polygon PoS Polygon zkEVM Starknet, Arbitum, Optimism, Solana, and Astar.

Source: Alchemy

Alchemy SDK

The Alchemy SDK is a Javascript SDK that facilitates developer interaction with blockchains. The SDK works in a similar fashion to the widely used Ethers.js tool, allowing for an easy transition for developers who are already familiar with it. This is similar to how a universal remote can work with a variety of devices. Alchemy’s SDK also includes features like easy access to Alchemy's specialized APIs, which are like unique channels for interacting with digital assets and blockchain data. It also offers communication capabilities and improvements like automatic retries, akin to redialing a phone number when a call doesn't go through. The SDK leverages Alchemy's existing node infrastructure for reliability, scalability, and data correctness.

Source: YouTube

Tools

Create Web3 Dapp: This offering allows developers to build a full-stack decentralized application directly from their command line. It includes pre-built components for users to help speed up development.

Composer: Composer is an in-browser request sandbox tool that aids developers in building and testing web requests. This tool facilitates rapid prototyping within the browser, enhancing development efficiency. Composer is used by developers in testing and refining their web requests.

Account Monitoring: Alchemy’s account monitoring offers a dashboard and alert system for tracking app health, performance, and user behavior. This tool ensures developers can track their application's progress and identify potential issues. Account Monitoring plays a role in maintaining the health and performance of applications.

Transaction Monitoring: Alchemy’s transaction monitoring offering is a suite of tools that aid prototyping, debugging, and product shipping. It reduces the need for configuration and assists in streamlining transaction analysis.

Source: Alchemy

Customer

Alchemy's ideal customer profile comprises developers and organizations looking to use blockchain infrastructure to power their applications. Notably, decentralized finance (DeFi) and gaming companies require reliable blockchain infrastructure to ensure their services are consistently available and performant for their customers. Enterprises without blockchain developer expertise or a desire to host and maintain blockchain-related infrastructure are another customer base. Alchemy’s developer tools and infrastructure suite allows companies to build blockchain-powered applications without developing these resources in-house.

Market Size

The market for Alchemy centers around blockchain technology, composed of blockchain development tools and infrastructure. The global blockchain technology market was valued at $10 billion in 2022 and is expected to grow at a CAGR of 88% from 2023 to 2030. This growth is fueled by several factors, including escalating adoption of blockchain technology by enterprises, a surge in demand for blockchain-as-a-service (BaaS) offerings, and continued public interest in cryptocurrency.

Competition

Infura: Launched in 2016, Infura provides developers with reliable access to Ethereum and IPFS networks worldwide. As of December 2020, Infura reported over 130K registered developers and over 2 billion API calls daily. As a subsidiary of ConsenSys, Infura benefits from a vast network of blockchain projects and partnerships. With customers like Uniswap and Brave, Infura directly challenges Alchemy in providing infrastructure for Ethereum-based applications. ConsenSys has raised $726 million in funding. In 2019, it launched is Infura+, a subscription service for Infura’s Ethereum API for enhanced infrastructure support for developers building applications of all sizes.

QuickNode: Founded in 2017, QuickNode offers scalable blockchain infrastructure for Ethereum, Bitcoin, Solana, Polygon, BNB, and over 20 chains. After graduating from Y Combinator in March 2021, the company reported servicing over 2 billion API requests daily for 20K developers and a 20x increase in revenue and customers. QuickNode offers a competitive alternative to Alchemy's infrastructure services. The company has raised $100 million in funding.

Blockdaemon: Established in 2017, Blockdaemon offers multi-chain node infrastructure to empower blockchain projects. With support for over 40 protocols as of May 2023, Blockdaemon is notable for its broad protocol coverage, which includes popular chains like Ethereum, Bitcoin, Polkadot, and Solana. It provides a one-stop solution for developers looking to build on multiple chains simultaneously, which makes it a competitive offering to Alchemy’s product suite. Blockdaemon has raised $431 million in funding.

Coinbase Cloud: An offering from Coinbase, Coinbase Cloud was launched in June 2021 to provide developers with easy-to-use blockchain infrastructure. Coinbase Cloud offers a comprehensive suite of developer tools, including SDKs and APIs for wallets, payments, exchanges, and trading. It offers developers the potential for native integration with Coinbase's other products and easy distribution to Coinbase’s customers. This positions it as a potential long-term competitor to Alchemy in the blockchain infrastructure.

Alchemy operates a tiered subscription model, targeting developers and enterprises looking to build blockchain technology applications. it has three pricing tiers: free, growth, and enterprise.

The free plan is aimed at individual developers or small teams just starting blockchain development. This plan offers basic access to Alchemy's suite of blockchain developer tools, APIs, and node infrastructure, with restrictions on throughput, SLAs, and compute units.

The “growth” plan is designed for scaling businesses and is priced at $49/month. It provides improved features like auto-scaling compute units and detailed information about on-chain activity through parity trace to help companies scale their blockchain applications.

The "Enterprise" plan is tailored for larger businesses with substantial blockchain development needs. Pricing is negotiated on a case-by-case basis, and features include all the benefits of the “growth” plan, but with highly scalable infrastructure, dedicated support, and bespoke solutions for unique business requirements.

Source: Alchemy

By early 2021, Alchemy experienced a 97x increase in developers on its platform and powered more than $2 billion in NFT sales in 8 months. In 2021, it supported 70% of the world’s top Ethereum applications and over $30 billion in on-chain transactions. It saw over 10x year-over-year growth in its API requests in 2022.

In 2022, the company also acquired ChainShot, a web3 developer education company, to help onboard and train developers on creating blockchain applications. Alchemy expanded its capabilities to support new blockchains, including Arbitum and StarkNet, by 2023.

Alchemy also counts prominent blockchain companies like OpenSea and Dapper Labs among its customers and has forged partnerships with prominent companies/brands like DraftKings and The Smurfs.

Source: Alchemy

In February 2022, Alchemy announced $200 million in a Series C1 round led by Lightspeed and Silver Lake, which valued the blockchain developer platform at $10.2 billion. This followed its October 2021 Series C, which valued the company at $3.5 billion, and April 2021 Series B, which saw its valuation rise to $505 million. However, the crypto market underwent a marked downturn in the period following Alchemy's Series C1 round, with Alchemy customers like OpenSea seeing dramatic reductions in their volume by October 2022.
Key investors include Andreessen Horowitz, Coatue, Pantera Capital, and Coinbase. To date as of June 2023, Alchemy has raised $564 million in total funding.

Regulatory Compliance Services

As a leader in blockchain technology, Alchemy has an opportunity to develop services in regulatory compliance. As more industries adopt blockchain and crypto, they will need robust tools to meet evolving regulatory requirements. Regulatory requirements will constantly evolve with new developments in the blockchain field, with each country taking an individual approach. Alchemy could provide services such as compliance checks and regulatory reporting tools, offering value to customers while deepening its role in its operations. This would also help Alchemy diversify its revenue streams beyond developer tools and infrastructure. Alchemy’s existing blockchain expertise positions it well to execute this opportunity, as regulatory compliance in this space is complex and technical. Regulatory compliance tools could appeal to many clients from startups to large enterprises, and help accelerate greater blockchain development adoption in the enterprise sector.

Blockchain Education and Training

There is an opportunity for Alchemy to leverage its position by offering education and training services. As crypto continues to evolve, there's a growing need for skilled professionals who understand the technology. Despite significant growth in active crypto developers, exceeding 23K in early 2023, these numbers pale compared to the millions of software developers worldwide. Alchemy could develop educational courses or certification programs for individuals looking to enter or advance within the blockchain industry. This could serve as a new revenue stream while fostering a community of educated users around its platform.

Corporate training programs could also benefit businesses seeking to implement or improve their blockchain capabilities. Alchemy's existing suite of developer tools and deep knowledge of the blockchain ecosystem make it uniquely suited to provide such training. Enhancing the understanding of blockchain technologies among its potential user base could reduce barriers to adopting Alchemy’s products, driving growth. Investing in blockchain education and training could also boost Alchemy's reputation as a thought leader, grow its customer base, and position it as a key enabler of the wider adoption of blockchain technology.

Crypto Winter

As a blockchain developer platform, Alchemy is inherently tied to the health of the cryptocurrency market. In a "crypto winter," where significant price declines, lowered transaction volumes, and decreased investor interest occurs, Alchemy's business model faces risks. The demand for Alchemy’s products could decrease as crypto projects scale back during downturns and mainstream companies slow or halt their adoption of blockchain technology. The bearish macroeconomic climate has resulted in a large number of layoffs in the web3 industry, a core customer group for Alchemy. Crypto winters also often coincide with decreased investor interest and fundraising difficulties. Venture capital investments in crypto startups decreased 91% in January 2023 compared to January 2022, which could affect Alchemy’s ability to raise additional capital.

Competitive Pressures

While Alchemy was one of the first movers in the blockchain technology space, it now faces strong competition from startups and tech titans. Startups like Infura and QuickNode offer similar services and have been gaining traction. On the other hand, major tech companies like Amazon Web Services and Microsoft Azure also offer blockchain services that can leverage their vast resources and customer bases. Alchemy's strategy focuses on providing superior developer tools and API services for Ethereum and other blockchains, but the company's success depends heavily on its ability to continue innovating at a fast pace to maintain or grow its market share. A former Polygon blockchain analyst has stated their belief that Alchemy is experiencing significant user attrition to new platform competitors. The rapidly growing competitive landscape presents a significant risk to Alchemy's growth trajectory and market positioning.

Slow Blockchain Adoption

Being exclusively a blockchain tooling and infrastructure provider exposes Alchemy to the risk of dependence on the growth and success of other blockchain applications. If the adoption of blockchain technology slows down or web3 fails to live up to its promised potential, Alchemy's customer base could significantly shrink. While Alchemy likens itself to AWS, one difference is that Amazon’s ecommerce business was AWS's first and best customer. Amazon operated a successful e-commerce business that validated the need for a platform like AWS. Alchemy does not own or operate any blockchain application that would help validate Alchemy’s current product offerings. It is also unclear whether any blockchain application or company at all has found product market fit or success to remotely the same level as Amazon’s e-commerce business, which boasts 300 million customers. While tooling and infrastructure, akin to selling picks and shovels in a gold rush, can be good business, it becomes less so if no actual gold is found. Alchemy’s decision to focus exclusively on providing blockchain tooling and infrastructure make it largely reliant on other blockchain applications finding product market fit to bring about web3 adoption.

Alchemy operates in the growing blockchain technology market, offering tools and infrastructure that power decentralized applications. With its product suite, Alchemy strives to be the underlying technology platform that simplifies and accelerates blockchain development, making it accessible for businesses of all sizes. The company provides a suite of services, including developer APIs, node infrastructure, and blockchain data access, that make it easier for developers to build and scale blockchain applications. However, Alchemy faces stiff competition in a rapidly evolving market, where large incumbents like Coinbase and newer blockchain platforms with built-in scalability solutions challenge its market position. Additionally, as blockchain technology continues to evolve, Alchemy must stay ahead of the curve in integrating new protocols and chains to cater to developers' evolving needs. While its success will largely depend on its ability to continuously innovate its product offering, maintain a robust and reliable infrastructure, and foster relationships within the broader blockchain ecosystem, Alchemy’s potential as a foundational developer platform is immense if blockchain technology promises are realized and see widespread adoption.