I am increasingly obsessed with thinking about the fundamentals of Web3. As a builder, I believe that blockchain has a lot of potential (perhaps optimistically) to be the infrastructure technology for the next wave of Internet innovation. But there is still a lot of education and recognition work to be done for the general public. Sadly, in a field where scams and frauds happen every day, credibility is extremely lacking.
This highlights the need to make Web3 entry as simple as possible. As builders, our goals should be to 1. increase the influx of new users and 2. maintain sustained participation in this space. We "enthusiasts" cannot keep curious people out, but let them join us in the mission of transferring value from tech giants to independent creators. Our role is to make Web3 more approachable so that it can gain the trust of newcomers on a large scale.
It's time to lower the barriers to entry.
This may be the solution.
How to play social wallet
This guide was originally written as a pitch to the community platform islands. Unfortunately, it didn't quite win over their support, as their leadership had different ideas about how things should go in the future. But the article itself was well received, and the discussion around feasibility and usability was fruitful. So, to make sure that all the hard work wasn't wasted, I'm publishing it to share with you.
The following is the full text of "How to Play Web3 Social Wallet" written from the perspective of the community platform (the relevant platform is mentioned later in the article).
Looking Ahead
There has been a lot of progress in the field of currency wallets. Leading players such as Metamask, Phantom, and Rainbow have greatly solved the use cases of currency storage and transactions, and are greatly improving the problem of Web3 access. In my opinion, the next wave of popularity of Web3 will be achieved by "democratization of community participation". Social wallets are one of many ways.
status quo
Social tokens are a means of proving community connections through on-chain digital asset ownership. More specifically, there are two types of tokens that can provide Web3 access experience: homogeneous and non-homogeneous. Here are two examples:
Fungibility » FWB requires $75 worth of tokens to be approved to deeply experience its community.
Non-fungible » Anti requires an Antipass, which allows immediate community access without approval.
Each of these types of tokens has its own advantages and disadvantages, and which type to adopt depends largely on the specific use case. Why is this important? Because at the bottom of Web3, a development trend has emerged: the infrastructure that supports various communities based on social tokens is being built.
See: islands, metalink, matrica, backdrop, and guild. Roughly speaking, there are two types. 1. Aggregators, which provide software infrastructure for token-based communities to attract users. 2. Shapers, which provide communities with tools to issue and trade their tokens at scale. Here is an overview of 2022:
Web3 Large Community Competition Analysis Matrix
Right now, it seems like all platforms are going to market themselves through differentiation in their feature set. To stand out, you have to hit that sweet spot between being highly differentiated and highly in demand, and position your product accordingly. In my opinion, that’s social wallets — and no one is developing them at the time of writing.
Strategy
First, we need to develop a guiding strategy that helps us stay focused, aligned, and agile. We can challenge, borrow, or stay in a niche. But none of these are as effective as "being the first" because we should use our first-mover advantage. Next, we need a solid plan to achieve product-market fit. To do this, we need to define our market, product, and business operating model.
market
To estimate the available market in the social wallet category, we can look at the number of new wallets added each year. This gives us a rough idea of the expected user inflow:
TAM (100%) = 70million users.
SAM (30%) = 21million users.
AS (10%) = 2.1 million users.
TAM (100%) = 70 million users.
SAM (30%) = 21 million users.
SOM (10%) = 2.1 million users.
(Note: The abbreviations stand for potential market, reachable market and attainable market respectively)
Now that we know the size of the addressable market (SOM), we can narrow down the addressable target audience to 3 distinct Web3 groups: Newbies, Believers, and Veterans — each facing unique problems and having different motivations. What I’ve observed is that Newbies need services the most. In short, Newbies are latecomers with high intent, and are excited to try out fungible or non-fungible social tokens for themselves. They are severely lacking in solution services, and severely oversupplied with educational resource services. Let’s put these 3 segments together:
3 Market Segments of Social Wallet Users in Web3.
Unfortunately, most people only see the tip of the iceberg and put all their energy into developing complex solutions for believers and veterans. Good products should solve the core pain points first and then follow up with education, not the other way around. What is currently lacking is extremely simple, reliable, and intimate Web3 products.
product
Knowing who we serve makes it easier to understand what we are going to build. But why not just use any of the major crypto wallets mentioned above? Although most wallets integrate Moonpay or Simplex, they are still too complicated... For some reason, crypto skeptics still cannot understand the necessity of the Web3 crypto wallet onboarding process.
Thanks to ramper.xyz for providing the Web3 wallet onboarding process.
Social wallets simplify this by focusing only on social tokens for participation, rather than all other cryptocurrencies. This greatly lowers the barrier to entry and provides a concise product spec sheet:
support**:**
Hosting (optional)
Signatures, Transactions (Mint/Buy/Sell)
Cross-chain (ETH, SOL, XTZ)
Holding (non)fungible social tokens
not support**:**
The wallet does not support fiat currency
No cryptocurrency support in the wallet
The wallet does not support currency exchange
Send, receive or withdraw
There is a clear trade-off here compared to Metamask. Because of the extreme limitations on capabilities, social wallets are more secure and therefore serve a unique use case: seamless token ownership. Its design philosophy embodies the "Three Rules of Simplicity" proposed by Harvard professor George Whitesides:
Predictable » Instantly understandable.
Accessibility » Dramatically shorten the learning curve for encryption.
Usable as building blocks » Uses familiar Web2 authentication.
Even better, it makes it possible to slowly guide newcomers into Web3, and accompany them along the way to become true believers and veterans. All of this can be achieved through a frequently used digital product. Social wallets have changed the complicated user onboarding model of previous digital wallets:
The changes that Web3 social wallets bring to the onboarding process.
Instead of more than 10 steps, now you only need 4 steps: Enter Web3 app → Hosted login/signup [SSO] → Automatically convert fiat-to-cryptocurrency with credit card → Interact with social token → Repeat.
The goal of social wallets is to simplify participation in Web3 tokens - both fungible and non-fungible. Newcomers can tokenize without having to be crypto experts. Even better, it benefits more than just the primary target audience of newcomers - believers can also participate in Web3 social in a safer way, and veterans can benefit from higher user inflow and overall greater token purchases.
It is an all-round win-win situation for all stakeholders.
Model
So how does all this make money? That's a good question. Social wallets operate on a fee-based basis. End users use it for free, but they have to pay for each interaction. The company profits from currency conversion (Fiat~Crypto) and transactions (minting, buying or selling tokens) as a percentage. If lifetime NFTs are introduced to unlock 0 fees and other additional benefits, we can further explore B2T (business to token) experiences, thereby opening up a series of revenue streams to fill company coffers. Here is a diagram:
Business Models for Web3 Social Wallets, by @itsjulianpaul.
What I personally like about the concept of a decentralized treasury is the transparency of it, where companies can allocate a percentage of their total revenue to causes that the community deems important: such as charity, creator funds, and community publishing platforms… the possibilities are endless.
increase
After understanding the market, product, and business model there is only one thing left to do: a reliable flywheel to grow this new product category… For this, the framework behind demand-driven supply is perfect. It minimizes the “chicken and egg” problem in the market model.
What levers are most important to get your growth strategy rolling, and which levers should you focus on if user growth slows? The flywheel visualizes how to answer these questions:
Web3 social wallet flywheel for community platforms, by @itsjulianpail.
Initially, there will be a race between communities onboarding new users with their native tokens versus onboarding new social wallet users. Then, once the core features are fully functional and stable, the race will quickly change to who can better convert users through content-driven education to actively launch their own tokens and build their own communities. To achieve this goal, we need to conduct community-driven experiments to find out what infrastructure our core members want most - and then double down on it.
future
The goal of social wallets is to allow non-crypto natives to participate in community building with their own Web2.5 wallets. But as long as any new product category enters a market, we always want to use our first-mover advantage to gain an invincible position. Here are three indicators to measure success:
Usage: DAU (daily active users), MAU (monthly active users) and number of transactions.
On-chain user activity — activity of new and old token users.
Share of social wallets in the total number of new wallets per month and year.
By mastering these indicators, social wallets can become the long-term defensible moat that all Web3 platforms have been looking for.
Back to the topic
If more users see the magic that digital assets bring, we will all benefit in the long run. It is time to build a permissionless and trustless society.
Web3 will bring many new product categories like these. But we are still in the early days. Risks aside, developing a social wallet at scale requires a lot of investment, manpower, and engineering effort.
Betting on building a platform that 70%+ of a community and its members like is much riskier than relying on technology to generate demand-driven supply that has the ability to capture an entirely new market: a constant influx of new users.
Original author: Julian Paul
Original link: https://julian.mirror.xyz/2ls5Ndi4KSmG9JweYnos1xqwipsEL8bDmhfmBSBHHB4
Translator: SeeDAO | SuanNai
Proofread by: SeeDAO | Roy
