As Web3.0 social products become more popular, their number of users continues to rise. However, once the airdrop ends, the number of daily active users will drop sharply. What does the project need to maintain its vitality? Whether tokenization can truly motivate user participation remains a mystery. Coupled with the plunge of tokens in the secondary market, do Web3.0 native applications have a foothold? How to balance the contradictory relationship between content review and decentralized social networking?
These are the questions that entrepreneurs in the Web3.0 social field need to think about. In this article, we will discuss the nature of social interaction, the significance, classification and characteristics, problems and optimization directions of Web3.0 social products, to help everyone better understand the current status and future of Web3.0 social products, and provide some ideas for solving social fatigue.
The essence of social interaction is "relationships and interactions between people", which can be broadly divided into interactions between acquaintances and interactions based on user interests. However, the total number of crypto natives in Web3.0 is not large, so it may be too early to focus on products that interact with acquaintances. Interactions based on user interests require the creation of new relationships in new interaction scenarios, and simply copying and migrating social relationships from other platforms is not feasible.
01
Why are Web3.0 social products attracting so much attention?
It is predicted that by 2027, the number of social media users worldwide will reach nearly 6 billion. Currently, the average Internet user spends 144 minutes a day on social media and instant messaging apps. Although traditional centralized social platforms have a huge user base, they also face many problems, such as data leakage, content censorship, and algorithmic bias.
For this reason, more and more people are beginning to pay attention to Web3.0 social products. Based on blockchain technology, Web3.0 social products can achieve decentralized social experience and ensure the privacy and security of user data. At the same time, Web3.0 social products can eliminate the censorship and algorithmic bias of centralized platforms and bring more autonomy to the creators of original content. Therefore, Web3.0 social products have attracted much attention and may become one of the trends in the development of social media in the future.
As can be seen from this chart, Facebook is the dominant player in the social media space, with over 2.9 billion monthly active users. Meta Platforms owns four of the largest social media platforms with over 1 billion monthly active users each, including Facebook (core platform), WhatsApp, Facebook Messenger, and Instagram. These large-scale centralized players have successfully monopolized the entire industry. However, with the emergence of SocialFi, this situation may be broken.
SocialFi was created to make up for the shortcomings of traditional social platforms. The co-founder of Twitter once summarized the three principles that social media should follow:
1. Social media must be resilient to corporate and government control;
2. Only the original author can delete the content they created;
3. Auditing is best achieved through algorithmic selection.
Based on the principles of fairness and decentralization, blockchain-based social media applications have flourished in late 2022. This can be seen from the sharp increase in the total number of active wallet addresses interacting with the smart contracts of social DApps. Currently, the total number of smart contracts for social DApps is growing sharply, and the new trend of SocialFi may completely change the landscape of the social media industry.
02
Common categories and characteristics of Web3.0 social products
Currently, popular social and DID projects mainly include infrastructure, middleware, applications and tools, etc. Among them, the SocialFi track is gradually growing and developing. Many projects are based on social tokens, integrating elements of DeFi, and constantly updating and upgrading technology to become SocialFi projects.
According to the issuance projects of Social Tokens, they can be divided into the following categories:
Personal tokens: Token holders can access early fan groups, enjoy discounts or early access to events, and obtain merchandise, NFTs, etc. This token represents a symbol of status or connection participation, and early creators or entrepreneurs can receive financial rewards. Typical projects include RAC, a fan token launched by Grammy Award winner DJ RAC (André Allen Anjos) based on Ethereum, and ROLL (Creator Token), which is one of the old social token issuance platforms. Through this platform, creators can create ERC-20 tokens, that is, issue personal social tokens for content creators. In addition, MeTokens and MintGate are both social token issuance platforms based on Ethereum, while ALEX is a social token project built on Solana.
Community tokens: Community tokens are mainly issued and controlled by groups, and are usually governed by decentralized autonomous organizations (DAOs). They are mainly used to motivate community members to contribute to the community, such as being allowed to enter the community and enjoying special information. A typical example of a community is WHALE. WHALE Token has a variety of NFTs that democratize asset ownership. Based on WHALE DAO, the decision-making power around the governance of these NFTs lies in the hands of token holders. Other community token projects include well-known projects such as Mirror and FWB, as well as Cent, Yup, Matataki, SWAGG, Karma DAO, Ark, Seed Club, Forefront, and Flamingo. Recently, Aavegotchi (GHST) has received more attention: a project that combines DeFi and NFTs, which incentivizes users to participate in community governance and contributions by obtaining rare Aavegotchi NFT tokens in the game.
Minting and distributing platform coins: Social platform tokens represent control tokens of the platform, mainly to facilitate creators to issue and manage tokenized communities. Typical projects include Chilliz, which is a social token under the "fan economy" and focuses on the sports industry. In addition, there are well-known projects such as RALLY and BitClout, as well as Zora, CircleUBI, Loopss, Fyooz, Bluesky, Audius, Mastodon, Nafter, Coinvise, Calaxy, Clarion, etc.
In addition to the above three types of tokens, social tokens need to use third-party tools such as token distribution in project operations, and these tools sometimes overlap with tools used by blockchain projects in other ecosystems. There are also some typical projects worth paying attention to, such as Mask Network. Mask Network bridges the concepts of Web2.0 and the future Web3.0 in a "plug-in" manner, allowing users to seamlessly send encrypted messages, cryptocurrencies and even DAPPs (DeFi, NFTs, DAO) on the existing social network without migration. Mask Network uses distributed system technology so that users no longer need to rely on centralized servers when using social networks. This means that your data is more secure and more private.
03
Some current problems with Web3.0 social platforms
The Web3.0 social platform is built based on blockchain technology and the concept of decentralization, which is significantly different from traditional centralized social platforms. However, the Web3.0 social platform also faces some problems during its development, mainly including the following aspects:
1) High data storage cost: Web3.0 social platforms store user data in a decentralized manner in the blockchain network. Compared with traditional centralized storage methods, this method requires more computing resources and storage space, which also leads to higher data storage costs. In Web2.0, hundreds of billions of data are uploaded, liked, and commented on social media platforms every day. Such a data scale is a huge challenge for blockchain. However, there are now some solutions to deal with the scalability problem. One way is to increase the block size or sharding for parallel processing. Another way is to store identity information and the ability to read and write data on the chain like Farcaster, and store other data in the off-chain server Farcaster Hubs. Compared with increasing the block size or sharding for parallel processing, this solution focuses more on the ability to store and process data off-chain, thereby improving scalability. This approach ensures that users have full control over their identity, social relationships, and data information, while ensuring data security and privacy.
2) Insufficient social network effect: Compared with traditional social platforms, the user scale and activity of Web3.0 social platforms are lower. Therefore, the social network effect on the platform is not as strong as that of traditional social platforms. Users may face problems such as difficulty in finding suitable social circles and communication partners.
Currently, the user groups of Nostr and Farcaster are mainly Bitcoin and Ethereum users, as well as practitioners in the financial technology industry. Attracting a large number of traditional Web2.0 basic users to use the SocialFi application is not an easy task, just like guiding your relatives to use WeChat. The current user interface and operation methods of Web3.0 social platforms are relatively unfamiliar and inconvenient compared to traditional social platforms. Mass education requires more time and resources. Although incentives are an effective method, they are not enough to solve this problem alone.
Some project parties have come up with some interesting ideas, such as making middleware tools for social media such as Twitter to help users get familiar with SocialFi and actually own the data they generate. Borrowing power on the shoulders of giants can indeed better attract users. However, it is very difficult for some native SocialFi applications to attract Web2.0 users. Products that try to simply copy or imitate the design of Web2.0 products are just a speculative approach. Only those social products that use blockchain primitives to bring transformative experiences to users can truly achieve widespread implementation.
3) Difficulty in cross-platform interaction: Social media platforms in the Web 2.0 era usually lack standardized data formats and APIs, which makes it very difficult to transfer and share data between different platforms. Web 2.0 social networks lack interoperability, and users need to switch between multiple social networks, and cannot integrate resources such as friends and followers on different social networks.
With the emergence of different ecosystems and incentive algorithms, it has become easier for social data to traverse different ecosystems. For example, the Nostr protocol has achieved the reintegration of social data through a public-private key system, allowing user data from different social networks to be synchronized in the Nostr ecosystem, and when the API is available, data can be propagated across protocols, thereby achieving interoperability between social networks. This also helps reduce users' dependence on multiple social networks and usage costs.
Although Lens provides an API for synchronizing data with other DeSoc projects, different DeSoc protocols may use different data formats, encryption methods, and verification rules, etc., which requires cooperation and communication between protocols to develop standardized data formats and verification rules. These differences and obstacles may make it difficult to achieve large-scale social interaction on SocialFi through cross-platform interactions.
In addition, since different DeSoc protocols have different ecosystems and incentive mechanisms, users may prefer to stay on their original DeSoc protocol rather than choose to interact across platforms between different protocols. This inertia may lead to the fragmentation of social networks, making it more difficult to achieve large-scale social networking on SocialFi.
Therefore, cross-platform interaction to achieve large-scale socialization of SocialFi is still a distant goal. Cooperation and integration between protocols are needed to promote data sharing and interoperability and create greater synergies in the social network ecosystem.
4) Achieving a sustainable economic model: Currently, there are two main ways for SocialFi to capture value. One is to reward users for their social behaviors, such as forwarding, liking, commenting, etc., so as to obtain income. The other is to incentivize content creation. Creators with a fan base can create a subscription model in their social tokens to obtain premium access. In addition, when users want to access the latest content from high-quality creators, they can pay with tokens. If the content quality is very high and readers establish a reading and subscription habit, this system will bring more exclusive and shareable content to the SocialFi platform.
However, in most of the projects we have seen so far, 80% of the content providers are the project team itself, and 20% of the content has serious homogeneity problems, or the accuracy is difficult to verify, and the update frequency and quality are difficult to control. Readers can only measure the popularity of content through simple "reading numbers" and use their own knowledge reserves to verify the authenticity of the content. In this case, the lack of high-quality content creation and incentive mechanisms and objective and complete review mechanisms have become development bottlenecks.
5) Business expansion enters a white-hot stage: GameFi has successfully captured the value it provides through the "Play to Earn" model, and players around the world can create and capture value by playing games. The value contained in SocialFi is implicit in social interactions, and the value from SocialFi can only be obtained through the display of the personal value of content creators. For Influencers with top traffic, they have also become the first choice for many competitors to compete for entry into SocialFi's projects. For example, in its SocialFi community, Influencers can more easily realize the fan economy or strengthen rapid communication within the group, thereby strengthening the connection with fans. This has also led to the business expansion of Influencers entering a white-hot stage. SocialFi hopes to create a self-consistent economic system by tokenizing social influence to help more people with different levels of social influence obtain benefits corresponding to their social influence.
04
Optimize the entry direction of social products
In 2023, SocialFi will still be one of the hot spots in the next cycle, and the development potential of this field is still worth paying attention to. In this field, we see more and more middleware and protocols are constantly innovating and evolving, making social applications more stable, secure, fast and scalable.
At the protocol level of SocialFi, technologies in storage, communication, content distribution, and reputation/credentials are constantly innovating. Among them, decentralized social media protocols and middleware are receiving more and more attention. In addition to Nostr and Farcaster, Lens Protocol is one of the hottest DeSoc protocols. It is based on Polygon's Web3.0 social graph protocol and fully utilizes the potential of NFT. It builds a social graph based on NFT, and users have full control over their on-chain activity trajectory data. Currently, more than 100,000 users use the protocol, which shows the potential and appeal of social media protocols and middleware.
On the other hand, sharing personal information on a public network is often unsettling, and with the rise of Web3.0 social networking, privacy will become an important area of innovation. Zk technology is a privacy protection technology that can be used to implement private and secure transactions on the blockchain. Combining SocialFi and zk technology can improve the security and privacy of lending transactions. On the SocialFi platform, zk technology can be used to protect users' transaction data and prevent them from being accessed by unauthorized third parties. At the same time, zk technology can protect the privacy of lenders and ensure that their loan information will not be leaked. However, it should be noted that while protecting privacy, it is also necessary to balance the conflict between anonymity and building social status.
To sum up, Web3.0 social products need to constantly create new interaction scenarios and establish new social relationships between users to break social fatigue.
In the future, Web3.0 social products need to explore more innovative interaction methods and social scenarios to attract more users. At the same time, they also need to solve problems such as user experience, scalability, and privacy protection. With the continuous advancement of technology, we believe that Web3.0 social products will become more mature and popular.
Article reference:
https://cointelegraphcn.com/news/SocialFi
https://thedefiant.io/three-trends-shaping-SocialFi
https://medium.com/@hello_1905/interpretation-of-damus-communication-logic-the-myth-of-DeSoc-cfb4e3200a1b
https://wearesocial.com/hk/blog/2022/04/more-than-5-billion-people-now-use-the-internet/
