Exploring the Diverse Paths of Web3 Social - A Fleeting Trend or the Next Mass Adoption?

Introduction: What is Web3 Social?

In recent months, the popularity of friend.tech has reignited interest in Web3 social. This interest was piqued by the innovative approach of tying Key Opinion Leaders (KOLs)’ influence to pricing, leading to significant attention and FOMO (Fear of Missing Out). Following this, the emergence of Bodhi also gained considerable notice by attributing value to content, thereby realizing the return of data value. In the realm of social networking, Web3 social appears to be undergoing some novel transformations and explorations. With the development of blockchain technology, it is redefining our perception of social networking and offering a range of innovative solutions. Whether it’s Social Finance (SocialFi) or Decentralized Social (Desoc), Web3 social is actively exploring the future possibilities of social networks. Looking back at the evolution of social products, Web2 social platforms like Facebook, X (formerly Twitter), Instagram, WeChat, etc., have provided unprecedented convenience in sharing, interaction, and communication. However, this convenience masks certain dilemmas. Web2 social platforms often centralize control of user data, lacking transparency and privacy protection, and platform governance and decision-making are typically controlled by a few centralized entities. Additionally, the issue of creator incentives has been a controversial aspect of Web2 social products. Meanwhile, Web3 social is redefining social networks in a novel way, emphasizing decentralization, user data privacy and control, and the incentive mechanisms of cryptocurrency economics. Emerging protocols and products like Lens, CyberConnect, Farcaster, Phaver, Debox, friend.tech, and concepts like SocialFi are integrating finance and social networking, reshaping the landscape of social networks. Desoc, on the other hand, focuses on establishing decentralized social ecosystems to eliminate many of the problems present in Web2 social networks. Although the Social sector has long been hoped to be the next Mass Adoption, it has yet to produce large-scale applications since its inception. What does the future hold for Web3 social? Are the myriad emerging social products just a fleeting trend or the precursor to the next Mass Adoption? This research report will delve deep into the core concepts and solutions of Web3 social, analyze its current state, advantages, and challenges. We will return to the essence of social interaction, examine the Web3 social field, reveal its strengths and challenges, and explore its role in redefining social networks.

Why Do We Need Social in Web3?

1. The Essence of Social Interaction Remains Unchanged Throughout History

As Tom Standage mentions in “The Brief History of Social Media,” we often perceive social media as a contemporary concept, born alongside the development of the internet and digital technologies. However, in reality, humans have always engaged in socializing and information dissemination through various forms. From ancient letters and coffee houses to modern social networks, the essence of social media has not changed, but rather its form and technological tools have continually evolved. Social media is an extension of human nature, a manifestation of our relentless pursuit for connection and communication.

Examining different historical phases, technology has significantly influenced the development and transformation of social media, acting as a crucial driver of change.

• Ancient and Traditional Media Era: In ancient times, letters and postal systems were the primary means of social interaction. With the invention of the printing press, books and newspapers became major tools for information dissemination, but the scope of social interaction was limited by geography and communication speed.

• Telegraph and Telephone Era: From the late 19th to the early 20th century, the advent of the telegraph shortened the time for information dissemination, and the widespread use of the telephone changed the way of long-distance communication, enabling people to exchange information more rapidly.

• Radio and Television Era: In the 20th century, radio and television media revolutionized mass communication, allowing information to be spread more broadly, shaping cultural, political, and social perceptions.

• Internet and Web1.0 Era: From the 1990s to the early 2000s, the emergence of the internet enabled broader and more immediate information dissemination. The Web1.0 era was primarily characterized by static web pages, with content being a one-way transmission from official sources to users, offering little scope for active user participation and social interaction.

• Web2.0 and the Rise of Social Media: From the mid-2000s to the present, with the rise of Web2.0, more interactive and user-engaging social media platforms emerged, such as Facebook, Twitter, and YouTube. These platforms provided more user-generated content and social functions, becoming the primary tools for everyday communication, sharing, and interaction.

• Web3.0 and Decentralized Social: Recently, with the development of blockchain and cryptocurrency technologies, there has been a shift towards more decentralized, privacy-focused, and user-controlled Web3.0 social platforms. These platforms aim to address issues present in Web2.0 social networks, such as data privacy, algorithmic filtering, and authenticity of information, offering a more secure and transparent social experience.

It is evident that the human need for social interaction has been a constant throughout history. However, its essence has not significantly changed over time. The core needs of social interaction can be summarized as follows:

• Maintaining Connections and a Sense of Belonging: Socializing fulfills emotional needs, helps establish intimate relationships, and provides support, making people feel a sense of belonging.

• Information Learning and Exchange: Social interaction allows for the sharing of experiences, knowledge, and information, fostering learning, development, and personal growth.

• Cooperation and Mutual Assistance: Socializing aids in collaboration and cooperation, helping people solve problems and achieve common goals.

• Social Identification and Self-Expression: Social interaction is a way for individuals to express themselves, establish identity, and gain recognition.

1. Web2 Social Media: Addressing the Needs of Speed, Quality, and Efficiency

Since the mid-2000s, Web2 social media has witnessed significant growth. Facebook emerged as a pioneer, offering users the ability to share information, photos, videos, and status updates, thereby building social networks. Subsequently, a variety of social platforms like Twitter, YouTube, and LinkedIn emerged.

Each platform has its unique features and functionalities. Twitter, with its distinctive instant messaging and social interaction style, became a significant platform for information dissemination and discussion. Its 140-character limit facilitated the rapid spread of news and hot topics. YouTube, as a video-sharing platform, revolutionized how people view and share videos, becoming a popular platform for content creation and sharing. LinkedIn, focusing on professional networking, provided a platform for users to establish professional relationships, share work experiences, and expand their networks. Instagram, with its powerful image-sharing capabilities and social interactivity, attracted a vast number of users, becoming one of the primary platforms for photo and video sharing.

In the Web2 era, there was an emphasis on user participation, interaction, and content creation. Websites transitioned from static information displays to more dynamic and interactive social platforms, enabling users to create and share content, ranging from simple text and images to richer formats like videos, blogs, and personal profiles. The advancement of mobile internet and the proliferation of smartphones made it possible for people to access social media platforms anytime and anywhere, facilitating convenient and frequent social interactions.

Furthermore, as the user base expanded, social media gradually became a primary platform for commercial activities and advertising. Businesses and brands leveraged social media to attract users and promote products, leading to a significant increase in the market value of social projects. The leading company in this domain, Meta (formerly Facebook), saw its market value skyrocket since its IPO in 2012, surpassing $1 trillion in 2021.

Looking back at the evolution of Web2 social media, the essence of social needs has remained unchanged, with the core shift being the provision of faster, more convenient, and more affordable services. Facebook enabled faster friend-making and information sharing, Twitter allowed quicker access to breaking news and interactive discussions (compared to newspapers and TV), LinkedIn transformed workplace networking from solely offline introductions to quick online professional connections… Essentially, Web2 social products addressed the needs of “speed, quality, and efficiency” in social interactions.

3. Challenges in the Traditional Social Media Industry

However, social media in Web2 also brings a set of problems, which can primarily be summarized into two aspects: data ownership and centralization:

1) Data Ownership: In Web2 social media products, user data does not belong to the users themselves but to the platform, leading to numerous issues.

• Privacy Leakage: The extensive collection and use of user data lead to risks of personal privacy breaches. Platforms might misuse user data or sell it to third parties, resulting in privacy violations and data misuse.

• No Value Reciprocation to Users: The data provided by users enables social media platforms to conduct targeted marketing and other advertising activities. However, users do not benefit from the revenues generated, leading to a scenario where platforms exploit user data without compensation.

• No Cross-Platform Capability: Since user data belongs to the platform and not the users, registering on different social media often means starting from scratch. Essential elements like social media profiles and other information cannot be transferred across various platforms, turning each social media site into an isolated island.

In the Web2 social environment, many creators have reported that after creating most of the value, they are unable to receive appropriate compensation or receive only a minuscule portion. While one can build their IP on social media platforms, they lack ownership and control over the data and value of the content created. Once platforms like X and YouTube delete personal profiles, all accumulated content data is lost.

2) Centralization: In Web2 social media products, platforms possess unlimited rights to use the content.

• Weak Resistance to Censorship: Since Web2 information is stored on centralized servers, it’s susceptible to political and cultural influences, leading to restricted freedom of speech in many countries’ apps. Whether it’s the arbitrary changing of rules and account bans on X, or restrictions on platforms like Facebook, TikTok, and WeChat, centralized platforms impose too many constraints, limiting users to ‘dance in shackles’.

Although applications like Mastodon make efforts towards decentralization, many unavoidable issues still exist. Even though it’s decentralized overall, users are still at risk of being subjected to authoritarianism, abandonment, or bans by specific server providers.

Analysis of Web3 Social Industry Products

Facing various issues in Web2 social platforms, products in the Web3 space are exploring multiple dimensions, ranging from the protocol layer to the application layer. The Web3 social projects are flourishing, aiming to address different pain points encountered in Web2 social networking.

When we look at the entire Web3 social industry, it can be broadly divided into four parts: the application layer, the protocol layer, the blockchain layer, and the storage layer. Specifically, social-specific blockchains provide customized Layer 1 (L1) solutions to better serve the needs of social apps. This is because social applications require more information exchange compared to financial Dapps, thereby demanding higher transaction per second (TPS) rates and enhanced functionalities for storage and indexing. The storage layer is utilized for storing data related to social interactions. The protocol layer offers public development components to assist teams in building products. The application layer focuses on entering specific niche markets based on particular needs.

Since the entire Web3 social track is still in the value verification stage, this study chooses to start from different social needs and analyze Web3 social projects to comprehensively dissect the current development status of various projects.

1. Data Value Feeding Back to Users

In traditional social media products, users’ data is often treated as an asset of the platform rather than the property of the users themselves. In this scenario, social platforms utilize the data provided by users for targeted advertising and personalized marketing. Regrettably, the value generated from this data does not translate into reasonable feedback or rewards for the users. Essentially, the contribution of users’ data is seen as an unpaid supply, freely utilized by the platform, leading to a situation where the data is exploited without compensating the users.

Under this model, the profits generated from both the value of content created by users and their personal data are largely monopolized by the social platforms. This centralized control results in minimal benefits for users and creators in terms of sharing the value of their data.

In contrast, new Web3 social products aim to overturn this paradigm. They attempt to address this dilemma through various means such as token incentives and the tokenization of data into NFTs (Non-Fungible Tokens). These approaches seek to redistribute the value generated from user data, ensuring that users and creators are adequately compensated for their contributions.

1) Lens Protocol

Lens Protocol is a decentralized social graph protocol founded by the team behind the DeFi lending project Aave on February 8, 2022, operating on the Polygon blockchain. Its most distinctive feature is that all user-owned social graph data, including personal profiles, content publication, sharing, comments, and social relationships, are stored as NFTs (Non-Fungible Tokens).

As a representative protocol in the Web3 social space, more than 200 applications have been built on Lens, with a total user base reaching 370,000. The peak monthly active users in March of this year exceeded 60,000, and the current monthly active users are around 3,000.

(Source: Dune)

Lens Protocol has three main characteristics:

1. Tradable Data Value: In traditional social media, the content and social relationships created by users are valuable but often lack appropriate incentives. For instance, many KOLs (Key Opinion Leaders) on platform X cannot earn directly from their high-quality content but must resort to advertisements and endorsements, which can impact their reputation. Lens addresses this by NFT-izing user data. Each account becomes an NFT that can be freely traded in the market. However, since most people are strongly tied to their social media accounts in the real world, the actual demand and value of trading these accounts remain questionable.

2. Data Liquidity: By integrating at the protocol layer, Lens provides modular components for developers to create new social Dapps (Decentralized Applications). User profiles and all content data, treated as NFTs, are controlled via DID (Decentralized Identity). When a user logs into an application on the Lens protocol, they can synchronize all their data across different applications, thus facilitating data liquidity. For example, a Lens version of Twitter or YouTube could use a single NFT for data interoperability.

3. High Degree of Decentralization: In the Lens protocol, content, social interactions, and identities are all recorded on the blockchain, making it a very crypto-native social protocol.

Based on the Lens Protocol, many interesting products have emerged, such as Lenster and Phaver. Lenster, in terms of functionality and user experience, is similar to platform X and can be understood as a decentralized version of it.

On the other hand, Phaver’s model, referred to as “like to earn,” uses tokens to stake on quality content. If more people stake on the content later, they receive rewards. The rewards are also shared with the content creator. To prevent users from staking only on popular content, rewards for staking on already popular articles are reduced, thus incentivizing users to discover quality content early, similar to venture capitalists identifying promising investments at an early stage. Overall, this model addresses the issue of creator incentives, as the value of content depends on user recognition, and also motivates users to continually seek out good content targets.

2）The friend.tech project, which recently ignited the market, is a SocialFi project that has gained significant traction. As of now, its cumulative trading volume has reached 12.48 million, with the highest single-day trading volume recorded on September 13th reaching 530,000 .

(Source: Dune)

The essence of the friend.tech project is the tokenization of an individual’s influence to realize a fan-based economy:

From the perspective of fans, on one hand, followers of a Key Opinion Leader (KOL) can purchase the KOL’s key on friend.tech, allowing them to join private chat groups with the KOL and engage in conversations. On the other hand, as more people buy a particular KOL’s token, the value of the key increases, enabling fans to sell it for a profit.

From the KOL’s viewpoint, they receive a 10% fee on each transaction made by their followers. Half of this fee goes to the KOL, thus providing a monetary incentive for them to expand their influence and encourage more people to buy their tokens, thereby earning more fees.

In simple terms, friend.tech has realized the monetization of a KOL’s influence. The more reputable a KOL is, the more users will buy their shares, increasing their value, purchase price, and selling price.

The surge of friend.tech in August and September also sparked heated discussions in both the domestic and international crypto communities, with many podcasts, videos, and communities discussing related topics. The explosive popularity of friend.tech can be attributed to several factors:

• Innovative Model: The method of using tokens to purchase KOL keys to facilitate fan economy is quite innovative. Although the economic model is still Ponzi-like, the cycle of KOLs attracting people to join, fans buying, KOLs attracting more, and fans buying again, can form a smooth positive loop. KOLs and their fans become a community of shared interests, achieving a win-win situation.

• Capital Boost: On August 19th, friend.tech officially announced receiving a $50 million seed round funding from Paradigm. The trading volume quadrupled the day after the announcement, using the endorsement of a top-tier VC to boost market heat.

• PWA Approach: Instead of a mobile app, friend.tech uses Progressive Web Apps (PWA), providing an app-like experience through web browsers on mobile devices. This approach effectively avoids the need for users to download apps from the App Store or Google Play and the associated fees, making it a viable strategy for simpler applications.

In addition, strategies like invitation code scarcity marketing and user-friendly Web2 login methods contributed to the rapid start of friend.tech.

Although friend.tech has shown a downward trend after its peak, its innovative attempts in fan economy and value feedback to users have been inspirational for many practitioners and project teams.

3）Bodhi

Bodhi is a recently launched SocialFi project that has created significant buzz in the Chinese-speaking community. Within a day of its release, it saw a dramatic increase in trading volume and participation. The Total Value Locked (TVL) surged to 165 ETH in the early hours of the second day after its launch. Notably, the first article written by its author (which also serves as the product’s whitepaper) was traded for over 4000+ USD, and it has remained above 2000+ USD recently.

(Source: Dune)

(Source: Bodhi Top Assets)

At its core, Bodhi represents the assetization of content, similar to the reputation assetization in friend.tech. The key difference is that friend.tech assetizes the entire reputation of a creator, with each purchase being a transaction of the creator’s key. In contrast, Bodhi focuses on the transaction of individual pieces of content from a creator, thus broadening the scope of transactions and focusing more on specific content. Additionally, Bodhi’s content is stored on Arweave, achieving decentralized storage.

As mentioned in the Bodhi whitepaper, the challenge of content incentivization in Web3 fundamentally revolves around the funding of public goods. If content is stored on centralized servers, it faces the potential risk of disappearance.

Storing content on-chain and setting access permissions through content payment necessitates encryption and decryption. However, most decryption processes still occur on centralized servers, which doesn’t fundamentally differ from hosting content on centralized servers. Decryption through blockchain mechanisms essentially remains public.

A deeper exploration reveals that two key characteristics of on-chain content define it as a public good: it’s accessible to anyone, and one person’s access does not impede another’s. These traits of non-exclusivity and non-competitiveness align with the definition of public goods. Although Bodhi could not maintain its initial popularity due to its economic model and other reasons, its exploration and attempts in content incentivization have brought new innovations to the social domain.

4）Current State Analysis Summary

In summary, in terms of data value benefiting users, various projects like Lens Protocol at the protocol level, and application-based projects such as friend.tech and Bodhi, are attempting to address this need from different angles.

Lens Protocol uses a method of NFT-izing user social graph data, allowing personal and content data to be controlled by DID (Decentralized Identifier) and traded freely in the market, thus creating trading opportunities for high-value accounts. Additionally, Lens’s modular components offer social Dapp developers enhanced data liquidity, enabling user data to be synchronized and circulated among different applications. Meanwhile, friend.tech tokenizes the reputation of KOLs, allowing fans to join private chat groups by purchasing the KOL’s “key”, and thereby gaining both influence and monetary incentives brought by the KOL. These projects, through their value monetization mechanisms, enable users and creators to more fairly share the value of their data and content.

This new type of social product returns the value of user data to the users themselves and implements mechanisms for the liquidity and tradability of data value. Although projects like Bodhi may have encountered some challenges in exploring content incentives, they have provided new avenues of exploration and attempts in the realm of data value feedback in social domains. This is pushing social platforms towards a more equitable, user-friendly, and innovative direction. In the future, as technology and communities evolve, along with the emergence of new incentive models, Web3 social products will continue to influence the way we interact socially, bringing more opportunities and rewards for users and creators.

2、Anti-Censorship in Web3 Projects

Besides the incentivization of data value, anti-censorship is another crucial focus in current Web3 projects. Traditional Web2 social platforms often suffer from centralized control, leading to various restrictions on content moderation and freedom of speech. This has increased the public’s awareness of the importance of anti-censorship. Web3 social platforms tend to be decentralized, reducing reliance on any single platform, lowering the risks of censorship and banning, and promoting more open freedom of speech. Two notable projects in this area are Farcaster and Nostr.

1）Farcaster

Farcaster is a decentralized social protocol, allowing developers to create user-centric social applications. The project’s founders, Dan and Varun, were previously high-level executives at Coinbase, and the project has consistently received support from Vitalik Buterin. Besides the Farcaster protocol, the official front-end product Warpcast has been launched, currently maintaining around 2000 daily active users and over 40,000 total users .

(Source: Dune)

The two main features of Farcaster are:

• Decentralized Identity: Farcaster stores user identity information on the blockchain, ensuring the decentralization of user identities. Similar to Lens, data is tied to the user’s identity, making it easy for users to switch between various applications within the Farcaster ecosystem.

• Combination of On-Chain and Off-Chain to Improve User Experience: Apart from identity information, Farcaster stores high-frequency data such as user posts and interactions in the off-chain Farcaster Hub. This allows for faster data transmission and a better user experience, somewhat sacrificing a degree of decentralization in exchange for improved usability.

In terms of data, although Farcaster lags behind Lens in daily active and total users, it surpasses Lens in daily posts (7,000) and interactions (19,000+), indicating higher user engagement. However, both Farcaster and Lens are still in the early stages compared to Web2 social platforms in terms of user base. Moreover, Farcaster’s official front-end product Warpcast adopts a subscription model, requiring a $1 fee for use. This may pose a migration cost for Web2 users accustomed to free products, especially when large-scale value validation is yet to be achieved.

2）Nostr

Nostr is an open-source decentralized social protocol developed by an anonymous team, aiming primarily to combat censorship. Its founder, Fiatjaf, is a developer known for his work on Bitcoin and the Lightning Network.

Nostr employs a unique service framework consisting of clients and “relays.” Anyone can become a relay, and these relays operate independently, communicating only with users. Each user has a public and private key, analogous to a mailbox address and the key to open the mailbox, respectively. Once someone knows another’s address, they can send messages. The unique private key signature authenticates the sender’s identity, and the receiver’s private key, representing the “mailbox key,” ensures that they can receive messages.

A flagship project of the Nostr protocol is Damus, which has become synonymous with Nostr for many. Earlier this year, X’s former CEO, Jack Dorsey, announced the launch of Damus on the App Store, leading to its global spread.

Damus operates much like X, with the key difference being its decentralized nature. Built on the Nostr protocol, each Damus user acts as a client, forming a network of communication through countless relays. As mentioned earlier, anyone can run a relay without permission, which means that the official blocking of user posts on X is unlikely to occur on Damus. Users have the freedom to choose any or their own relays to publish content, thereby maximizing resistance to censorship. Although the overall gameplay is still quite rudimentary, it satisfies people’s desire for freedom.

Although Nostr and Damus have quieted down recently, every time Musk engages in banning or other chaotic actions on X, some Web3 advocates return to the embrace of anti-censorship social networking. The popularity of Damus has made Nostr developers realize that the demand for anti-censorship remains a significant concern for users.

Currently, neither Farcaster nor the Nostr protocol have spawned continuously active applications. However, if we consider Farcaster and Nostr as the Layer1 of the social domain, whether it’s Ethereum-like Farcaster or Bitcoin-like Nostr, both are awaiting the next killer application.

3）Current Situation Analysis Summary

In traditional Web2 social platforms, centralized management often leads to content censorship and speech restrictions. Frequent account suspensions and content censorship on platforms like X have increasingly drawn attention to the need for anti-censorship features. Even before Web3, products like Mastodon aimed to break these censorship barriers. With the evolution of blockchain technology, more Web3 projects aspire to create anti-censorship social projects and protocols like X and Facebook.

Both Farcaster and Nostr are noteworthy attempts. Although neither protocol has yet hatched continuously active applications, and Farcaster’s user base remains small compared to Web2 social platforms, its high posting and interaction rates demonstrate user stickiness. However, its charging model might deter some users, especially those accustomed to free Web2 products, due to the higher migration costs. After Damus’s surge in popularity, users didn’t significantly settle on the platform.

The widespread interest in Damus and the buzz it created in social circles showed a natural curiosity and desire for a Web3 anti-censorship social product. These projects bring new possibilities for Web3 social networking in their exploration and attempts at anti-censorship, providing valuable experience and hope for the emergence of the next groundbreaking application.

3、Web3 and Its Native Social Scenarios

In addition to the core entry points of data value feedback to users and anti-censorship, blockchain technology has also introduced some native social needs specific to Web3. Some projects are focusing on niche scenarios to tap into these native social demands. A prominent application in the social track that I’d like to introduce is DeBox.

DeBox

The core problem that DeBox addresses is “holding-based chat.” In traditional group chats, whether for token or NFT holders and enthusiasts, it’s often challenging to prevent the inclusion of outsiders, leading to the potential presence of scammers and those with ulterior motives who might manipulate discussions. DeBox’s group chat feature enables the creation of communities where only members holding specific NFTs or Tokens in a certain amount can participate, thereby establishing a consensus-based community.

According to official data released in August this year, DeBox has surpassed 1.1 million registered users, with login instances exceeding 13 million. It enjoys considerable popularity among Web3 projects, and its recent BOX token has sparked significant discussion.

In its early stages, DeBox leveraged several sets of NFTs for a cold start, attracting a large number of users. It used holding as a consensus to unite community members with similar views and ideas, thereby fostering a spontaneously organized community governance mechanism and reducing informational noise. Since the content storage and logic are off-chain, the user experience is relatively smooth, similar to that of Web2 social products.

The approach taken by DeBox exemplifies how Web3 can leverage blockchain technology to create unique, community-driven social experiences. These experiences are distinguished by their ability to form tighter, more focused communities based on shared interests or investments (like NFTs or tokens), thereby enhancing the relevance and quality of interactions within these communities.

In exploring the Web3 social field, blockchain technology has introduced a series of innate social demands beyond data value feedback and anti-censorship measures. Addressing these needs has become a focal point for many projects. For instance, DeBox, which I previously mentioned, is dedicated to solving the issue of “possession-based chatting.” It has established a consensus mechanism where members holding specific NFTs or Tokens can join a community. Thanks to its focus on community governance mechanisms, Debox has attracted a significant user base, forming spontaneous communities. The use of holdings as a consensus mechanism fosters cohesion among community members with similar views and philosophies, providing a better framework for community governance and reducing informational noise.

Apart from DeBox, many projects are entering the social domain from different angles. For example, the Cyberconnect protocol focuses on building user social graphs. Its official project, Link3, aggregates users’ on-chain and off-chain data, allowing users’ off-chain activities to be authenticated on-chain, thereby enriching their social profile. Mast Network, after launching its X plugin, also introduced the firefly aggregator, which combines content from Lens, Farcaster, X, and other projects to become a one-stop Web3 social platform.

The emergence of these projects reflects the diversity and innovation in the Web3 social sphere. Along with Web3’s native scenarios, they are attempting to address various social needs and build a more diverse and inclusive social environment.

Why is Web3 Social Relatively Quieter Compared to Other Sectors?

As mentioned earlier, many Web3 social projects, riding on the development of blockchain technology, are attempting to create new solutions. They focus on rewarding users for their data, offering resistance to censorship, and addressing specific social scenarios. However, most projects remain in a subdued state, with even the few successful ones quickly fading away. The challenges and limitations behind the lack of large-scale applications in Web3 social can be summarized in the following points:

1. Trade-off Between Decentralization and User Experience : One of the biggest challenges for current Web3 social projects is user experience. Most Web3 social platforms have more complex user interfaces and operations compared to traditional Web2 platforms. They often require wallet logins, which are unfamiliar to Web2 users without wallets, hindering the entry of average users into Web3 social products and limiting their development and popularization. The concepts of blockchain and cryptocurrency are still relatively foreign to many, requiring more education and popularization. Consequently, some Web3 social products have adopted Web2 account login methods to lower the barrier to entry. There is also a natural contradiction between decentralization and efficiency. If all actions and data need to be blockchain-recorded, it lengthens the user operation and experience path. Different social projects have adopted various approaches, such as Lens, which fully blockchainizes content, social relationships, and identities, and Farcaster, which chooses to blockchainize only identities. Others like Debox and friend.tech keep everything off-chain except for NFTs or tokens. These projects are exploring a balance between user experience and partial blockchainization to meet specific social needs.

2. High Replacement Costs of Social Products : Common social products like Facebook, X, Instagram, and WeChat have high migration costs, including time, effort, learning, data transfer, and rebuilding social networks. Once stable social relationships are established on a platform, users tend to stay rather than switch. If Web3 social projects merely copy Web2 projects with a dash of decentralization, it’s challenging to attract users to switch, especially when users’ perception of decentralized storage is weak compared to their awareness of user experience and direct migration costs. Therefore, Web3 social products need more innovation in new experiences and differentiated offerings compared to existing products to attract users or become large-scale applications.

3. Sustainability of Data Value Feedback to Users : Due to the financial nature of the Web3 industry, many Web3 social or SocialFi projects have started integrating various economic models to accumulate user influence or content. However, most projects are still in a Ponzi-like phase, relying on new participants to pay earlier ones, lacking sustainable development and often evolving into purely speculative ventures. Finding a reasonable token economic model and function curve to balance financial attributes with sustainable development is crucial for social products that aim to solve data value feedback issues.

4. Low Overlap Between Social Target Users and Web3 User Demographics : According to Messari data, in Q3 2023, funding for Social category projects was around 10 million USD, significantly lower than the 200 million for DeFi and 150 million for Gaming projects. The reason behind this is the low overlap between social target users and the Web3 user profile. Many users enter the Crypto field attracted by the wealth creation effect, often with speculative and wealth-generation motives. Social products, however, require genuine users for social interaction. Unlike other sectors that can attract users with airdrops or inflated TVL, social projects need to attract and retain users with real social needs, not speculative one-time users. Compared to the social user profile, many gamers who love games also have traits like a gambling nature and competitiveness, making it easier for GameFi and gaming projects to convert users from various Web3 platforms into gaming users. Similarly, DeFi projects easily attract users with investment and speculative needs. The recent surge in BRC20 inscriptions is also tied to their significant wealth creation effect. The natural difference in needs between social users and Web3 users might be one reason why the social sector is quieter compared to gaming and DeFi.

In summary, compared to DeFi and Gaming, the target users for social are further from money, gambling, and competitiveness, resulting in a lower overlap with the Web3 user profile. How to attract target users is a long-term journey that social projects need to explore.

Business Models in Social Networking

Finally, let’s discuss the business models in the context of comprehensive blockchain games and social products.
The evolution of business models in social products can be categorized into several key stages:

1. Early Web 1.0 Era (Late 1990s to Early 2000s): During this phase, social products primarily existed in the form of forums and chat rooms. The business models were largely based on advertising and membership fees. Forums earned revenue through ad displays, while chat rooms charged users membership fees. For instance, America Online (AOL) operated on a membership fee basis, where users had to pay to access its services. Yahoo Groups generated income through advertising.

2. Web 2.0 Social Products Era (Mid to Late 2000s to 2010s): With the advancement of internet technologies, social media and networking platforms began to emerge. The business models in this stage revolved around advertising displays and the collection of user data. Social media platforms like Facebook, X, and TikTok primarily earned revenue through ad displays and targeted advertising, using user data as a valuable asset for personalized ads and marketing.

3. Rise of Web3 (Late 2010s): The advent of Web3 brought with it blockchain technology and decentralized thinking. Social products started exploring new business models such as data value feedback, token economy, and NFTization of data assets. Users gained more control over their data and could earn rewards by participating in governance or sharing their data. For example, Lens NFTized data assets, while projects like friend.tech and Bodhi realized the return of data value to users by pricing influence/content. Farcaster, however, still adopts the traditional model of paid membership subscriptions.

In conclusion, the business models in social networking have evolved significantly, from the basic ad-based and membership fee models of the Web 1.0 era to the sophisticated, decentralized models of Web3, which emphasize user empowerment and data ownership. This evolution reflects the changing landscape of internet technology and user expectations.

In addition to the inherent features of social products, the regional market differences also play a crucial role. For instance, one significant aspect in the realm of social media is addressing the economic challenges faced by content creators.

The primary revenue model for content creators currently leans towards ToB (Business-to-Business), with ToC (Business-to-Consumer) playing a secondary role. Due to the low incentives for content views and clicks provided by many platforms, both domestically and internationally, most creators are compelled to accumulate massive traffic to earn money from advertising (ToB). Some have started exploring direct sales to consumers (ToC), but both revenue models can negatively impact a creator’s brand and reputation. Therefore, many Web3 social projects aim to start with a ToC model, allowing creators to earn directly from their quality content. This approach is seen in projects like friend.tech and Bodhi, which focus on incentivizing through influence and content.

However, there’s a distinct difference in the domestic market in China. The social and content creator platform traffic is highly monopolized by giants like WeChat, Douyin, and Kuaishou, where the platforms are dominant, and creators have limited bargaining power and receive meager earnings. Creators often struggle to earn a living from the platforms’ traffic incentives and are forced to opt for ToB models, including embedded advertising and live-streaming sales. Due to the platforms’ dominance, it’s challenging to divert traffic to private domains. Consequently, domestic creators tend to focus on understanding the platforms’ recommendation algorithms to create high-traffic content types for commercial monetization.

In contrast, the monopoly of social platforms in international markets is less severe. Creators on platforms like Instagram and YouTube can more easily divert followers to their independent sites or web pages to sustain themselves. This flexibility allows many international creators to produce niche content they enjoy and successfully direct traffic to private domains.

Given these regional differences in the competitive landscape of traditional social products, Web3 social projects can consider varying strategies for market entry. Overall, the business models of current Web3 social projects are still diverse and in the exploratory and validation phase. Looking at the history of social products, the evolution of business models has progressed from a singular focus on advertising revenue, membership income, to precise ad targeting after data monopoly, and now to the trend of reciprocating user value through tokens/NFTs. The future development may likely emphasize more on the value of user data, user engagement, community governance, and diversified business models.

Future Exploration of Social Media: The Intersection of Web3 Social and AI

In the recent surge of technological developments, Web3 and AI have emerged as two star fields attracting significant attention. This trend extends to the exploration of social media, where, alongside Web3/Crypto social projects, many AI initiatives have emerged, including those from traditional Web2 teams that are combining social media with AI. This integration has led to numerous applications in matching, translation, and virtual personas.

For instance, in the Chinese market, Soul has introduced an intelligent conversation robot, “AI Gou Dan,” to interact with users on a personalized level. Similarly, Baidu launched an AI social app “Skyclub,” to re-enter the social media race using AI. Internationally, Meta has increased user engagement by combining AI with social media feeds. Last year, algorithm improvements increased user retention time on Facebook by 7% and on Instagram by 6%. These developments indicate that the integration of social products with AI is a significant trend.

AI, as a tool for enhancing productivity, has empowered the social domain, especially in the combination of social media and AI agents. This includes the creation of virtual girlfriends, boyfriends, and companions to fulfill human needs for companionship and emotional support. For example, A16Z-invested Character.AI generates human-like text responses and participates in contextual conversations, enabling intelligent chatbots to interact with users.

As previously mentioned, one of the core human needs in social interactions is to fulfill emotional and affective needs, establish intimate relationships, and receive support. Current AI+social projects primarily focus on meeting human emotional needs, exploring new possibilities to fulfill companionship needs that real people cannot always satisfy in real time. However, whether AI virtual beings should meet these emotional companionship needs is still in a stage of market and value validation.

In the development of social products, we find that Web3 and AI have the potential to complement each other in social aspects. Differing from AI’s enhancement in productivity, Web3’s characteristics in production relationships and financial incentives can also empower social products. For example, Binance-incubated Myshell combines AI with Web3, allowing users to create their own AI robots. It also launched a voice chatbot Samantha based on Telegram, catering to human needs for emotional companionship. The token shell is used to incentivize the product’s ecosystem, including function payments by content consumers and token use by creators to increase exposure.

Additionally, Siya.AI in the Solana ecosystem aims to build a social companion platform with both AI and real people. It intends to make AI Agents a traffic gateway for internet and Web3 users. Furthermore, by integrating Realy’s SDK, it introduces incentive mechanisms for the creator economy and AI companions. This combination of AI and Web3 addresses the need for emotional companionship in social interactions. Users can engage in chat mining and NFT incubation through conversations with AI boyfriends and girlfriends.

In summary, as new forces in the era, AI and Web3 are exerting their influence in the social domain from different angles: AI focuses on emotional support, while Web3 concentrates on data value feedback to users and anti-censorship. Both are still in early stages of development. Whether addressing emotional or other social needs, both strive to better fulfill the fundamental human need for social interaction. In the journey of exploring social products, there’s an emerging cooperation and complementarity between AI and Web3. It’s exciting to anticipate the birth of the next major social application under new technologies and models. Perhaps AI and Web3 will spark new innovations in the social domain, better catering to the diverse social needs of humanity.

Conclusion

Social interaction, a fundamental need for everyone regardless of age, gender, or context, occupies a significant place in the Web2 industry in terms of traffic and boasts some of the highest daily active users (DAU). Thus, since its inception, Web3 social has been laden with the hopes of mass adoption by practitioners in the Web3 sector.

From a positive perspective, Web3 social has brought revolutionary changes in terms of data value and user feedback. Unlike traditional Web2 social products, Web3 considers user data as a valuable asset. Through token incentives and NFTization, Web3 reflects the value of data back to the users, establishing a foundation on user data sharing, creator incentives, and community consensus.

Moreover, the anti-censorship nature of Web3 social products provides users with greater freedom and privacy protection. Leveraging blockchain technology and decentralization, these products reduce the risks of censorship and banning, advocating for open freedom of speech. This creates a safer and more open social environment, making social interactions more authentic and free.

However, Web3 social faces several challenges, and large-scale applications have yet to emerge. High replacement costs and network effects are significant obstacles. Traditional social products have established strong network effects among users, and their habits, resource investment, and platform dependence make it difficult to migrate to new Web3 social platforms. This hinders the expansion of the user base and growth of new products replicating Web2 models. Another challenge lies in balancing sustainability and user experience. Some Web3 social products, in emphasizing decentralization and data control, have sacrificed user experience and convenience. Maintaining usability and attractiveness while pursuing innovation is crucial for user retention and appeal.

As Tom Standage mentions in his book “The Victorian Internet,” humans have always had social needs, regardless of technological evolution. From papyrus letters used by ancient Roman politicians to exchange information, to pamphlets during the American and French revolutions, from newspapers, radio, and television to the internet and blockchain technology, humanity has always been transforming amidst the tension between efficiency, freedom of speech, and censorship.

Compared to traditional communication methods like phone calls, text messaging, and newspapers, Web2 social products like Facebook, X, and WeChat have enabled people to communicate and disseminate information faster, better, and more affordably. However, the core focus of Web3 lies in censorship resistance and the return of data value to users. Although there isn’t a large-scale application like those in Web2 yet, the demand for anti-censorship and data value return still resides in the hearts of users, awaiting a moment of breakthrough.

For future developments, one potential area of focus is the community aspect. Social interaction is not merely broadcasting; it oscillates between centralization and decentralization. Community is a crucial feature of Web3 social networking. Its characteristics of data sovereignty and openness align well with community dynamics. Communities enable multidirectional, interactive socializing and could be one of the key directions for future Web3 social products. Moreover, the intersection with other areas like gaming might spark unique innovations.

As mentioned in the challenges and limitations of Web3 social networking, the difficulty in user profiling has made the Web3 Social track somewhat quieter compared to the BRC20 track. However, the prospects for the development of Web3 social networking still carry many people’s hopes. Emerging projects and technologies continue to push this field forward. Alongside technological advancements, we are witnessing more explorations and improvements focused on sustainability and user experience. This domain is maturing, finding its developmental path, bringing innovative experiences to users, and profoundly influencing the entire social networking sector.

Finally, a heartfelt thank you to partners like Heitie, Adazz, A Shan, Harlan, Trinity, and others for their assistance, and to everyone who shared their knowledge and patience during discussions. Sincerely hoping that all builders in this track continue to thrive!

Disclaimer：

1. This article is reprinted from [Ryze Labs]. All copyrights belong to the original author [Fred]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.