User Generated Content (UGC) in Web3 - Innovations, Opportunities, and Challenges

Introduction

User Generated Content (UGC) refers to content created by users, which has revolutionized the way we use the internet. Platforms like YouTube and MySpace are prime examples of successful UGC platforms, where users can download and upload various types of content, including community networks, video sharing, blogs, and podcasts.

In the early days of UGC development, content was mainly created by professionals and brands, resulting in more professional and brand-oriented content.

With the emergence of internet products like YouTube, TikTok, and Roblox, more and more people are actively creating content such as text, videos, images, and games, and uploading them to various platforms. This process not only makes platforms more active with users but also allows creators to receive rewards from the platforms, creating a win-win situation for both platforms and creators. However, in Web2, UGC content also faces several issues such as platform rules, protection of creator rights, profit sharing, and content creation freedom.

Exploring UGC in Web3

In Web3, user-generated content (UGC) creators can protect their works by utilizing the “immutable” feature of blockchain technology through on-chain mechanisms. The advent of technologies like Non-Fungible Tokens (NFTs) simplifies the distribution and monetization of creators’ works. Platforms such as Opensea offer NFT creation tools that allow creators to customize royalties, issuance quantities, and other restrictions on their creations. Web3 empowers creators with increased freedom of expression and transparent ownership. Furthermore, creators can effortlessly generate income and cultivate relationships with their fans using Web3 technologies.

Unlike the opaque traffic distribution algorithms of Web2 platforms, Web3 UGC platforms are more fair and transparent in terms of both ownership and distribution. For example, Mirror, a decentralized content creation platform, allows users to freely create content and turn their creations into NFTs or crowdfund them, with the platform itself not involved in content moderation or algorithmic recommendations. Creators can also directly crowdfund ideas for their content. In this process, Mirror intervenes in the content and promotion methods and channels of creators.

The composability offered by Web3 technologies makes user-generated content (UGC) an important aspect of metaverse development. Users can freely create scenes to enrich the metaverse. For instance, an Indian couple invited 2,000 people to attend their metaverse wedding party hosted in Decentraland.

Case Studies

In Web3, UGC platforms primarily focus on the metaverse, gaming, and social sectors. We have chosen typical projects in each domain to explore how UGC becomes a part of their products and the benefits it brings to the projects.

Sandbox

The Sandbox is a decentralized, community-driven gaming ecosystem where creators can share pixel assets and gaming experiences on the blockchain and monetize them. According to the official blog, Sandbox aims to be a UGC ecosystem controlled, regulated, and open to the community. Sandbox is also a typical case of UGX (User Generated Experience), which is a form of UGC.

Sandbox provides two creation tools for creators. VoxEdit helps game developers create pixel assets （Assets）and sell them on the marketplace, while Game Creator helps players build game themes (Themes), place Assets, and design dynamic effects for characters.

Developers can use the Themes templates provided by Sandbox for design (Source: Medium @TheSandbox)

To promote the creation and development of user-generated content (UGC), Sandbox has implemented various measures to encourage creators within its ecosystem:

1. Creator Fund and Creator Contests: Sandbox regularly opens VoxEdit contests and the Creator Fund to incentivize high-quality creators.
2. Open Publishing Channels and Management Tools: The Sandbox is focused on upgrading its dashboard tools to simplify the process of uploading, publishing, minting, and selling, making it easier for new users to navigate the creation process.
3. Metaverse Accelerator Program: This program aims to bring new business ideas into the metaverse. If there are business models exploring collaborations with Web3, Sandbox provides seed funding and guidance from industry leaders and innovators.
4. IP Collaborations: Celebrities and brands, including Snoop Dogg, The Walking Dead, The Smurfs, Care Bears, Atari, and CryptoKitties, have joined Sandbox and created pixelated versions of their worlds and characters in the metaverse.

According to a report by VentureBeat, Sandbox had over 2 million players as of March 2022. Sandbox has not only attracted Web3 players and users but has also launched its mobile version which is available on Web2 app stores. According to Gamereport.io data, the mobile version of Sandbox has been downloaded over 40 million times.

DecentraLand

Decentraland is a decentralized virtual social world built on the Ethereum blockchain, where users can create, experience, and monetize content and applications. Essentially, it is a virtual reality platform where users can purchase virtual land called LAND and build on it to earn money. The content ranges from simple scenes to interactive games and complex environments. Within Decentraland, users can buy and develop LAND, create rich experiences ranging from games and applications to virtual exhibitions, and build dynamic 3D scenes. Through the Decentraland marketplace, users can trade land, avatars, wearables, and other user-generated items. Additionally, Decentraland supports community activities such as art exhibitions and concerts, giving users the opportunity to showcase their works to a wider audience. The Decentraland world offers personalized 3D spaces for private or public events, supporting up to 100 users for online interactions.

Before entering DecentraLand, you can customize your avatar (Source: DecentraLand)

Well-known brands like Netflix, Doritos, and Samsung have already created interactive experiences in Decentraland, showcasing the platform’s immense potential in connecting the virtual and real worlds. DecentraLand has also incubated Decentral Games, a project that focuses on providing players with economic freedom through consistent incentives, self-governance, and revenue-generating metaverse assets.

Createra

Createra is a user-generated content (UGC) metaverse engine that enables creators to freely create, distribute, and play MetaFi games. In January 2023, Createra raised $10 million in funding, with notable investment from a16z. Createra’s metaverse consists of a Genesis Map comprising 2,500 lands and aims to provide the best platform for game creators to build, experience, and monetize content through a wide range of tools and flexible protocols.

Createra Creator Room Interface (Source: Official Website Screenshot)

Createra provides developers with tools, engines, and technologies to build metaverse experiences. The currently launched tools include VOXA and ARENA.

• VOXA is a pixel editor for creating models and NFTs. It features a template system that allows users to add animations to models and bring them to life. Users can decorate their lands with VOXA creations or sell them on Createra’s marketplace to earn profits.
• ARENA is a map editor for creating scenes and games in a 3D virtual world. It supports real-time collaboration, allowing users to invite friends to build and explore the metaverse together. Users can create various virtual environments such as digital galleries, meeting rooms, classrooms, games, and parties. More tools are under development, including BEATA for sound and music creation.

All of Createra’s tools are browser-based, allowing creators to access them anytime from any device, and their creations can be shared through web links. The engine and tools also support real-time collaboration to expedite the building process.

In addition to the development tools, Createra has built a composable economic system component. Flexible protocols support the development of GameFi, SocialFi, and X-to-earns products. Creators can easily build or produce digital assets and trade them on Createra’s marketplace.

According to Createra’s official disclosure, the project’s founder, Jon Wagbi, has built a UGC gaming platform from scratch, transforming it into a unicorn company with over 30 million game/voxel creators, and $400 million in total funding. As of October 27th, the experience with the most visits and plays on Createra is “Createra’s Meta-Room,” with a total of 7.32K player experiences.

Createra’s Experience Page (Source: Createra Official Website)

Lens Protocol

Lens Protocol is a decentralized and composable social graph deployed on Polygon, created by Stani Kulechov, the founder of AAVE. Lens Protocol leverages NFTs to build user relationships. The social relationships of Lens Protocol are stored on the Polygon chain and utilize NFTs as the core elements of the protocol. These NFTs establish mutual reference relationships to record social actions such as following, liking, and sharing, forming a social graph.

Users have full control over Lens NFTs, including transferring, selling, and even governing them through voting. Different NFTs are connected through three types of actions: following, collecting, and sharing. The logic of these actions is modular, allowing third-party developers to customize modules for payment, subscription, and even DAO governance.

Based on the Lens Protocol, the social dAPP Hey homepage (source: Hey official website)

Lens Protocol’s social graph revolves around personal page NFTs created by users. When other users follow a personal page, it triggers the smart contract of the following module, which executes the logic requirements for following (such as payment in stablecoins), and the system mints an NFT for the follower as proof. Personal page NFT holders can publish content, including text, images, videos, and music, with specific metadata structures. Content itself can also be an NFT, and once published, the metadata of the personal page NFT is updated to include a link to the content. Other users can collect the content, similar to liking it, which triggers the smart contract of the collection module and rewards the collector with an NFT as proof. Users can also comment on and reshare content, triggering the smart contract of the reference module, and the comments themselves become publications.

According to data analysis by sixdgree on Dune panel, as of October 26th, Lens NFTs (personal page NFTs) have been traded nearly 60,000 times, with approximately 40,000 unique addresses involved, and a total trading volume exceeding $6.5 million.

Lens Protocol’s Lens Profile NFT transaction status (source: Dune)

Advantages of UGC in Web3

From the case studies mentioned above, we can summarize the advantages and benefits of UGC development in the Web3 field:

Decentralization

Users can directly generate and share content through NFTs and blockchain. Protocols like Mirror and Lens Protocol provide decentralized creator tools, allowing creators to avoid intermediaries during the creation process.

Ownership Determination

Using blockchain technology, creators can determine the time of content release and ownership, thus retaining ownership of their content. The easily accessible on-chain information also facilitates ownership determination.

Flexible Revenue Distribution

In Web3, creators can freely circulate their products through NFTs, tokenization, decentralized exchanges, and more. They can also utilize smart contracts to collect royalties and manage their works.

Composability of Tools

Multiple tools in Web3 can be combined. For example, after selling their works as NFTs, creators can still receive tokens as royalties. They can also provide staking services, Token-Gated exclusive services, and more.

Community and DAO Incentives

Communities are an integral part of Web3 products. Creators can leverage the power of communities to gain better dissemination and feedback, making their creative content more valuable and creating a win-win situation for creators and supporters.

Challenges of UGC in Web3

However, after experiencing some UGC platforms and projects, we have also identified obstacles and challenges that UGC currently faces in Web3 development, including:

Content Quality

Due to the lack of centralized review mechanisms, there may be inconsistent content quality. Additionally, illegal or restricted content may lose restrictions as it relies solely on the self-restraint of creators.

Copyright Protection

In a decentralized environment, where creators are directly responsible for their own rights, protecting copyright and preventing piracy may be challenging. For example, if your painting is copied by another NFT collection, you may need to track down the plagiarist based on an address in order to protect your intellectual property rights. In addition, you may need to convince real-world courts to accept the intellectual property attributes of NFTs.

Learning Costs for Creators

Learning Web3 creation and mastering Web3 fundamentals bring new challenges to creators’ growth, monetization methods, fan relationships, and more. Therefore, there is a learning curve for creators to engage in UGC creation in Web3.

Regulation and Legal Recognition

In some countries and regions, cryptocurrencies or NFT assets are not legally protected. For example, in certain countries, the IP of an NFT belongs solely to the creator and not the owner. NFT holders who use IP for derivative works may face legal risks.

Future Trends

When discussing the future prospects of User-Generated Content (UGC), different technologies and trends play important roles in driving its development.

AI and AR

Firstly, we see the integration of new technologies, particularly Artificial Intelligence (AI) and Augmented Reality (AR), bringing unprecedented innovation and transformation to the UGC field. AI technology can help creators generate and edit content more efficiently, and AI-generated content (AIGC) has become a hot topic in the market. AR technology provides users with rich interactive experiences, expanding UGC beyond traditional text and images towards a more diverse and immersive direction.

With the advancement of new technologies, the barrier to entry for content creation is gradually lowering, enabling anyone to easily create and share content. This is due to the continuous improvement and optimization of creative tools, which are not only user-friendly but also powerful, meeting the diverse needs of different creators and promoting the flourishing development of UGC.

Regulatory Issues

With the rapid development of the UGC field, however, regulatory issues have also emerged. The application of blockchain technology provides new possibilities for creators’ on-chain ownership recognition. Through blockchain, creators can clarify their ownership of content, protect their rights, and also provide new avenues for resolving copyright disputes. However, protecting digital content ownership within existing legal and regulatory frameworks remains challenging.

While addressing regulatory issues, the UGC field is also exploring new creative models. User-Generated Products (UGP) is an upgrade to UGC, emphasizing that users can create complete products, not just content. This allows individuals and small teams to participate more easily in product design and sales, further promoting the development of the creative economy.

Simultaneously, the convergence of Intellectual Property (IP) has become a new trend in User-Generated Content (UGC) development. Increasingly, well-known IPs are collaborating in UGC creation, offering users abundant creative materials and business opportunities. This not only attracts more participants but also generates new revenue streams for creators and platforms.

Community-driven

Driven by IP convergence, community-driven creation is gaining more attention. Under the impetus of communities, users can not only collaborate in content creation but also jointly determine the rules and direction of the platform, forming a more open and democratic creative ecosystem.

The power of communities is also reflected in the integration of metaverses and UGC. Metaverses provide users with a new platform for exhibition and interaction. In a metaverse, users can experience UGC in a more intuitive and immersive way. Additionally, metaverses provide new possibilities for the commercialization of UGC.

To better serve users, platforms are also utilizing data analytics and personalized recommendation technologies to understand user needs more accurately. This enables them to provide personalized content recommendations, thereby improving user satisfaction and engagement.

Lastly, with the development of technology, the sharing of UGC across multiple platforms and cross-platforms will become possible. Users can easily create, share, and access content on different platforms, allowing UGC to achieve broader dissemination and influence, further enriching the diversity and vibrancy of the digital content ecosystem.

Conclusion

In exploring the future development trends of UGC, we see that Web3 technology provides possibilities for creators to have more freedom and ownership guarantees. We also anticipate that the lowering of barriers to entry and IP convergence will further drive the prosperity and innovation of the UGC field. However, regulatory issues and copyright protection remain important topics along the way. With the rise of metaverses and new technologies, UGC will not only enrich the diversity of the online world but also open up new spaces for interaction and creation for creators and users, promoting the development of internet communities towards a more open, fair, and shared direction.