LK Venture Research Report | Telegram vs. X (Twitter): Who Will Win in the Super App Race in the Web3 Era?

TL;DR

• Exploring the potential of Web2 applications like X and Telegram in the Web3 world isn’t just exploring the future development of these social platforms; it’s also a prediction of the new landscape and order in the forthcoming Web3 world.
• X and Telegram exhibit noticeable differences in user market distribution, core functionalities, innovation capabilities, business models, openness, community culture, and Web3 explorations. Their competition and potential collaboration might persist in the long term.
• Reshaping user experience, establishing new standards for privacy and security, technological innovation combined with ecosystem integration, and innovative business models constitute the four key elements determining the victory in the Web3 super app race between X and Telegram.
• Although the competition between X and Telegram around Web3 super applications has become increasingly fierce, there are still uncertain changes, and the final competitive landscape may present unexpected results.

Web2 Social Giants’ Evolution Towards Crypto May Usher in a New Paradigm in the Web3 World

Web3, as the representative of the next generation of the Internet, marks a major shift from centralization to decentralization. Compared with Web2, Web3 emphasizes user data ownership, decentralized network structure and transparency based on blockchain technology. This not only represents a technological leap, but also heralds an innovation in online interaction methods and business models.

For example, the rise of decentralized finance (DeFi) and non-fungible tokens (NFT) is the embodiment of the Web3 concept in practice. According to DappRadar data, the Total Value Locked (TVL) in the DeFi sector peaked at $267 billion in 2022, while the NFT market transaction volume is approximately $25 billion. These data highlight the huge potential of the Web3 world.

In the era of Web2, WeChat is undoubtedly the giant of social applications. As of 2023, WeChat’s monthly active users have exceeded 1.2 billion, making it one of the most popular social applications in the world. WeChat is not only a communication tool, but also a super app integrating functions such as payment, shopping, games, mini programs.

The success of WeChat lies in its comprehensive ecosystem that allows users to complete almost all daily operations on one platform. The influence of WeChat is not only reflected in the number of users, but also in the way it changes people’s lifestyles and business models.

In this context, exploring the potential of Web2 applications such as X and Telegram in the Web3 world is not only an exploration of the future development of these social platforms, but also a prediction of the new pattern and order of the future Web3 world.

Certainly, other social platforms such as Facebook and Kakao also possess significant potential in the Web3 landscape. However, it seems that X and Telegram might be among the first Web2 social platforms to make headway in the Web3 world.

As world-renowned social media platforms, X and Telegram both possess unique advantages and huge user bases. X is known for its broad reach and diverse user base, while Telegram is favored by users for its strong emphasis on privacy protection and security. In the wave of Web3, these two platforms are facing the challenge of how to adapt to the trend of decentralization and how to use blockchain technology to innovate services and business models. These factors will determine whether they can become the dominant players akin to the WeChat dominance in the Web3 world.

Musk has publicly praised China’s WeChat many times, saying that “You basically live on WeChat in China because it’s so usable and helpful to daily life.” His vision is to create a similarly comprehensive super app, and X was his name for the app.

To cater to the specific needs of dating services, X may need to develop new algorithms and user interfaces. Becoming a “digital bank” means that X may introduce financial services such as payment processing, funds transfers or even cryptocurrency transactions, which will require X to establish a strong security and compliance framework to ensure the safety and legitimacy of financial transactions.

Meanwhile, Pavel Durov, co-founder of Telegram, initially envisioned TON as a means to integrate cryptocurrency transactions into chats and monetize the app. In mid-September 2023, the TON Foundation announced its formal collaboration with Telegram, aiming to integrate and promote the TON network ecosystem to Telegram’s 800 million active users. Their goal is to attract and convert 30% of Telegram’s active users, approximately 240 million users, into active TON network users by 2028. The wallet, TON Space, with its self-custodial space, has been seamlessly integrated into Telegram. This not only enhances the convenience of user experience but also potentially attracts new users interested in cryptocurrency.

In this rapidly changing digital era, infiltrating low-frequency scenarios from high-frequency scenarios is much easier than vice versa. Social media, as an ultra-high-frequency scenario, faces less difficulty in penetrating financial scenarios than integrating social elements into financial scenarios. The key to success lies in convenience—having users download fewer applications stands as a clear indicator of success.

Both X and Telegram are working toward this goal, but their paths and strategies differ. Over time, we will see which platform better adapts to the trends of Web3 and ultimately becomes the leader in this new era.

All the functions we have seen on WeChat will be implemented on X and Telegram. These rich ecosystems will form a powerful driving force and significantly increase the stickiness and usage duration of X and Telegram users. This logic is similar to the transition from the Internet to the mobile Internet, and then from applications to mini programs. Nonetheless, at the initial stages, this already creates a significant impact on the Web3 world.

By analyzing their current status, advantages, challenges and future possibilities, we can better understand the development trends and business opportunities of social media in the Web3 era, including but not limited to the following aspects:

— — The vast user bases: Both X and Telegram have extensive global user bases. This signifies their potential, upon transitioning to Web3, to bring in hundreds of millions of users into the Web3 ecosystem. This scale of user migration is crucial for driving the widespread adoption and acceptance of Web3.

— — Influence and brand awareness: As world-renowned social media platforms, X and Telegram wield considerable brand influence. Their adoption and promotion of Web3 could significantly impact public awareness and attitudes toward Web3.

— — Potential for innovation and technology integration: Both X and Telegram have a history of implementing technology innovation and integrating new technologies. Their activities in the Web3 field may lead to new technological breakthroughs, such as in decentralization, data security and user experience.

— — Business model changes: Web3 provides a completely new business model, especially in terms of data ownership and user incentives. X and Telegram’s exploration in these areas could pioneer new chapters in social media business models.

— — Reshaping privacy and security: As users become increasingly concerned about privacy and data security, Telegram has built a reputation in this area. The development of X and Telegram in the Web3 field may further strengthen the ability of social media platforms to protect user privacy and data.

— — Community and decentralized governance: Web3 emphasizes the power and participation of the community. X and Telegram’s experience in building and maintaining active communities may play an important role in building decentralized governance structures and promoting user participation.

In summary, the development potential of X and Telegram in the Web3 world deserves significant attention. Their movements may have a profound impact on the entire Web3 ecosystem and even the future development of the Internet.

Introduction and Competitive Analysis of X and Telegram

Both X and Telegram are world-renowned social media platforms, each boasting a large user base and widespread market distribution. They differ primarily in their core functionalities, with X focusing more on public topic discussions and information dissemination, while Telegram places greater emphasis on privacy protection and security. The main distinctions between the two include:

Features

Comprehensive comparison between X and Telegram

1. X

User base: As of 2023, X has approximately 528 million monthly active users spread across the globe, especially in countries such as the United States, Japan, and India.

Market distribution: X has significant influence worldwide, particularly prominent in Western countries. It plays an important role in politics, entertainment and news communication.

Key features: X is famous for its real-time information dissemination, public topic discussion and high user interactivity. Additionally, it supports features such as multimedia content sharing, live streaming, and topic tagging.

Web3 Milestones:

— — X previously introduced a blockchain-based NFT avatar verification function and explored the use of cryptocurrency for tipping.

— — On October 29, 2023, Musk disclosed his vision for X, anticipating it to become a “full fledged” dating site and a “digital bank” by 2024.

2. Telegram

User base: Telegram has more than 70 million monthly active users. It is particularly popular in countries such as Russia, India, Iran, and Brazil.

Market distribution: Telegram has a user presence across many countries and regions around the world, and is especially popular in regions with high demand for online privacy and security.

Key features: Telegram is known for its high level of privacy protection and security. It supports end-to-end encrypted private chats, large groups and channels, file sharing, and more.

Web3 Milestones:

— — From May to July 2023, the success of Unibot (experiencing a price increase of over a hundred times within three months) triggered FOMO sentiment in the market. With its foundation in the integration of artificial intelligence and social networking, Telegram Bot covers multiple fields such as transactions, airdrops, communities, and cross-chains, enriching the application scenarios within the crypto industry and paving innovative paths for its development.

— — In July 2023, Telegram introduced the “Stories” feature, allowing users to edit content by clicking the “+” icon in the lower right corner of the main interface and selecting “New Story”.Users can upload various media types like images, videos, audio, add text and location information. Similar to WeChat Moments, users can set filter conditions to control which friends can view the posted content, addressing product feature gaps for Telegram’s future development of a Web3 version of WeChat.

— — In September 2023, the TON Foundation announced a formal partnership with Telegram. Telegram will integrate TON Space, the self-custodial wallet launched by TON. After that, all Telegram wallet users will be able to use TON Space from now on. As a next step, the service is expected to be rolled out to Telegram users around the world in November this year.

— — In October 2023, the TON Foundation aims to secure the Guinness World Record as the world’s fastest blockchain and launched a performance test on October 31, which will demonstrate the reliability, scalability and speed of the TON blockchain.

Four Crucial Elements Determining the Web3 Super App Race

1. Reshaping User Experience

In the Web3 world, reshaping user experience means transcending traditional convenience and interface attractiveness, shifting to deeper levels of engagement and ownership.

— — X: Leveraging its extensive user base and rich content, X can introduce cryptocurrency reward mechanisms to incentivize users to create and share high-quality content. For instance, by rewarding popular tweets or influential content creators with tokens, it can enhance user engagement and sense of ownership.

— — Telegram: You can take advantage of its high degree of privacy protection and security to create a more secure and private social environment. For example, by introducing blockchain-based authentication and data storage, Telegram can provide users with a higher level of privacy protection and data security.

TON meets the goal of millions of TPS in the future by realizing the “infinite sharding paradigm” and brings a better user experience (Source: Beosin)

2. Setting New standards for Privacy and Security:

In the Web3 era, privacy and security will become important considerations for users when choosing social platforms.

— — X: More efforts need to be made to protect user privacy and data security. For example, X can introduce a decentralized data storage solution to ensure the security and immutability of user data.

— — Telegram: Already possessing inherent advantages in privacy and security, this advantage can be further strengthened, such as by introducing a blockchain-based decentralized identity verification system to provide a higher level of user privacy protection.

TON demonstrates clear advantages in fault tolerance and redundant storage compared to Ethereum and Bitcoin networks.

3. Technological Innovation and Ecosystem Integration:

Technological innovation and integration with the wider ecosystem are crucial in the Web3 world.

— — X: Its platform functions and user experience can be enriched through cooperation with other Web3 projects and services. For example, X can integrate DeFi services or NFT markets, allowing users to participate in financial activities or trade digital artworks while interacting socially.

— Telegram: With its openness and flexibility, Telegram has the potential for deeper integration with the broader Web3 ecosystem.

According to the latest data from ton.app, the Ton ecosystem currently has more than 550 applications, but only 7 applications are included on DefiLlama. Among them, the number one decentralized exchange (DEX) accounts for nearly half of the total value locked (TVL), reaching $4.87 million.

As a public chain with a circulating market value of $3 billion, Ton’s TVL is only about $10 million. While this data might be less than satisfactory, it also holds immense opportunities, especially for developers. Developers have ample time and space to explore potential opportunities within the ecosystem. Additionally, the Ton project team has also realized this and is actively attracting more developers to participate by organizing hackathons and launching support funds.

However, Ethereum’s L2 ecosystem has demonstrated strong network effects and has significant advantages in terms of infrastructure maturity, diversity of application ecosystems, application innovation, and fund scale. Market interest in new public chains appears to be waning. If the Ethereum L2 ecosystem can take the lead in achieving major breakthroughs in large-scale applications, this may reduce the attractiveness of the TON ecosystem or affect the development of Telegram’s Web3 ecosystem.

4. Innovation in Business Models:

For social media platforms, it is crucial to explore new revenue streams and growth while maintaining user engagement.

— — X: As of 2023, X’s financial data shows that its main source of revenue is still advertising, accounting for the vast majority of total revenue. According to the 2022 financial report, X’s advertising revenue reached approximately $4 billion. In addition, X also generates revenue from data licensing and other services, a smaller portion but still bringing in hundreds of millions of dollars for the company. X is also actively exploring new revenue channels, including launching subscription services, enhancing e-commerce capabilities and integrating cryptocurrency payments.

— — Telegram: Since its founding in 2013, Telegram has grown into a product with over 800 million monthly active users worldwide. However, its revenue scale is not commensurate with its user base. Currently, Telegram’s revenue comes primarily from limited advertising, in addition to its standard subscription services. Reports indicate that Telegram’s advertising revenue in 2022 was only 10 billion rubles, approximately $104 million. In comparison, Bilibili, which has only a quarter of Telegram’s monthly active users, earned nearly $700 million in advertising revenue in 2022.

5. The Influence of Core Business Design

In the race to explore the super app in the Web3 era, the core business design of X and Telegram will have a significant impact on their development trajectories.

— — X: X’s core business design is very similar to social sharing platforms such as Weibo (China’s microblogging website). As a public platform, Weibo takes information dissemination and social interaction as its core, which is highly consistent with X’s original intention and development direction. The success of Weibo lies in its ability to quickly spread information and gather public attention, which has been a strength for X as well.

In the Web3 era, X can learn from this feature of Weibo to strengthen the functions of information dissemination and social interaction, while integrating blockchain technology to provide a more transparent and decentralized information sharing platform. In addition, X can also explore Weibo’s successful experience in content creation and user interaction, such as encouraging users to create and share high-quality content through token incentive mechanisms.

— — Telegram: Telegram’s core business design is based on instant messaging tools, which are closely related to WeChat. As a multi-functional social app, WeChat not only provides communication services, but also integrates multiple functions such as payment, shopping, and games, creating a comprehensive ecosystem.

Telegram can learn from this model of WeChat and explore more diversified services and applications while maintaining its core communication and privacy protection functions. For example, Telegram can integrate Web3 elements such as decentralized financial services (DeFi) and non-fungible tokens (NFTs) on its platform to provide users with a richer and more convenient experience. At the same time, Telegram can also use its powerful privacy protection features to provide users with a more secure and trustworthy Web3 social environment.

To sum up, it is not easy to predict the results of the competition between X and Telegram. ChatGPT has provided its analysis, but this is merely a reference.

Speculating the Future Competition Endgame Between X and Telegram

The competition between X and Telegram around Web3 may lead to some unexpected “black swan” events that could significantly change the competitive landscape. Let’s imagine events that could potentially occur one day:

— — Web2 giant acquires Telegram: If WeChat were to announce the acquisition of Telegram, it would drastically change the landscape of the global social media and instant messaging market. This merger may bring about the integration of technology and market resources, exerting even greater competitive pressure on X. It’s worth noting that as recently as September this year, Tencent Cloud has officially announced its cooperation with the TON Foundation to support Web applications and robots built within Telegram. The cooperation between the two parties is quietly underway.

— — X announces major collaboration with Web3 Projects: If X announces a partnership with high-performance blockchain networks like Solana or certain Layer 2 networks, it could significantly enhance its competitiveness in the Web3 sphere. This collaboration might involve aspects like cryptocurrency payments, integration of decentralized applications (DApps), and more. Tips: Presently, typing “Web3” in X automatically displays the Immutable logo suffix (though this is most likely a technical bug).

— — Increased government intervention: The government may introduce new regulatory policies that will have a significant impact on social media and the cryptocurrency market. For example, hypothetically, the U.S. government might enact new social media regulations requiring all social platforms to strictly scrutinize and delete content deemed “fake news.” This could force X to invest substantical resources to comply with these regulations. It may also cause controversy over freedom of speech and affect user engagement and brand image.

— — Geopolitical risks: With the impact of international situations such as the Israeli-Palestinian conflict and the Russian-Ukrainian war, the international image and brand reputation of Telegram and X may be affected. If seen as a political tool or part of a country’s information warfare, it could damage their credibility among global users. Today, the countries with the highest market share of Telegram are Russia, Indonesia, Malaysia, Brazil, Saudi Arabia, India, Nigeria, Egypt, Turkey, etc.; while X primarily dominates in the United States and Europe.

— — Technological innovation and breakthrough: If X or Telegram achieves some major technological innovation, it may bring about a major change in competition. Assume that Telegram develops a new decentralized identity verification system based on ZK technology, which can provide efficient identity verification services while protecting user privacy. This innovation may attract privacy-conscious users, thereby enhancing Telegram’s competitiveness in the social media market.

— — Major security incident: If X or Telegram encounters a major security vulnerability or data leakage, this may seriously damage user trust and affect its market position; it may also lead to heavy penalties from the government and strong criticism from the public.

— — Major partnerships: Imagine if X announces a partnership with Amazon, allowing users to directly purchase Amazon products on the X platform and pay with cryptocurrencies. This would significantly enhance X’s competitiveness in the e-commerce and payment sectors.

Conclusion

In the race for the super app between Telegram and Telegram in the Web3 era, we should consider three decisive factors, including reshaping user experience, setting new standards for privacy and security, and integrating technological innovation into ecosystem development. Telegram, leveraging its advantages in privacy protection, security, and close collaboration with the TON network, is actively exploring the possibilities within Web3. Meanwhile, under Elon Musk’s leadership, X exhibits ambition for diversified services and the concept of digital bank. These initiatives not only challenge existing business models but also explore the future direction of social media development.

Although both platforms are working hard to shape their own Web3 vision, the future competitive landscape is still full of uncertainty. In the future, we may see more partners join the race, or entirely new competitors emerge, which may change the current competitive landscape.

In short, the super app competition between Telegram and X in the Web3 era is not only a competition between technology and business models, but also a profound exploration of the future Internet world.

Regardless of the final outcome, this competition will promote the development of the Web3 world and lead us into a more open, decentralized, secure, and user-friendly digital era.

(ChatGPT also contributed to the content of this article)

About LK Venture:

LK Venture is a crypto investment and research institution under Linekong Interactive (08267.HK) that focuses on the Web3 field. Formerly known as Consensus Lab, it focuses on investing in cutting-edge infrastructure, trading platforms, technology protocols and financial tools. The institution has invested in over 100 projects spanning North America, Asia, Europe and other countries and regions, including FTX, Polkadot, Filecoin, Casperlabs, and Coin98.

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