Web3 Social

You may have noticed I am not writing to you as consistently. That is being driven by the fact that…

• It’s summer; I’m vibing

• Work is picking up

• I’m working on a side project that will build on my writing. 

I will still be writing to you. It may be more sporadic in terms of when. When I send you an email, it will be good (I hope hehe). Anyways, onto this week’s piece. 

Thank you to Rohan, Shrey, and Arthur for your review and edits. 

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Web3 Social

There have been several attempts to decentralize social media. Key platforms today include DeSo, Lens, and Farcaster.

These teams are influencing what the future of social media could look like. The public sentiment suggests that if these teams can scale, they have the potential to disrupt web2 incumbents. I do not think they will displace platforms like Twitter, LinkedIn, Instagram, Facebook, or TikTok. I do believe they will act as an inspiration for how current platforms can adapt.

The state of web3 social reminds me of where the smartphone was in the early 2000s. 

Have you heard of a company called Handspring? Their ideas were ahead of their time; touchscreen phones, access to the internet, and the ability to play music on the device. Handspring had the ideas, but they were too early for consumer adoption. The maturity of the technology was not ready for the vision that Handspring was painting.  The team’s ideas helped shape the iPhone and Android devices we use today. 

Will we look back in 2040 at the early 2020s and give thanks to the web3 social founders building today? I think so.

Let’s explore.

Why are people building decentralized social media?

Let us start with the problems of our current social media companies:

• Control of public discourse & misinformation 

• User privacy & platform transparency 

• Harming creators

• Monopoly profits and lack of competition

Web3 proponents think that blockchains can solve these problems. I think they are onto something and want to spend some time in this article evaluating these claims.

Control of public discourse & misinformation

Data living on blockchains is public. This can include what people are talking about on social platforms. Today, this data lives within social media companies’ databases. With blockchains, that data can potentially be available to everyone to review. Who would do this?

Academics could review content and make recommendations to companies building these products. These recommendations can work against the potential unconscious biases of employees building these products. Authorities can monitor trends and ensure there is nothing dangerous brewing (e.g., warfare, social unrest, etc.). This data lives within strongly held APIs that social companies have built today. They are only used for top priority partners - if at all.

I guess the question is, do you want everyone to access your data or just a set of centralized platforms? 

Blockchains could also solve users being de-platformed. If large state actors are banned from social platforms, they could easily take their following and content to other platforms. That would limit platforms having the control to ban actors that are not aligned with their views. 

User privacy & platform transparency 

There is a movement across the internet industry to give users more control over their data. Many regulations coming out of the EU have accelerated this. GDPR was the first. This required stricter requirements on how social platforms share their data with third parties. 

Companies also need to be able to remove their user data from internal databases if a user asks for it. As an example, if I tell LinkedIn to remove all of my data, they need to be able to do it within a certain timeframe. 

Do blockchains help with this? Maybe. If a social application is built on a blockchain, then I own the data (probably in my wallet) vs. the actual application.

Harming creators

The majority of creators on social platforms do not make money. Although without creators, the social platform itself would not be successful. The breadth and influence of their reach are incredible for creators with large followings. Those in the middle still have to work hard to earn a living. I find myself in this bucket. I have seen the benefits of posting on social platforms to increase my skills and networks and get work opportunities. However, I would love to find more ways to make money. 

These web3 social apps give us a glimpse of what could be on the horizon for creators to monetize their work. Tipping through crypto, selling NFTs, allowing your audience to buy a creator coin, and many more.  Connecting users to creators through open protocols can potentially lower the bar for creators to make a living.

I do think these ideas will manifest over time. Most ideas from technologists do end up existing. It is more a question of time. Creators will flock to the tools that can help them make money. It’s an open question if those ideas will be built within a web2 company or web3 native apps. My bet is on the former. They have the capital, time, and scale to bring these products to market. They have the network effect built in. These web3 apps need to start from scratch. 

Monopoly profits/lack of competition

There’s another trend of allowing more products to be interoperable. This is to increase competition in the space. Recently the EU required WhatsApp and iMessage to integrate their messaging functionality. Many think this would harm privacy. Although, if this goes through, the infrastructure to power this may also be on blockchains. 

Storing all of the data on a public blockchain makes it so that, with one engineer, anyone can build a social media experience. This also lowers the entry barrier for creating new social media products. 

Who are the main players?

DeSo

It is a decentralized blockchain built specifically for social applications. DeSo, short for decentralized social, is analogous to Ethereum and Solana as a layer 1 solution. They have over 200+ developers building on top of DeSo today. The DeSo Foundation is a separate entity that manages its ecosystem. Since launching in April 2021, they have 1.3k DAUs. 

I like them the most. I think their products work and give you a glimpse of what could come. I can get tips for my posts. My audience can buy my token. I have made a couple of hundred dollars on there. 

The issue they will run into is how people will get onboarded onto DeSo. Not only do you need to set up a new wallet, but you need one that is not the same one you use for applications on Ethereum. I.e., you cannot use your Metamask wallet on DeSo. That makes it even harder to onboard users onto its ecosystem. 

Lens

They are a decentralized social graph and platform built on Polygon. Users leveraging the platform own and carry their data in their wallets versus a centralized database. Users can take their identity across any social application built on Lens. Each post they make on the platform can be turned into an NFT and sold to their audiences. Since launching in the middle of May, they have ~40k total users (DAUs not publicly available). 

They are still in beta, and I have not played around with their apps too much. Their team is solid and has a lot of experience from Aave and other large web2 social apps. They also have the fact they are built on the Ethereum ecosystem. 

Today the UX is slow and hard to understand. Over time this will get better. 

Farcaster

Farcaster is a sufficiently decentralized social network. It is an open protocol that can support many clients, just like email. Users can move their social identity between applications, and developers will always have the freedom to build applications with new features on the network. 

Like Lens, and unlike DeSo, they are built on Ethereum. They are making a bet that most users into crypto will be on Ethereum. It is a fair bet to make. Although usage is low and the broader industry is so early, I see room for other social apps built on other chains to flourish. 

Unlike Lens, they have a mobile app. 

What happens next?

So today, these web3 apps are dealing with the following issues:

1. Minimal users 

2. Lack of defensibility if everything is public and transferable 

3. Lock in effect from incumbents 

4. Crypto is in a bear market 

5. Hard to build new network effects 

Turns out it's hard to build a social consumer app. Most great outcomes have been acquisitions by incumbents. Even if they are successful initially, many apps quickly leave public attention. Clubhouse raised +$4b in less than a year. When was the last time you used them? Audio rooms (Clubhouse’s main value) became of a feature in existing businesses. Will web3 tech follow the same trajectory?

Is there a way they could succeed? Let’s explore. 

Sign creators

There is a trend for social platforms to sign creators. This restricts the creators from posting content anywhere else. Joe Rogan is a good example of this. You can only find new episodes of his podcast on Spotify after their acquired his content rights. Could web3 social apps experiment with this? Imagine signing the top 20 web3 twitter people and bringing them onto one of these upstarts. Or getting the top gaming creators on Youtube or Twitch to post content on your web3 social app. Would their followers come along? Would those creators restrict their growth by signing a deal like this?

Work closely with web2 companies

Many web2 companies are experimenting in the space. Could there be room for collaboration? Lens, for example, is building a set of web2 platforms to build on a set of APIs. Could Instagram bubble up DeSo’s tipping functionality and place it in their UX? Could they just build their own? Could they just use credit cards? Unclear how this will pan out. 

Continue to accelerate product development

This one is simple. Just keep building unique products for users. One of these novel ideas may hit. One of these applications may become so unique that it drives users onto their product in droves. Stepn has shown that this can happen at a sufficient scale. But like the rest of the web3 apps, usage dropped significantly. 

Lobby governments

Today, many governments worldwide want platforms to be more interoperable, provide more data to users, etc. We discussed this above. Could blockchains be the technology to build this new ecosystem? The technology itself would probably be better suited to be built through APIs, but that may not be as scalable. Putting these web3 social builders together to consult governments on the future of social media could help accelerate usage on their platforms. 

In sum

• Web3 social apps are an interesting glimpse into the future but have limited to no usage today. 

• Web2 social apps are nowhere near being disrupted but can look to web3 apps for inspiration. 

• To accelerate the usage of new tools (e.g., creator coins, tipping, NFTs), these players can partner together