Web3 Social's Path to Blossom – Flash in the pan or the next Mass Adoption?

1. Introduction: What is Web3 Social?

The popularity of friend.tech in the past few months has once again attracted people's attention to Web3 social networking, and the gameplay of giving the influence of KOL to the price has attracted a lot of attention and fomo, and the Bodhi that appeared later has also attracted a lot of people's attention, and the return of data value has been realized by giving the content a price. In the field of social networking, Web3 social seems to be undergoing some new changes and explorations. With the development of blockchain technology, it is redefining the way we think about social networking and offers a range of innovative solutions. Whether it's social finance (SocialFi) or decentralized social networking (Desoc), Web3 social is actively exploring the possibilities of social networking in the future. Looking back at the development of social products, Web2 social products such as Facebook, X (formerly twitter), Instagram, WeChat, etc., have given users unprecedented convenience to share, interact and communicate. But there are also some dilemmas behind this convenience.

Web2 social platforms often have centralized control over user data, lack transparency and privacy protections, and platform governance and decision-making are often controlled by a small number of centralized entities. In addition, creator incentives are also a controversial aspect of Web2 social products. At the same time, Web3 social is redefining social networking in a whole new way. Web3 social emphasizes decentralization, user data privacy and control, and incentives for cryptocurrency economics, with protocols and products such as Lens, CyberConnect, Farcaster, Phaver, Debox, friend.tech, and SocialFi reshaping the face of social networks by merging finance and social networking. Desoc, on the other hand, focuses on building a decentralized social ecosystem to eliminate many of the problems that exist in Web2 social networks.

Although the social track has been pinned on the next Mass Adoption for a long time, it has never produced large-scale applications since its birth, what will be the future of Web3 social networking? We'll return to the essence of social, examine the Web3 social landscape, reveal their strengths and challenges, and explore the role they play in redefining social networking.

2. Why do we need Web3 social?

1. The essence of social interaction does not change with the development of history

As Tom Standage's A Brief History of Social Media mentions, we tend to think of social media as an emerging concept that was born with the development of the internet and digital technologies. However, the fact is that humans have been socializing and disseminating information in different forms. From ancient letters and cafes to modern social networks, the essence of social media has not changed, but its forms and technical tools have evolved. Social media is an extension of human identity, a way for us to constantly seek connection and communication.

Looking at different historical periods, technology has had a significant impact on the development and evolution of social media and is an important agent of change.

• Ancient and Traditional Media Period: In ancient times, letters, postal services, etc. were the main social media. With the invention of the printing press, books and newspapers became the main tools for disseminating information, but the social sphere was limited by geography and the speed of communication.
• The Age of Telegraph and Telephone: In the late 19th and early 20th centuries, the advent of the telegraph shortened the time it took for information to be disseminated, and the popularity of the telephone changed the way people communicated over long distances, allowing people to exchange information more quickly.
• Radio and Television Age: Radio and television media in the 20th century changed the way mass communication was conducted, allowing information to be disseminated more widely and shaping cultural, political, and social attitudes.
• Internet and Web 1.0 era: From the 90s to the early 2000s of the 20th century, the emergence of the Internet made information dissemination more extensive and immediate. In the Web 1.0 era, it is mainly composed of static web pages, and the content is mainly one-way transmission from the official to the user, and the user cannot actively participate in the content creation, and the sociality is low.
• Web 2.0 and the rise of social media: From the mid-2000s to the present, with the rise of Web 2.0, more interactive and user-engaged social media platforms have emerged, such as Facebook, X, and YouTube, among others. These platforms offer more user-generated content and social features, becoming the primary tools for people to communicate, share, and interact on a daily basis.
• Web3.0 and Decentralized Social: Recently, with the development of blockchain and cryptocurrency technology, Web3.0 social platforms have emerged that focus more on decentralization, privacy protection, and user control. These platforms try to solve the problems of Web 2.0 social networking, such as data privacy, algorithm filtering, and information authenticity, and provide a more secure and transparent social experience.

It is easy to find that humans have had the need to socialize since ancient times. But in essence, whether it is face-to-face socialization, flying pigeons or engraved on the stone slate to upload to others, the essence of human needs for social interaction has not changed much with the development of the times, and the core needs are summarized in the following four points:

• Maintain a sense of connection and belonging: Socializing makes people feel belonging, meet emotional and emotional needs, build intimacy, and feel supported.
• Informatics Xi and exchange: Through socializing, people can share experiences, knowledge, and information that foster learning, Xi development, and personal growth.
• Cooperation and mutual aid: Socializing helps people collaborate, cooperate, solve problems together, and achieve common goals.
• Social identity and self-expression: Socializing is how people present themselves, build identity, and gain recognition.

2. Web2 social solves the needs of "fast, good, and economical".

After the mid-2000s, Web2 social media began to flourish. Facebook was a pioneer in this, providing users with the ability to share information, photos, videos, status updates, and more, and to build social networks. Subsequently, X, YouTube, LinkedIn and other social platforms appeared one after another.

Each platform has different features and functions, such as X, with its unique way of instant messaging and social interaction, it has become an important platform for information dissemination and discussion. Its 140-character limit quickly spread the word and became a hotspot for news and conversations, YouTube as a video-sharing platform that changed the way people watch and share videos and became a popular platform for content creation and sharing, LinkedIn focused on professional networking, providing a professional network for users to build professional relationships, share work experiences and expand their network, and Instagram With its powerful image sharing function and social interactivity, it has attracted a large number of users and has become one of the main platforms for photo and video sharing.

In the Web2 phase, where user engagement, interaction, and content generation are emphasized, websites transform from static information displays to more dynamic and interactive social platforms, enabling users to create and share content, from simple text and images to richer videos, blogs, and profiles. With the development of mobile Internet and the popularization of smartphones, people can access social media platforms anytime and anywhere, which promotes the convenience and frequency of social activities.

And with the increase in the scale of users, social media has gradually become the main platform for business activities and advertising, enterprises and brands use social media to attract users and promote products, and the market value of social projects has also climbed, among which the market value of the leading company Meta (formerly Facebook) has soared since its IPO in 2012, and its market value exceeded $1 trillion in 2021.

Looking back at the history of Web2 social networking, the essence of social needs has not changed, and the core change is to provide faster, more convenient, and cheaper services. Facebook makes it easier to meet people and share information, X makes people see hot news and interactive discussions faster (compared to newspapers and TV), Linkedln makes workplace networking change from offline introductions to online quick workplace friends... In essence, Web2 social products solve the needs of "fast, good, and economical" social networking.

3. The dilemma of the traditional social industry

However, Web2 social networking also brings some problems, the core of which can be summarized in two aspects: data ownership and centralization:

1) Data ownership: In Web2 social products, users' data does not belong to themselves, but to the platform, which will lead to many problems.

• Privacy breach: User data is collected and used in large quantities, resulting in the risk of personal privacy breach. Platforms may misuse user data or sell it to third parties, causing privacy breaches and data misuse.
• Value is not fed back to users: Users' data enables social platforms to carry out targeted marketing and other advertising behaviors, but users are unable to benefit from revenue, resulting in users' data being provided by the platform for prostitution.
• Unable to cross platforms: Since the user's data belongs to the platform instead of their own, they often need to start from 0 when registering on different social media, and their social business cards and other information cannot be circulated in multiple social platforms, and each social platform has become an island.

In the Web2 social environment, many creators report that they don't get paid at all after creating most of the value, or get a very small part. You can make your own IP on social media platforms, but you don't have ownership and control over the content data and value you create. Once X, Youtube deletes the profile, it will lose all content data accumulation.

2) Centralization: In Web2 social products, the platform has unlimited rights to use the content.

• Weak resistance to censorship: Because Web2 information is stored in centralized servers, due to the influence of political and cultural factors, freedom of speech cannot be realized in apps in many countries, and the right to free expression is deprived to a certain extent. Whether it is the change of X rules, the banning of accounts, or Facebook, tiktok, and WeChat, there are too many centralized restrictions and constraints on centralized platforms, so that users can only dance under shackles.

Despite the efforts of apps like Mammoth to decentralize, there are still many unavoidable problems, and although they are decentralized, there is still a risk that users will be dictated, abandoned, and banned by the server provider in a particular server.

3. Product analysis of Web3 social industry

In the face of various problems in Web2 social, Web3 products have begun to explore from many aspects, from the protocol layer to the application layer, and Web3 social projects have blossomed to solve different pain points in Web2 social.

From the perspective of the entire Web3 social industry, the Web3 social industry can be roughly divided into 4 parts, the application layer, the protocol layer, the blockchain layer and the storage layer. Among them, the social proprietary chain provides customized L1 for social apps to better serve the needs of social apps, because social apps require more information exchange than financial Dapps, so they have higher requirements for faster TPS and functions such as storage and indexing, the storage layer is used to store social-related data, the protocol layer provides public development components to help teams build products, and the application layer cuts into a subdivision scenario according to specific needs.

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

1. The value of data feeds back to users

In traditional social products, the user's data is considered as the platform asset rather than the user's own property. In this case, social platforms can use the data provided by users to implement precise ad targeting and personalized marketing. However, unfortunately, the value of this data is not properly rewarded and rewarded, and it is difficult for users to benefit from the value of their own data. In fact, the user's data contribution is regarded as a free supply and is freely used by the platform, which leads to the situation that the data is "prostituted".

In this model, whether it is the content value created by the creator or the personal data provided by the user, most of the revenue created in the end is monopolized by the social platform. This centralized control results in minimal benefit for users and creators in terms of sharing the value of their data.

However, the new Web3 social products try to subvert this model and solve this dilemma through different ways such as token incentives and data NFTIZATION.

1）Lens Protocal

Lens Protocol is a decentralized social graph protocol founded on February 8, 2022 by the team of Aave, a Defi lending project, on the Polygon chain. Its biggest feature is that all user-owned social graph data, including personal data, content posting, sharing and commenting, and social relationships will be stored in the form of NFT.

As a representative protocol for the Web3 social track, Lens has built more than 200 applications on it, and the total number of users in the ecosystem has reached 370,000. Among them, the number of monthly active users peaked at more than 60,000 in March this year, and the current monthly active users remain at 3,000.

(Source: Dune)

The Lens Protocal protocol has three most important features:

• The value of data can be traded: In traditional social software, the content and social relationships posted by users are often very valuable, but they are not reasonably incentivized. For example, many KOLs on X do not benefit from the activities of high-quality content itself, and can only make a living by receiving advertisements and bringing goods, but this behavior often has an impact on their reputation. By NFTIZING user data, Lens turns all accounts into an NFT, which can be freely traded on the market. However, since most people in the real world will implement strong binding with social accounts and rarely trade, there needs to be a question mark about the demand value of users' trading accounts.
• Data Circulation: Cutting into the protocol layer, providing modular components for developers of social development social Dapps, allowing developers to freely combine and build new social products. The user's profile and all content data are controlled as NFTs for DIDs. When a user logs in to an application on the Lens protocol, the data of all applications can be synchronized in it, so as to realize the circulation of data. For example, twitter for Lens and Youtube for Lens can all use an NFT to achieve data exchange.
• High degree of decentralization: The content, social networking, and identity in the Lens protocol are all on the chain, which is a very crypto-native social protocol.

Based on the Lens protocol, there are also many interesting products, such as Lenster and Phaver. Among them, Lenster is similar to X in terms of function and interactive experience, and can be roughly understood as a decentralized version of X.

On the other hand, Phaver's model is worth mentioning, which is called "likes are rewards", using tokens to stake high-quality content, and if more people stake the pledged content in the future, they will get rewards, and similarly, the staked rewards will be divided among the creators of the content. And in order to avoid users staking all the already popular content, the staking rewards for articles with very popular opinions will become very small, so as to motivate users to be the early discoverers of high-quality content, to some extent, similar to venture capitalists, to find the best targets at the earliest stage. In general, on the one hand, it solves the problem of creator incentives, the value of content depends on the recognition of users, and on the other hand, it also motivates users to constantly look for good content targets.

2）friend.tech

friend.tech is a socialfi project that exploded in the market a while ago, with a cumulative trading volume of 12.48 million and a single-day highest trading volume of 530,000 on September 13.

(Source: Dune)

friend.tech The project will essentially be the tokenization of an individual's influence to enable a fan economy:

• From the perspective of fans, on the one hand, KOL followers can buy KOLs on friend.tech, so that they can join KOLs' private chat groups and chat with KOLs they follow;
• From the KOL's point of view, followers will charge 10% of the fee for each transaction, and half of the fee will go to the KOL, so KOLs also have a monetary incentive to expand their influence, hoping that more people will buy their own tokens to get more fees.

To put it simply, friend.tech realizes the impact value of KOLs, the more reputable the KOLs, the more users come to buy their shares, and the higher their value, the higher the purchase price, and the higher the selling price.

friend.tech's popularity in August and September has also caused a lot of buzz in crypto circles in China and abroad, with many podcasts, videos, and communities discussing related topics. Its explosion can be boiled down to the following aspects:

1. Innovative model: The way to buy KOL's key with a token to achieve fan economy is more innovative in the model. Although the economic model is still Ponzi, KOLs shout to enter the game, fans buy, KOLs shout again, and fans buy again, which can form a very smooth positive cycle. KOLs and fans have become a community of interests, and it has become a necessary factor to realize it together (3, 3), which can be promoted.
2. Capital boost: friend.tech officially announced on August 19 that it had received a $50 million seed round of financing from Paradigm, and the trading volume more than quadrupled one day after the official announcement, using the blessing news of top VCs to boost the market heat.
3. PWA: Instead of using a mobile app, friend.tech uses a PWA (Progressive Web App). Achieve an app-like experience through a web browser on your mobile device. Using PWAs is a great way to avoid having to download apps from the App Store or Google Play, and the usual fees that need to be handed over to these platforms, making it an alternative strategy if the app is not complicated.

In addition, there are also common project cold start strategies such as invitation code, hunger marketing, Web2 login method, and user-friendliness, which jointly help the flywheel of friend.tech.

Although friend.tech has been showing a downward trend after the peak, its innovative attempts in fan economy and value feeding back to users have also inspired many practitioners and project parties.

3）Bodhi

Bodhi is an interesting Socialfi project that has been making a splash in the Chinese-speaking region one day after its launch, with the number of transactions and participants skyrocketing. In the early morning of the second day after the launch, TVL rushed to 165 ETH. The first article written by the author (which is also the white paper of the product) traded at a maximum of $4000+, and recently it is still above 2000+.

(Source: Dune)

(Source: Bodhi Top Assets)

To put it simply, the essence of Bodhi is content monetization, which is similar to the friend.tech KOL reputation monetization. The difference is that friend.tech is to capitalize the reputation of the entire creator, and each purchase is a key transaction for the entire creator. Bodhi, on the other hand, is to trade a single piece of content of the creator, so that the magnitude of the transaction is expanded and the subject matter of the transaction is more focused. And Bodhi's content is stored on Arweave to achieve decentralized storage.

As mentioned in the Bodhi whitepaper, the reason why content incentives are so difficult to do in Web3 is essentially a matter of funding public goods. If the content is stored on a centralized server, it still faces the possibility of disappearing at any time.

If the content is stored on-chain and access is set up by paying for the content, it needs to be encrypted and decrypted. However, most of the decryption process still takes place on a centralized server, which is essentially the same as being hosted directly on a centralized server. And if it is decrypted through the blockchain mechanism, it is still public in nature.

Digging deeper, you can see that there are two important characteristics of on-chain content that also determine that it is a public good: anyone can access it, and your access does not affect the access of others. It can be seen that it is non-exclusive and non-competitive, which is also the definition of a public good. Although Bodhi has not been able to maintain its popularity due to economic models and other reasons, its exploration and experimentation of content incentives have brought new innovations to the social field.

4) Summary of the analysis of the current situation

In general, in terms of data value feeding back to users, whether it is Lens Protocol at the protocol layer, or friend.tech and Bodhi in the application class, they are trying to solve this need from different perspectives.

Lens Protocol uses the method of NFTIZING user social graph data, allowing profile and content data to be DID controlled as NFTs and freely traded in the market, creating trading opportunities for high-value accounts. At the same time, the modular components of Lens provide data portability for social Dapp developers, enabling the synchronization and circulation of user data between different applications. friend.tech, on the other hand, tokenizes the reputation of KOLs, allowing fans to join private chat groups by purchasing KOLs' "keys" and receiving influence and monetary incentives brought by KOLs. These projects allow users and creators to share the value of their data and content more equitably through a value monetization mechanism.

This new type of social product returns the value of user data to the user itself, and realizes the negotiability and transaction of data value through some mechanisms. While projects such as Bodhi may have encountered some challenges in exploring content incentives, they have provided new explorations and attempts for data value feedback in the social field, pushing social platforms to become more just, user-friendly, and innovative. In the future, as technology and community advances, as well as some new incentive curves are born, Web3 social products will continue to influence the way social interactions are made, bringing more opportunities and rewards to users and creators.

2. Censorship resistance

In addition to data value incentives, censorship resistance is also a very important force in current Web3 projects. Traditional Web2 social platforms are usually subject to centralized management, with various restrictions on content censorship, speech restrictions, etc., and people are increasingly aware of the importance of anti-censorship. Web3 social tends to be decentralized, reducing reliance on platforms, reducing the risk of censorship and banning, and promoting more open freedom of expression. Two of the projects that have to be mentioned are Farcaster and Nostr.

1）Farcaster

Farcaster is a decentralized social protocol for developers to develop social applications with users in mind. The project's founders, Dan and Varun, were both former executives of CoinBase, and the project has been supported by Vitalik. At present, in addition to the Farcaster protocol, the official has also launched a front-end Warpcast product, which currently maintains a daily active population of about 2,000 people and a total of more than 40,000 users.

(Source: Dune)

Overall, the two biggest features of the Farcaster are:

• Decentralized identity: Farcaster stores the user's identity information on-chain to ensure the decentralization of the user's identity. Similar to Lens, data is tied to the user's identity, so the migration cost for users to use various applications in the Farcaster ecosystem is low.
• On-chain and off-chain integration to improve user experience: In addition to identity information, Farcaster stores high-frequency data such as users' published content and interaction data between users in the off-chain Farcaster Hub, so as to achieve fast data transmission and better user experience. In a way, some decentralization is sacrificed in exchange for a better user experience.

In terms of data performance, although it is an order of magnitude less than Lens in terms of daily active users and total users, it is higher than Lens in terms of daily posts (7,000) and interactions (19,000+), reflecting Farcaster's user stickiness. However, compared with Web2 social platforms, the number of users is still in the infant stage. In addition, Farcaster's official front-end product, Warpcast, requires a $1 subscription to use the charging model, which has a certain migration cost for Web2 users who are Xi to using the product for free without large-scale value verification.

2)Our

Nostr is an open-source decentralized social protocol developed by an anonymous team that aims to solve the core problem of censorship resistance, founded by Fiatjaf, the developer of Bitcoin and the Lightning Network.

Nostr uses a unique service framework consisting of a client and a "relayer". Anyone can become a repeater, and the repeaters remain independent from each other and only communicate with the user. Each user has a public key and a private key, which can be simply understood as their own mailbox address and the key to open the mailbox. Each person can send a message when they know someone else's address, and the unique private key signature ensures the identity of the sender, as well as the private key of the recipient of the "mailbox key", which also ensures that they can receive the message.

Speaking of the Nostr protocol, the landmark project that has to be mentioned is Damus, and I believe many readers have heard that Nostr also started with Damus. Earlier this year, former X CEO Jack Dorsey announced the launch of Damus on the App Store, and Damus began to take the world by storm.

Damus plays very much like X, with the biggest difference being that it's decentralized. Built on the Nostr protocol, each user of Damus is a client, and a network of countless repeaters communicates with each other. As mentioned above, anyone can run the repeater permissionlessly, which means that the official blocking of user posts in X is difficult to happen in Damus, and users can choose to publish content arbitrarily or their own repeater, thus maximizing censorship resistance. Although the overall gameplay is still very basic, it satisfies people's desire for freedom.

Although Nostr and Damus have had some disappearance recently, every time Musk carries out a series of random operations such as banning and banning accounts on X, some Web3 fans will once again turn to the arms of anti-censorship social networking. The explosion of Damus has also made Nostr developers realize that the need to resist censorship has always been a concern for users.

Although there are currently no continuously active applications on the Farcaster and Nostr protocols, if we consider Farcaster and Nostr as the Layer 1 of the social space, whether it is Farcaster like Ethereum or Nostr like Bitcoin, they are waiting for the next killer application.

3) Summary of the current situation analysis

In traditional Web2 social platforms, centralized management often leads to content censorship and speech restrictions. X and other platforms frequently ban accounts and censor content, which makes people pay more and more attention to the anti-censorship nature. Before Web3, there were products like Mammoth that wanted to break the limits of censorship. With the development of blockchain technology, more and more Web3 projects are looking to create censorship-resistant social projects and protocols such as X and Facebook.

Both Farcaster and Nostr are interesting experiments. Although Farcaster and Nostr protocols have not yet incubated continuously active applications, and the number of users of Farcaster is still small compared to Web2 social platforms, its high number of posts and interactions shows user stickiness. However, its charging model may dissuade some users, especially Web2 users who are Xi to using products for free, and the migration cost is higher. After the explosion of Damus on the Nostr protocol, users did not settle down too much.

But at that time, the explosion of Damus and the full screen of the circle of friends also showed people's natural curiosity and yearning for a Web3 anti-censorship social product. These projects have brought new possibilities for Web3 social networking in terms of anti-censorship exploration and attempts, and also brought more experience and hope for the emergence of the next killer app.

3. The native social scene brought by Web3

In addition to the two core entry points of data value feeding users and anti-censorship, blockchain technology has also brought some native social needs of Web3. Some projects have begun to focus on subdividing scenarios and starting to cut into native social needs. Here is a brief introduction to DeBox, the star app of the social track.

DeBox

In the traditional group chat, it is difficult for both token and NFT holders and believers to avoid mixing other people in the group chat, which may lead to the existence of many scammers and people with ulterior motives. Debox's group chat feature can be set up so that members who own a specific NFT or token and reach a certain amount of money join the community, thus establishing this consensus.

According to the official data released in August this year, the number of registered users of DeBox has exceeded 1.1 million, and the number of user logins has exceeded 13 million. Web3 projects are quite popular, and the recent BOX has also caused a lot of discussion.

In the early days, DeBox carried out a cold start through several sets of NFTs, attracted a large number of users, and used holdings as a consensus to unite community members with the same views and concepts, so as to better form a spontaneous community governance mechanism and reduce information noise. Since the content storage and logic are off-chain, the user experience is better, similar to the experience of using Web2 social products.

In exploring the Web3 social field, in addition to data value feedback and censorship resistance, blockchain technology has brought a series of native social needs. Addressing these needs became the focus of the project. For example, the above-mentioned DeBox is committed to solving the problem of "position chat" and building a consensus mechanism for members who hold specific NFTs or tokens to enter the community. Thanks to its focus on community governance mechanisms, Debox has attracted a large number of users and formed a spontaneous community. By using the position as a consensus mechanism, it promotes the cohesion of community members with the same views and ideas, provides a better framework for community governance, and reduces information noise.

In addition to DeBox, there are many projects that are entering the field of social networking from different perspectives, such as the Cyberconnect protocol, which focuses on building users' social graphs, the official Link3 project that aggregates users' on-chain and off-chain data, so that users' off-chain activities can be authenticated on the chain, thereby enriching their social image, and Mast Network, which launched the X plugin and the firefly aggregator, which aggregates Lens, farcaster, and X and other projects to become a one-stop social platform for Web3.

The emergence of these projects reflects the diverse and innovative nature of the Web3 social landscape. Along with the native scenarios of Web3, they try to solve the social needs of different aspects and build a more diverse social environment and field.

4. Why is Web3 social relatively deserted compared to other tracks?

As mentioned above, with the development of blockchain technology, many Web3 social projects have begun to try to create new solutions, in the value of data to feed users, censorship resistance and solve specific social scenarios to build, but most of the projects are still in a relatively sluggish state, even if a few projects exploded for a while, but they quickly fell silent. Web3 social networking has not yet been adopted on a large scale, and the challenges and limitations behind it can be summarized as follows:

1. The trade-off between decentralization and user experience

One of the biggest dilemmas that current Web3 social projects encounter is user experience.

On the one hand, the user interface and operation of most Web3 social platforms are relatively complex, and compared with traditional Web2 social platforms, some Web3 social projects require wallet login, which is relatively unfamiliar to Web2 users without wallets, hindering ordinary users from entering Web3 social products and limiting their development and popularity. Concepts such as blockchain and cryptocurrencies are still relatively new and require more education and popularization efforts. Many people still lack an understanding of how blockchain works and its value, which has also affected the acceptance of Web3 social platforms by Web2 users. Faced with this situation, some Web3 social products adopt the method of Web2 account login to reduce the threshold for use.

On the other hand, there is also a natural contradiction between decentralization and efficiency, if all behaviors and data need to be on the chain, it will also make the path of user operation and experience longer. Various social projects have also developed in different ways, such as Lens, which has all content, social relationships, and identities on the chain, Farcaster, which chooses to only put its identity on the chain, and Debox, friend.tech, etc., which are all off-chain except for NFTs or tokens, and so on, and everyone has made user experience and partial on-chain choices at different levels to meet specific social needs.

The current Web3 project is still in the exploration stage of constantly splitting and reorganizing the on-chain part, and there is still a long way to go in how to choose to meet the user's experience and solve the actual user needs.

2. The replacement cost of social products is very high

Among the social products we commonly use, whether it is Facebook, X, Instagram, or WeChat, there are high migration costs, which can include time, effort, learning Xi costs, data migration, and re-establishing social networks. Once we've established a solid social relationship on a platform, uploaded a lot of data, and adapted to the platform's features and interface, we're more inclined to stay on that platform than to switch to another easily.

The value of new products is often = (new experience - old experience) - replacement cost, and because the replacement cost of social products is a high-frequency product in the product type, it can be found that social products have a very high network effect, and after a certain user has become dependent on some existing products, the high replacement cost makes it difficult for users to be willing to switch to other products.

Therefore, if a Web3 social project is just a copy of the Web2 project, with a little bit of decentralization, it will be difficult to attract users to migrate. In particular, the average user's perception of decentralized storage is weak, but the perception of user experience and the cost of lift-and-shift migration is explicit. Therefore, if Web3 social products want to attract users or become large-scale applications, they need to make more innovations in new experiences and combine different ways to meet the needs of differentiation from existing products.

3. The value of data feeds back to the sustainability of users

Due to the financial nature of the Web3 industry, many Web3 social projects or socialfi projects have begun to combine various economic models to accumulate user influence or content. However, most of the projects that have appeared so far are still in the Ponzi stage, and basically need the people behind to take over the front people, and the sustainable development of the project has not been realized, and many times it has evolved into a pure speculative orientation.

How to find a reasonable tokenomics model and function curve to balance financial attributes and sustainable development is very important to solve the problem of social products where the value of data feeds back to users.

4. The overlap between the target users of social networking and the portraits of Web3 users is low

From Messari's data, it can be seen that in the financing data of Q3 2023, the financing of social projects is around 10 million US dollars, which is significantly lower than the 200 million US dollars of Defi projects and the 150 million US dollars of Gaming projects, and in terms of the number of financing projects, there are 6 Social projects, which is also less than 67 DeFi projects and 25 Gaming projects. A very important reason behind this is that the target users of social networking have a low degree of overlap with Web3 user portraits.

Many users come to the crypto space because they are attracted by the wealth creation effect, so they usually have the need and purpose to speculate and get rich. And what social needs most is real users, and these users need to come here for social behavior. Unlike some other tracks that can attract users through airdrops and TVL to attract traffic, if a social project wants to solve real social needs, it is very necessary to attract and retain users who really have corresponding social needs, rather than speculative one-time users.

Compared with social user portraits, many players who love games also have characteristics such as gambling and competition, so Gamefi and game project parties have attracted users from various Web3 platforms to a relatively higher degree of conversion into game users; Similarly, DeFi projects are also easy to attract users with investment and speculative needs, and user portraits are perfectly matched; the recent explosion of BRC20 inscriptions is also inseparable from its huge wealth-making effect, and social users and Web3 The differences in user needs are naturally greater than those of games and finance, which may be one of the reasons why the social track is more deserted than games and Defi.

In general, compared with DeFi and Gaming, the target users of social networking are farther away from money, gambling and competition, and have less overlap with Web3 user portraits. How to attract target users is a long-term exploration for social projects.

Fifth, the business model of social networking

Finally, I would like to discuss with you the business model of full-chain games.

The history of the business model evolution of social products can be divided into several key stages:

1. Early Web 1.0 stage (late 1990s to early 2000s): Social products in this stage mainly existed in the form of forums, chat rooms, etc. The business model is primarily based on advertising and membership fee revenue. Some forums earn revenue from ad impressions, while chat rooms charge a membership fee. For example, AOL (AOL) is based on charging a membership fee, and Yahoo Groups generates revenue by displaying ads.
2. Web 2.0 Social Product Stage (mid-to-late 2000s to 2010s): With the development of Internet technology, social media and online platforms have gradually emerged. The business model at this stage mainly revolves around advertising display and user data collection. Social media platforms generate revenue through ad display and targeted targeting, and user data has become a valuable asset for personalized advertising and marketing, as is the case with Facebook, X, and Tiktok.
3. The Rise of Web3 (Late 2010s): The advent of Web3 brought with it the application of blockchain technology and decentralized thinking. Social products have begun to try new business models, such as data value feedback, token economy, and NFT-based data assets. Users are given more control over their data and are rewarded for participating in governance and sharing data. For example, Lens has turned data assets into NFTs, friend.tech and Bodhi have returned the value of data to users by assigning prices to influence/content, and Farcaster still uses the traditional membership payment subscription model.

In addition, due to the regional market environment differences of social products themselves, there are many factors to consider when entering Web3 social products. For example, in the area of data value feeding back to users, a big part is to solve the problem of creator economy.

At present, the main income model of creators is still ToB-based, supplemented by ToC. Due to the low incentives given by many domestic and foreign platforms to creators for content viewing and clicking, most entrepreneurs have to choose to make money from the toB side by accumulating a large number of traffic resources to receive advertisements, and some creators have begun to try to bring goods to this kind of toC, but these two income models have a certain negative impact on the creator's own brand and reputation. Therefore, many Web3 social projects want to try to start with the toC model, so that creators can get their due rewards directly from high-quality content, which is also the idea of friend.tech and Bodhi (through influence incentives and content incentives).

• The difference is that in the domestic market, the traffic of social networking and creator platforms is highly monopolized, WeChat, Douyin, and Kuaishou occupy the vast majority, the platform is extremely strong, and the creator's bargaining power over the platform is low, and the share is meager, and it is difficult for creators to rely on the platform's traffic incentives to make a living, so they have to choose the TOB model to obtain commercial income, including advertising insertion, live streaming and so on. However, due to the strength of the platform, it is difficult to divert traffic to the private domain. Therefore, domestic creators are more inclined to study the platform's recommendation strategy - to do the type of content that can drive high traffic - to increase the volume - and then to monetize commercially.
• The monopoly of social platforms in overseas markets is better than that in China, and the traffic circulation of the public domain and the private domain is relatively high (in China, the concept of private domain is too strong because the public domain is too strong), so creators on overseas social media platforms such as ins and Youtube can divert traffic to their own independent stations or web pages after having a follower to support themselves. This also allows many overseas creators to create their favorite niche content relatively freely, and it can also be better diverted to the private domain.

Therefore, in the face of the competitive landscape of traditional social products in different regions, Web3 social projects can also consider different strategies to make efforts when cutting in.

In general, the current business model of Web3 social projects is still in the stage of a hundred flowers, and the business model is still being explored and verified. Looking back at the history of social products, the evolution of the business model shows a development trend from a single advertising revenue model, membership income, to precise advertising delivery after data monopoly, and then to data value feeding back to users through token/NFT. The future direction of development may pay more attention to the value of user data, user engagement and community governance, as well as more diversified business models.

6. Exploring the future of social networking: the collision of Web3 social networking and AI

In the recent wave of technological developments, Web3 and AI are two star areas that have attracted much attention. The same is true for the exploration of social, in addition to Web3/Crypto social projects, many AI projects have also emerged recently, including some traditional Web2 teams, which have also begun to combine social and AI, and there are many application scenarios in matching, translation, and virtual humans.

For example, in the domestic market, Soul launched the intelligent conversational bot "AI Goudan" to personalize communication with users, and Baidu also launched the AI social app "Skyclub" to re-enter the social track with the help of AI. In overseas markets, Meta has increased user activity by combining AI and social feed recommendations. Last year, the optimization of the recommendation algorithm resulted in a 7% increase in time spent on Facebook and a 6% increase in time spent on Instagram. From the development of domestic and foreign products, it can be seen that the combination of social products and AI is an important development trend.

As a productivity improvement tool, AI has been empowered in the social field, and one of the areas worth paying attention to is the combination of social networking and AI Agent, which uses AI to create virtual girlfriends, boyfriends, and partners to meet human needs for companionship and emotional support. For example, A16Z has invested in Character.AI that can generate human-like text responses and engage in contextual conversations, enabling intelligent chatbots to interact with users.

As mentioned earlier, one of the core human needs for socialization is to meet emotional and emotional needs, to build intimate relationships and to be supported. At present, the projects of AI+ social networking basically start from the point of meeting the emotional needs of human beings, and begin to solve the companionship needs that cannot be met by real people in real time from the way of virtual companionship, so as to explore new possibilities for this demand satisfaction. However, whether the companionship needs of human emotions needs to be realized by AI virtual humans is still in a stage of market and value verification.

And in the development of social products, we see that Web3 and AI have complementary potential in social aspects. Different from the productivity improvement of AI, the characteristics of Web3 in terms of production relations and financial incentives can also be well equipped to empower social products. For example, Binance's incubated Myshell combines AI with Web3 to allow users to build their own AI bots, and has also launched Samantha, a Telegram-based voice chatbot to meet human emotional companionship needs.

In addition, there is a recent Siya.AI in the Solana ecosystem, which aims to build a social companion platform where AI and real people coexist, hoping to use AI Agent as a traffic entrance for Internet and Web3 users. In addition, by accessing the SDK provided by Realy, an incentive mechanism has been introduced for the creator economy and AI companions. Combine AI and Web3 to address the need for emotional companionship in social interactions. Users can also achieve chat mining and NFT incubation by having conversations with AI boyfriends and AI girlfriends.

In general, AI and Web3, as two waves in the new era, are working from different angles in the field of social networking. The former focuses on emotional companionship and support, while the latter focuses on data value feeding users and resisting censorship, both of which are now in their early stages. But no matter which demand point is cut, it is also hoped to better meet the original needs of human beings for social interaction to varying degrees. On the road of social product exploration, AI and Web3 have also emerged to cooperate and complement each other. I am very much looking forward to the birth of the next large-scale social application under the birth of new technologies and models, and perhaps AI and Web3 can collide with new sparks in the social field to better meet the diverse needs of human beings in social networking.

7. Summary

Social networking is a rigid need for everyone, regardless of age, men, women, children, or acquaintances and strangers in the scene, social products occupy the gate of traffic in the Web2 industry, and they are also the highest category in DAU. Therefore, Web3 social has been pinned on by Web3 practitioners since the birth of the concept, and Mass Adoption has been pinned on by Web3 practitioners.

On the positive side, on the one hand, Web3 social has revolutionized data value and user feedback. Compared with traditional Web2 social products, Web3 regards user data as a valuable asset, and feeds back the value of data to users through token incentives and NFTization, based on user data sharing, creator incentives, and community consensus.

On the other hand, the censorship-resistant nature of Web3 social products provides users with greater freedom and privacy protection. Through blockchain technology and decentralization, these products reduce the risk of censorship and banning, and promote open freedom of expression. This creates a safer and more open social environment for users, making social interactions more authentic and free.

However, the current Web3 social network has always faced some challenges, and there has been no large-scale adoption so far. The high cost of replacement and network effects are the biggest challenges. Traditional social products have established strong network effects among users, and user Xi, resource investment, and platform dependency make it difficult for them to migrate to new Web3 social platforms, making it difficult for new products that replicate Web2 to expand their user base and grow. Another challenge is about the balance between sustainability and user experience. Some Web3 social products emphasize decentralization and data control at the expense of user experience and convenience. While pursuing innovation, keeping products easy to use and attractive is critical to user retention and appeal.

As mentioned in Tom Standage's book A Brief History of Social Media, humans have had a need to socialize since the dawn of time, and no matter how technology evolves, humans will always need to communicate with each other. From papyrus letters used by ancient Roman politicians to exchange information, to pamphlets during American independence and the French Revolution, from newspapers, radio, and television to the internet and blockchain technology, humanity has always been transformed in the tension between freedom of speech and censorship.

Compared with phone calls, text messages and newspapers, Web2's social products Facebook, X, and WeChat enable people to communicate and spread faster, better, and cheaper, while the core of Web3 is focused on anti-censorship freedom of speech and the return of data value to users.

For the future power point, what can be considered in the future is the community attribute: because social networking must not be broadcast, but always oscillating between centralization and decentralization. Community is a very important feature of Web3 social networking, and the characteristics of data sovereignty and openness are also very compatible with the community, the community can achieve multi-directional, interactive socialization, may become one of the future directions of Web3 social products, in addition, and the cross-combination with other directions such as games may also collide with different sparks.

As mentioned in the Challenges and Limitations of Web3 Social, the dilemma of the Social track in user portraits has led to the fact that the Web3 Social track is a little deserted compared to the current heat of the BRC20 track, but the development prospects of Web3 social still have many expectations. New projects and technologies are constantly emerging to push the field forward. As technology continues to evolve, we're also seeing more explorations and improvements for sustainability and user experience. The field is maturing, finding its own development path, bringing more innovation to users and having a profound impact on the entire social landscape.

Finally, I would like to thank Black Iron, Adazz, Ahsan, Harlan, Trinity and other partners for their help, as well as everyone who is very willing to share patience during the exchange, and I sincerely hope that the builders in this track will get better and better!