Opportunities and Mission of Web3 Social

Recently, the Web3 discourse is filled with hostility, and many people believe that Web3 social is a scam. However, in my opinion, Ponzi is neutral; it is a financing technique that reduces project operating costs and serves as a means to support the project's ultimate success. As long as the pace of progress does not stop, the Web3 revolution has not failed. All technological innovations emerge in bursts, and short-term troughs are insufficient to prove that the industry lacks prospects.

This article will summarize the achievements in the Web3 social field over the past eight years and organize experiences and lessons learned to identify potential opportunities. Although Web3 social has not fully matured, the development achievements in the industry are noteworthy. In the process of technological advancement and lowered barriers, real products may be emerging right now.

The Underlying Demand Theory of Web3 Social

Any successful product is built on a solid demand. Humans are social animals with social needs. This conclusion has been repeatedly validated by social products. People need to establish links with others, perceive the emotions, attitudes, and mental activities of others through these links, obtain information feedback, and correct their own emotions and cognition. This need is as fundamental as eating, drinking, and breathing; it is inscribed in our genes throughout evolutionary history.

Holding tokens is a brand new way of connecting. An open and verifiable database expands the dimensions of information obtained from connections. A completely new information environment will foster new social relationships and interaction methods.

The psychological motivations for online social behavior mainly include: the need for self-presentation, the need for emotional venting, and the need for recognition. The internet has created more social scenarios through multimedia, ranging from forums and BBS to social media and gaming spaces. These new scenarios encompass different interpersonal relationship networks and content presentation methods, resulting in a number of successful projects.

Economies of scale are a significant feature of internet socialization. Historical experience shows that projects that cannot establish economies of scale in social activities targeted at specific groups and purposes are difficult to survive. Compared to the millions of concurrent users of Web2 social giants, the scale of Web3 socializing is even less than a fraction of that. Economies of scale are a mountain; without forming scale, it is hard to escape the deadlock of being subsidized to death.

The direction of Web3 development is an industrial ecosystem supported by a trustworthy and open data environment and a financial environment backed by tokens. How does this environment nurture a brand new industrial pattern? With underlying information support across databases and organizations, the ability to freely choose front-end composable and pluggable social interfaces is a unique advantage of Web3 social. Tokens are a typical feature of Web3, with social support for token issuance, and the core content is the quantification of rights interaction through tokens; the scenes for organizing social relationships represent unique applications of Web3 social.

In recent years, the Web3 industry has gone to great lengths to gain a competitive advantage in the local social market.

The Development Context of Web3 Social

The advantages that the Web3 environment provides for entrepreneurs have led social projects to show two parallel development trends:

1. Develop decentralized social technology standards
2. Build token consensus through social networking

Competition of Decentralized Social Technology Standards

The Internet social platforms hold enormous power. We can hardly imagine the severe consequences of handing this power over to companies and governments. Losing sovereignty over social information means losing cognitive and choice freedom. The Facebook data breach scandal led by Cambridge Analytica shows us how easily our will can be manipulated. We and future generations need to have control over our data sovereignty. Therefore, decentralized social technology solutions are a necessity for the future.

To achieve decentralized social networking, breakthroughs must be made in communication protocols, data, and applications. The communication technology that enables global consensus on the blockchain may not be suitable for decentralized social communication. Therefore, based on the experiences of STEEM, projects like Bluesky, Nostr, Lens, and Farcaster have proposed their own decentralized social protocols. By relinquishing some data decentralization attributes, all protocols have made significant progress. Imitating Web2 social tools is no longer a problem on any protocol, and even due to the realization of decentralization, users have greater autonomy. Users have the right to maintain their intangible assets within the system. However, Web3 businesses face a significant scale disadvantage.

Technology is not the issue. How to move the mountain of economies of scale that blocks the road to success is a challenge faced by all proposed solution projects. To penetrate this disadvantage, token incentives have become the most direct means for the vast majority of projects in the short term.

Token incentive revolution faces obstacles

The birth of tokens is akin to opening Pandora's box. All Web3 users are forced to confront a complex financial environment from the moment they enter the industry. For project parties, adopting tokens can satisfy user desires as a subsidy, reducing project operating costs.

Token incentives face two major dilemmas in social environments:

1. The subjective value of social content is difficult to judge, and the effectiveness of token incentives is questionable.

2. Token incentives face witch attacks.

These two issues have not been completely resolved to this day, and we introduce a case to help understand.

The STEEM blockchain can be considered a pioneer of the entire Web3 social industry. To this day, not only are its proposed concepts and structural designs still imitated and referenced by current projects, but it has also nurtured a number of blockchain application teams and projects. In 2016, the STEEM blockchain made innovative attempts in multiple dimensions, including token incentives for content, token incentives for real-life curation, data availability layers, and account hierarchical security.

The application built on the STEEM blockchain is a social media platform where the quality of media content is determined by users based on the amount of tokens they stake as weight. In the early stages of the project, the founding team had an absolute advantage in both reputation and the number of tokens staked. At that time, content production and filtering recommendations based on token staking weight were effective. Like most projects that adopt token incentives, the massive wealth effect attracts a swarm of witches. However, the token staking on the STEEM blockchain includes punitive powers that can immunize to some extent against witch attacks.

This validity is built on the centralization of assets and power and a solid foundation of consensus. When the founder BM left, the founding team fell apart, and the project was sold to the infamous Sun Yuchen, leading to a collapse of consensus. In the early stages, the collapse of consensus caused more individuals to choose witch attack methods for profit: users holding coins liked each other, and proxy mining ran rampant. Later, when algorithm recommendation systems and AIGC technology matured, this content production and recommendation system based on token-weighted voting reached the moment of exiting the historical stage. Now, top social media platforms have achieved user-generated content that is tailored to each individual, and this refined content selection is something that human resources combined with simple content tagging and sorting cannot reach.

After STEEM, many projects have used token issuance to accelerate platform expansion, such as Torum, BBS, and others that want to scale have adopted token incentives. Of course, later on, there are also those like Lens protocol that use the expectation of getting something for free. These incentives violate the "non-monetary reward" element of social interaction. Experiments have shown that external material rewards can diminish intrinsic psychological rewards, leading to social content being mixed with non-social content. Social links are information channels, and the value of social platforms lies in aggregating information within these channels. However, this incentivization that mixes in sand leads to a decrease in social efficiency. It causes already information-scarce channels to face more noise, making decline a natural outcome.

Like Degen on Farcaster, a portion of the tokens is distributed through rewards. This is to incentivize social projects in Web3 with unique financial features ( rather than content creation or recommendations ). By introducing the financial properties of crypto social, it creates a wealth effect and triggers ecological prosperity. A platform can only have one token, but it can have countless Meme tokens. Meme tokens can crash, but platform tokens cannot. Using Meme tokens to boost social projects will become a superior token incentive platform project strategy. The wealth topics of Degen combined with the innovative possibilities on Frames have attracted more and more builders to participate in Farcaster, triggering the ecological prosperity of Farcaster. It can be said that so far, I personally believe: this is a classic operational campaign. The ecological emergence brought about by this operation cannot be ignored. So far, the ecosystem has already produced tools including NFT piggy banks, various streaming ( voice chat rooms, short videos, GIFs ), and launching platforms. Although I have not found signs of Farcaster breaking through the Lens business boundaries ( or the current industry bottlenecks ), this emergence is worth paying close attention to.

Content self-revolution stage setbacks

Web3 is focused on decentralization, which means breaking monopolies in business.

The starting point of Web3 social should be around 2016-2017. At that time, Web2 social products were developing rapidly. In the last two cycles, social projects were all focusing on the narrative of content autonomy. Various projects were trying to "put content on the chain", and based on the "on-chain" content, they could work on content assetization.

Launched in 2016, STEEM fell behind due to the disintegration of its project team and slow development progress. Although content was already on-chain at the time of the project's launch, it lacked an EVM environment to run smart contracts and gradually lagged behind after the DeFi summer that began in 2020. The leading position of content on-chain has been taken over by Mirror. The selling point of Mirror is that it provides a relatively user-friendly text content editing environment. Users can publish their text content by signing with their wallets. Content is on-chain and cannot be tampered with. Other users can subscribe to and follow a specific account. Additionally, content can be minted as NFTs and traded in the NFT market. So far, this project continues to operate, with traffic declining somewhat, but some Degen players still use the project to publish content and engage in NFT minting activities.

Mirror is an excellent Web3 product that embodies the spirit of minimalism in its design and makes great use of a trustworthy and open database. Anyone can assert ownership of content data on the internet through wallet signatures. Once ownership is asserted, the content can be issued as NFTs and traded in an NFTfi environment under EVM. The user attrition of Mirror is essentially 1, in contrast to traditional Web2 content operators, who not only lack operational capabilities but also face the inherent lack of traffic for textual content, especially lengthy articles, which are cast aside in the age of junk culture. At the same time, there are projects that focus on audio and video to put content on the chain. Without discussing the ineffectiveness of content incentives, the sheer volume of data makes it difficult for project operating costs to be sustainable. Doing content business is essentially doing media. Either you have good content to attract users, or you have a large user base to attract good content. Simply providing a technical solution cannot create a viable business.

At the end of 2023, another content-based project emerged. Bodhi is also a minimalist product. Inspired by Friend tech, Bodhi no longer mints NFTs associated with content at a uniform price but adopts bonding curve technology for tiered pricing; the more sold, the higher the price. Additionally, there are projects like CloudBit that forcibly replicate Web2 content on the blockchain to create NFT assets. There are many similar projects, all attempting to transform content into assets with clear rights. However, what they cannot change is that in the Internet era, while content can have its rights clarified, the information it carries can easily be transferred. In cases of direct content theft or infringement, putting content on-chain does little to increase the cost of violations. Therefore, using content as a value anchor to issue assets has yet to find a solid case.

Another reason why the market is insensitive to the assetization of content is that the timing is not right. Although reason tells us that personal information is valuable, users actually do not care that much about their own content sovereignty.

The New Journey of Attention Sovereignty: The Development of Content Recommendation Systems

The emergence of STEEM has encouraged and inspired a number of blockchain projects. One of the main ideas of STEEM is to rank content through voting weighted by the amount of tokens staked, creating a list.