Opportunities and Mission of Web3 Social

Recently, the Web3 industry has been filled with negative sentiments, as if it has become a large "leek field." However, Ponzi is essentially neutral; it is a financing technique that reduces project operational costs. Whether in DeFi, social networks, or other sectors, there are builders who continue to strive. As long as the pace of progress does not stop, the Web3 revolution has not failed. All technological innovations occur in an emergent manner, and short-term troughs are insufficient to prove that the industry lacks prospects.

This article will outline the achievements of Web3 builders in the social field over the past eight years from a development perspective, summarizing experiences and lessons learned while seeking potential opportunities and blueprints. Although Web3 social is not yet mature, its results are noteworthy. As technology continues to advance and the cost of entry keeps decreasing, the emergence of real products may be happening right now.

The Underlying Demand Theory of Web3 Social

Any successful product is built on solid demand. Web3 projects are often criticized for failing to integrate with the real economy. To break the prejudice that "Web3 is just about exploiting users", it is necessary to fundamentally demonstrate the demand for social interaction in Web3.

Humans are social animals with social needs. This conclusion has been repeatedly demonstrated by social products. People need to establish connections with others to perceive their emotional attitudes and obtain feedback to correct themselves. This need is as fundamental as eating and drinking, ingrained in our genes through evolution. In short, it is about connection, mental interpretation, and self-coordination.

Holding tokens is a brand new way to connect. An open and verifiable database expands the dimensionality of information obtained from connections. The new information environment will give rise to new social relationships and interaction methods.

The psychological motivations behind Internet social behavior can be summarized as: self-presentation, emotional venting, and seeking recognition. Compared to traditional offline socializing, the Internet has created more social scenarios through multimedia. From forums, BBS to blogs, instant messaging, social media, and gaming spaces, different scenarios contain different interpersonal networks and content presentations, resulting in a number of successful projects.

Economies of scale are a significant feature of the development of internet socialization. Social projects that cannot establish economies of scale under specific target audiences and purposes find it difficult to survive. Compared to the million concurrent users of global Web2 social giants, the scale of Web3 social platforms is even less than a fraction of that. Economies of scale are a mountain; without forming scale, one cannot escape the fate of being subsidized to death. The scale of social networks and content determines whether social nature and motivation can be better realized.

The development direction of Web3 is an industrial ecosystem supported by a trusted and open data environment, as well as a financial environment backed by tokens. How does such an environment nurture a new industrial landscape? With support from underlying information that crosses databases and organizations, the unique advantage of Web3 social interactions lies in the freedom to choose front-end composable and pluggable social interfaces. Using social interactions to support token issuance and organizing social relationships around rights interactions quantified by tokens is a distinctive application scenario 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

Web3 social is constantly evolving. The lessons learned from the industry and the continuously advancing technology are pushing the industry closer to a singularity of explosion.

The advantages provided to entrepreneurs by the Web3 environment give rise to two parallel trends in social projects:

1. How to develop decentralized social technology standards
2. How to Build Token Consensus through Social Media

Competition of Decentralized Social Technology Standards

If we believe that humans are social animals and that information input determines what kind of people we are, then the power of internet social platforms is immense. We can hardly imagine the serious consequences of handing this power over to companies and governments. Losing control over social information sovereignty means losing the freedom of cognition and choice. The Facebook personal data leak scandal led by Cambridge Analytica shows us how easily our will can be manipulated. We and future generations desperately need to grasp our data sovereignty. Therefore, decentralized social technology solutions are a necessity in the future.

To achieve decentralized social networking, breakthroughs must be made in communication protocols, data, and applications. The communication technology that achieves global consensus through blockchain may not necessarily be suitable for decentralized social networking. Therefore, based on the experience of STEEM, a new generation of projects like Bluesky, Nostr, Lens, and Farcaster have proposed their own decentralized social protocols. By giving up some of the decentralized attributes of data, all protocols have made significant progress. On any protocol, mimicking Web2 social tools is no longer an issue, and even due to the implementation of decentralization, user autonomy is stronger. Users have the right to maintain their intangible assets within the system. However, as mentioned earlier, Web3 businesses face significant scale disadvantages.

Technology is not the issue. The challenge faced by all projects proposing solutions is how to move the mountain of economies of scale that stands in the way of the road to success. To overcome 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 like opening Pandora's box. All Web3 users have been forced to face a complex financial environment since they entered the industry. For project parties, adopting tokens can use users' desires as subsidies, reducing project operating costs.

Token incentives face two major dilemmas in social environments:

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

2. Token incentives are faced with witch attacks.

These two issues have not been completely resolved to this day, and we introduce a case that helps in understanding.

The STEEM blockchain can be considered a pioneer in the Web3 social industry. To this day, its proposed concepts and structural designs are still imitated and referenced by current projects, and it has nurtured a group of blockchain application teams and projects. In 2016, the STEEM blockchain made innovative attempts in multiple dimensions such as token-based content incentives, token-based real-person curation, data availability layers, and account hierarchical security.

Applications built on the STEEM blockchain are social media, and the quality of media content is determined by users based on the amount of tokens staked as weight. In the early stages of the project, the founding team had an absolute advantage in reputation and the number of staked tokens. At that time, content production and filtering recommendations based on token staking weight were effective. Like most projects that adopt token incentives, the huge wealth effect attracts swarms of witches. However, the token staking on the STEEM blockchain includes punitive powers, which can provide some immunity against witch attacks.

This effectiveness is established on the foundation of asset and power centralization and solid consensus. When the founder BM left, the founding team disbanded, and the project was sold to the notoriously infamous Sun Yuchen, a collapse of consensus occurred. In the early stages, the collapse of consensus led more individuals to choose witch attack methods for profit: token holders 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. Today's top social media has achieved a personalized content experience for users, which this refined content curation cannot be matched by human resources and merely relying on content tags for content sorting and pushing.

After STEEM, many projects have used token issuance to accelerate platform expansion, such as Torum and BBS. Anyone looking to scale has adopted token incentives. Of course, later there were also those like Lens protocol that used the expectation of getting something for free. These incentives contradict the "non-monetary reward" element of social interactions. Experiments show that external material rewards can reduce intrinsic psychological rewards, which leads to the mixing of non-social content in social content. Social links serve as information channels, and the value of social platforms lies in summarizing the information within these channels. However, these mixed incentives lead to reduced social efficiency. Channels that are already lacking in information must now face more noise, making decline a natural outcome.

Like Degen on Farcaster, a portion of the tokens is sent out as rewards. This uses Meme tokens to incentivize the unique financial functions of Web3 social projects ( rather than content creation or recommendations ). By introducing the financial attributes of crypto social, it creates a wealth effect and triggers ecological prosperity. A platform can only have one token, but there can be countless Meme tokens. Meme tokens can fail, 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 battle. The ecological emergence brought about by this operation cannot be ignored. So far, the ecosystem has produced tools including NFT piggy banks, various streaming ( voice chat rooms, short videos, GIFs ), launch platforms, and more. Although I have not found signs of Farcaster breaking through the business boundaries of Lens ( or the current industry bottlenecks ), this emergence is worth paying close attention to.

Content autonomous revolution stage setbacks

Web3 emphasizes decentralization, which in business means breaking monopolies.

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

Launched in 2016, STEEM has fallen behind due to the disintegration of its project team and slow development progress. Although it achieved content on-chain at the time of its launch, it lacks an EVM environment and cannot run smart contracts, which led to its gradual decline after the DeFi summer that began in 2020. The leading position in content on-chain was taken over by Mirror. The selling point of Mirror is that it provides a 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, and they can mint the content as NFTs for trading in the NFT market. So far, this project continues to operate, although traffic has decreased. However, some Degen players are still using the project to publish content and engage in content 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 rights to content data on the internet through wallet signatures. The asserted content can be issued as NFTs and traded in the NFTfi environment under the EVM framework. The user retention issue of Mirror essentially boils down to 1; compared to traditional Web2 content operators, it not only lacks operational capabilities but also, written content, especially lengthy discussions, inherently lacks traffic, making it a discarded item in the era of junk culture. Concurrently, there are projects that focus on content on-chain through audio and video. Without discussing the ineffectiveness of content incentives, the enormous data volume makes it difficult for project operating costs to be sustainable. Doing a content business is akin to being in the media industry. 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 make it a business.

At the end of 2013, another content-based project emerged. Bodhi, which is also a minimalist product. Bodhi was inspired by Friend tech and no longer mints NFTs related to content at a unified price, but instead adopts bonding curve technology to sell at varying prices; the more sold, the higher the price. There are also projects like CloudBit that forcibly replicate Web2 content on the blockchain to generate NFT assets. There are quite a few similar projects, all attempting to transform content into verifiable assets. However, what they cannot change is that in the internet era, content can be verified, but the information carried by the content can be easily transferred. In cases of direct theft of content or infringement, putting content on-chain does little to increase the cost of illegal activities. Therefore, there are currently no good cases of issuing assets directly anchored in content.

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