Bixin Ventures 3 Paradigms of Web3 Social
Bixin Ventures 3 Paradigms of Web3 Social
Author: Bixin Ventures; Translator: LianGuai0xxz
DeFi has become one of the paradigm shifts that actually impact the lives of its users. Since 2018, more and more Web 3 workers and companies have started to receive their salaries in the form of cryptocurrencies, and some people’s wealth is now mostly in cryptocurrencies – in other words, some people are actually “living in the crypto world”.
Social networks not only have the potential to empower people financially through cryptocurrencies, but also can influence many aspects of the social experience.
Starting from 2022, Lens Protocol and its social application ecosystem have begun to explore various ways to build consumer-oriented applications based on on-chain social graphs. There are other protocols, such as Farcaster, which has created new peer-to-peer connection methods, and applications like Friends.tech, which are trying out new ways of value extraction around social networks.
Whether it is the social graph-based experience supported by Lens Profile NFTs, or the value-oriented social network experience based on Friends.tech, the Web 3 social network experience has emerged, offering key advantages that Web 2 social networks lack.
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We believe that over time, these features will gradually attract Web 2 social network users to migrate. In this article, we will categorize these features and draw conclusions on where we believe Web 3 social networks will surpass their Web 2 counterparts.
UIUX: Designing New Design Patterns for New Business Models
Web 2 social network applications have long maximized the utilization of their design patterns for commercial potential. Twitter directly built its advertising business into its feed, which is still a major source of revenue. WeChat established social transactions in its DM interface, added banking functions based on social transaction capabilities, and expanded into a “super app” that fully capitalizes on the social transaction points in the DM interface.
On the level of being closest to the category-defining layer, Metamask alone drives adoption by providing front-end DEX trading services to wallet users and has become a fee-based business. By just offering front-end services, Metamask has generated $324 million in revenue since 2020.
How does this inspire us in terms of Web 3 social? Web 3 users are essentially value users, and Web 3 networks are essentially value networks. Looking back at the large Web 3 communities that formed starting from 2020, most of these groups were initially value-driven communities and DAOs operating on various DeFi protocols. Branches were then formed in NFTs and gaming, but the value habits of these groups remained unchanged.
UIUX built around these community habits can lead to innovative business models around use cases such as trading opportunities, tickets, events, NFT releases, whitelist activities, IDOs, prediction markets, and community memberships.
While Metamask’s front-end services have been an effective example of an application-layer business model, there are still many use cases that have not been developed, as mentioned above. Web 3 social applications can embed these use cases in a super app or multiple niche apps through UIUX innovation, and build effective business and technology by providing these services.
Data: On-chain Data Primitives for User-centric Features
Blockchain, as a public data ledger, has long been the data fuel for companies like Chainanalysis and Dune Analytics. The combined valuation of these two data companies has reached $10 billion. Although these two companies focus on enterprise use cases, we can also create tremendous value for consumer-centric use cases using the same approach.
When DeFi protocols dominate on-chain activities, data as primitives typically constitute financial activity ledgers. However, DAO governance, on-chain authentication events, NFTs, and games are enriching the categories of on-chain activities to the extent that there may be more data categories on the blockchain that are not specifically available in traditional Web 2 social network companies’ traditional social graphs.
With the help of the blockchain data ledger itself, we can build general-purpose applications based on specific data or what we call “behavioral graphs.” The difference between a behavioral graph and a typical social graph is that a behavioral graph includes not only relationship data that indicates social connections between users but also transaction data between users and protocols and activity data between protocols and applications.
A “behavioral graph” only needs to index and analyze enough on-chain data to provide not only social relationship suggestions but also product interests, productivity tools, etc., fundamentally expanding the use cases that a graph database can cover.
In a social network environment, a behavioral graph should be used to build a social “super” application, as suggested by Elon Musk, providing many daily tools that users interact with every day.
Once the value of these features accumulates in the on-chain revenue pool, it can easily be shared with users and organizations that generate data, rewarding users for their contributions. Through ZK-proof, users can even choose to restrict access to their data, prioritizing privacy over profit.
This value capture and value return mechanism can easily generate a flywheel effect, incentivizing more users to join Web 3 native social networks and allowing users to earn money simply by being more active on the network.
Infrastructure: Social Primitives with Value Effects
A behavioral graph is just one of many foundational primitives that can be used to build social networks. Whether it’s advertising, affiliate marketing, recommendation systems, all of these protocols can provide new ways for users to derive value from social experiences.
Some other useful primitives based on the unique characteristics of blockchain distributed ledgers include on-chain credit scoring and proof of contribution. Different front-ends can assign different weights to specific types of data and generate different credit scores for different applications and use cases. A DeFi protocol may prioritize DEX trading frequency and volume data, while a social networking application may prioritize data related to NFTs. Then, based on the weight variables of a specific scoring system, they can choose different ways to distribute rewards based on the on-chain generated scores and provide corresponding privileges.
Compared to Web 2-based systems, these on-chain systems are more trustworthy for consumers of these applications because the transparency of on-chain data is guaranteed. In cases where privacy is needed, ZK-proof can be used to verify the integrity of private data sets. However, Web 3 has significant advantages in terms of transparency and value return to users, both in terms of transparency and value return.