Friend.tech has been hot for only half a month, is there still a future for Web3 social networking?
With Friend.tech gaining popularity in just two weeks, is the future bright for Web3 social networking?
Friend.tech is the most discussed decentralized social application recently. In just two days after its launch, it raised $500,000, breaking a record of daily trading volume with over 4,000 ETH transactions on August 11th, and 260,000 on-chain transactions, causing a sensation. At its peak, Friend.tech ranked second in daily revenue, surpassing leaders of decentralized exchanges such as Lido and Uniswap, and even surpassed Layer1 cryptocurrencies like Bitcoin.
However, a sharp decline soon followed. According to DeFiLlama’s data, the daily revenue of the application has dropped by more than 95%, and the number of active users has also decreased significantly. According to data released by Friend.tech on Twitter on August 30th, the DAU has halved from 42k to 21k, and the hype quickly dissipated.
How does Friend.tech work? As a new SocialFi application built on Coinbase’s recently launched L2 network Base, Friend.tech requires users to bind their Twitter accounts to use it. Users can buy and sell “shares” of any Friend.tech user on the Base chain. Investors in KOL shares will gain the right to have direct conversations with KOLs. It allows users to buy and sell shares of related Twitter accounts, and owning shares of a certain KOL will authorize users to enter the private chat room of that KOL. The most important thing is that these “shares” are tradable, and the whole process becomes an investment game with fluctuating prices.
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The essence of Friend.tech is to bet on the influence of KOLs, which is a tokenization project of KOLs. Friend.tech essentially launches coins for KOLs using their personal IPs, monetizing the value of KOLs, and attempting to quantify and trade social value. Although it gained popularity and many crypto KOLs started to profit from it, some people have expressed concerns about the pricing model and data privacy of the application.
After its launch, some opinions believe that Friend.tech is a text version of Onlyfans and may even replace the Alpha community model represented by the LaserCat community. This is because buying group shares with ETH is somewhat similar to buying NFT LianGuaiss cards with ETH. Some analysis points out that the demand for NFT Alpha communities is real, and the direction of Friend.tech’s development is not to attract dispersed users, but to attract users with long-term relationships. Therefore, from this perspective, Friend.tech may attract higher-quality users from Discord communities compared to acquiring them directly from Twitter.
Friend.tech was a short-lived hope for the SocialFi track and Web3 social interaction, bringing a brief glory before its demise. To further understand the situation of SocialFi and the Web3 social track, this article will analyze it from the following three aspects:
What are the core features of Web3 social?
A list of important protocols and projects for Web3 social
Can Web3 social products replace traditional Web2 social applications?
Web3 Social: Ownership and Revenue Return to Individual Users
In late July, well-known cryptocurrency investment institution LianGuairadigm released the latest top ten areas of focus in the cryptocurrency field, with “native cryptographic social applications” ranking among them. It represents a new paradigm of social media in the Web3 era, integrating social media and decentralized technology, and providing users with a unique Web3 social experience using blockchain.
“Web3 social” is a general term for Web3 protocols, products, etc. related to social, which operate on public chains and have more obvious decentralized characteristics in data storage and operational management compared to Web2 social products. In the Web3 social scene, projects that combine the “X to earn” growth incentive model, such as SocialFi, mainly focus on the token mechanism design and have obvious social financial characteristics, and short-term popular applications like Friend.tech have emerged.
SocialFi, or Social+Finance, essentially tokenizes users’ social influence to form a self-consistent economic system to help more people with different levels of social influence earn corresponding income, thereby breaking the monopoly of traditional social platform giants on user-generated content and the monopoly of KOLs on ordinary users. This article will refer to the Web3 social track as including the concepts of SocialFi, decentralized social, etc.
Overall, Web3 social is a nascent track. Unlike traditional Web2 social products, Web3 social products have significant differences in “whether to be on-chain” and “the ownership economy,” resulting in differences in incentive mechanisms.
On-chain interaction and resistance to centralized censorship
In traditional social products, all social interactions occur off-chain, and the relationship between social platforms is relatively closed and fixed. When a user posts a message on one social platform, it is difficult for users on other platforms to interact across platforms.
Web3 social, on the other hand, may undergo a fundamental change – users’ behavior shifts from off-chain to on-chain, everything becomes open and transparent, and the differences between social platforms will no longer be barriers to interaction. When social relationships become public infrastructure, users can experience any new product with their accumulated social relationships without being tied to any specific product.
At the same time, privacy and resistance to censorship are also major advantages of Web3 social. Unlike traditional platforms, Web3 platforms do not centralize data storage, reducing the risks of single point of failure and unauthorized access. The pseudonymity provided by blockchain technology allows users to protect their privacy while maintaining their online identities and adopts a decentralized censorship mechanism that allows community members to participate in content decision-making, minimizing the risks of centralized censorship.
Users have ownership of their accounts
In traditional social platforms, all user actions are based on a highly centralized platform. This means that all user interactions are under the control of the platform. Web3 social aims to regain user control over their social resources, and the establishment of ownership is a crucial way to achieve this.
On Web3 social platforms, users have ownership of content distribution. They can decide how to distribute content to users who follow them and are not locked into a specific platform. They can freely choose the platform with the best services and algorithms to pursue their own interests and truly achieve the vision of controlling their own network in the Web3 era.
Diverse incentive measures
Profit and incentives are achieved through social tokens, which is one of the main features of SocialFi.
SocialFi, similar to GameFi, combines application layer design with DeFi. It achieves diversified social media experiences by introducing the concept of social tokens and utility tokens within the application. In the ecosystem of SocialFi, social tokens primarily control the platform economy and allow creators to manage their social and content, while the influence of users determines the value of the tokens. However, these tokens are not controlled by the platform itself, and creators can decide how their tokens will be used by their followers. This changes the current situation in traditional social applications where platforms make money by using users’ attention to display advertisements, while users get nothing in return, and instead turns social data into assets.
Web3 Social Protocols and Application Overview
Until now, there hasn’t been a leading project in the Web3 social track that can be considered a successful breakout, but there are some excellent protocols and projects that have made effective explorations. Research institution Messari summarized the current market landscape of the Web3 social track, as shown in the figure below.
With more and more users escaping from traditional Web2 social media platforms like Reddit and Twitter, the market for Web3 social protocols and applications will continue to grow in the future. The following will introduce common types of protocols and important applications in the Web3 social track:
Decentralized Social Protocols
Decentralized Social Protocols are protocols that allow developers to freely establish social platforms and services. They have higher resistance to censorship and privacy, provide the infrastructure for developers to quickly establish highly autonomous social projects, and have stronger data security and reliability.
Lens Protocol is currently the leading protocol in the Web3 social track. Lens Protocol is a composable decentralized social graph based on Polygon released by Aave last year, and is also one of the most well-known social protocols in the crypto-native space. Lens aims to enable creators to have their own connections with the community, forming a fully composable community network owned by the users themselves.
Unlike traditional social platforms, all actions generated by users on Lens Protocol are stored on-chain in the form of NFTs, allowing users to own all the content they create. The protocol was designed with modularity in mind from the beginning, allowing for the addition of new features and fixes, while ensuring that the content and social relationships owned by users remain immutable.
In the Lens ecosystem, Lenster is one of the important benchmark social applications. Lenster is a decentralized social media application built on the Lens protocol and is one of the 12 winning projects of the Lens hackathon LFGrow.
NFTs in the wallet used to log in to Lenster and resolved ENS domains can be displayed in personal profiles, and other features are similar to Twitter. On Lenster, users can choose the accessibility of their posts (followers, friends of friends, everyone), choose whether the post can be collected by other users, and set a collection fee for the post. Lenster has also launched content distribution functionality, where if a user paid to collect a post through your repost, you will also receive a share, with the default value currently set at 15%.
Farcaster is also a protocol for decentralized applications, allowing users to freely migrate social identities between applications and developers to freely build applications with new features on the network. On Farcaster, users can send short text messages as broadcasts and connect Ethereum addresses.
On Farcaster, anyone can build client applications to broadcast messages. The Farcaster protocol is divided into two important parts: the on-chain registry for users to claim unique usernames, and the off-chain hosts for users to store social data.
CyberConnect is a decentralized social graph protocol based on blockchain technology that allows users to migrate their identity information, social relationships, and more to different networks and platforms, while fully owning their personal data, creating immense value for users.
The CyberConnect protocol consists of 3 core components:
Cyber Profiles – as a decentralized identity standard, Cyber Profiles store all activity data of users in Web3. All on-chain credentials and assets can be mapped to a user’s Cyber Profile, creating a unified identity;
CyberConnect Social Graph – Connects users’ identities, personal data, content, and social relationships together to build a unified social network. This allows social relationships to cross platforms, enabling seamless communication and transfer;
Cyber Wallet – As the smart contract wallet of the protocol, CyberWallet can securely store users’ assets. This provides users with a trusted way to store and manage digital assets. Through these features, CyberConnect provides users with a more open and free social network experience.
In terms of the economic model, CyberConnect has completed the public sale of its protocol token, which can be used to pay for CyberProfile minting fees, as well as gas and governance.
Nostr (Notes and Other Stuff Transmitted by Relays) is a concise and open-source decentralized social network protocol launched in 2020. It is essentially an information transmission protocol for decentralized social scenarios. Damus, Amethyst, and snort.social are third-party applications developed based on this protocol. The design based on the client and relay terminal Relay makes Nostr highly interoperable, relatively lightweight, simple but scalable, providing possibilities for large-scale applications.
In the Nostr protocol architecture, everyone can run a client program. When publishing information, they sign the text with their private key and send it to multiple relays. When they want to obtain information, they inquire various relays. The client then verifies the authenticity of the obtained information using its public key.
DeSo is an open-source Layer1 blockchain protocol designed to expand social DApps. DeSo allows users to create social profiles and social tokens. These tokens can earn profits from NFTs minted by creators. The profits are generated by interactions between each user and the NFTs minted by creators.
The famous social DApp Bitclout uses this protocol. Bitclout is a social platform controlled by its users. In addition, the social DApp Diamond also uses this protocol, allowing interaction between fans and creators to build a community.
Web3 Social Applications
In the DeFi field, DeBank has become a wallet tracking platform commonly used by investors. They added two important social features last year: DeBank Hi and DeBank Stream. DeBank has the advantage of “wallet binding” for social applications, which allows better tracking of real users.
DeBank Stream is a social application similar to Twitter that rewards users for creating value (based on time and attention). After users post content, they can receive rewards based on the exposure of their content and the promotion received during the spread on Stream, such as the number of followers, clicks, comments, and retweets, as well as the value of these users’ assets. DeBank Hi is a communication DApp that allows paid consultation or chat.
Bluesky is a decentralized social application created by Jack Dorsey, co-founder of Twitter, which was originally incubated by Twitter in 2019. Bluesky has a similar user interface and algorithm selection as Twitter, but unlike Twitter, Bluesky stores user data on independent servers rather than on a company’s servers, giving users more autonomy in their interactions on the platform. Bluesky is currently still in beta and is invite-only.
Mask Network is a product that helps users seamlessly transition from Web2 to Web3. It allows users to send encrypted messages, cryptocurrencies, and even decentralized applications (such as DeFi, NFT, and DAO) on Twitter. Mask Network is currently available as a smartphone application and as a browser extension, with its earliest and possibly most important feature being private messaging, allowing users to encrypt and decrypt content on social media using public-key cryptography.
Stealcam can be said to be a popular Web3 social product before Friend.tech. It is an Arbitrum ecosystem image sharing application, where users can upload image or video files to the platform. However, the images posted on the platform are not freely accessible and require payment to gain access to view the specific content of the images. Additionally, Stealcam introduces a bidding incentive model that includes all participants in the profit-sharing model of a work, thereby promoting price discovery for the work.
Can Web3 social products replace traditional Web2 social applications?
In his speech at EthGlobal Waterloo 2023 conference this year, Vitalik expressed his concerns about the current development of Web3 social. He believes that existing Web3 social dapps may not be sufficient to replace their Web2 counterparts. However, he still recommends developers to leverage the unique features of Web3 to iterate new social dapps and build social applications that are 10 times better than similar Web2 products.
Against the backdrop of frequent data leaks, privacy scandals, and algorithm biases on Web2 social platforms, Web3 social is gradually entering the public’s view, with its characteristics of decentralization, censorship resistance, user-centricity, empowering digital assets, and identity interoperability being favored by users and capital.
The future vision of Web3 social is undoubtedly promising, but there are still many practical problems at present. Due to the high cost of social migration and the strong advantage of centralized social platforms, there are almost no successful projects in the encrypted social track. On the other hand, projects like Friend.tech show that they are influenced more by financial attributes such as airdrops, incentives, and financing than their social attributes as applications themselves.
At the same time, the maturity of Web3 social products is far from sufficient. Even leading projects like Lens have a relatively rigid and inconvenient user experience. Compared to applications with a massive user base like Twitter, Facebook, Telegram, TikTok, and WeChat, it is still challenging to achieve large-scale user migration through disruption and surpassing.
For users, the social value between individuals and the value of creation and creativity may be more important than the economic benefits brought by social behaviors. Like any innovation in Web3 applications, the future of Web3 social depends on its ability to adapt, develop, and continuously provide social value to users.
Web3 social products need to be more innovative than Web2 products for users to be willing to give up their existing habits and social circles to try them. However, the current motivation behind most Web3 social applications is to take advantage of airdrops and incentives, rather than focusing on product development. Only through iterative technological advancements and shifts in market perspectives, perhaps killer applications will emerge, bringing new opportunities for explosive growth in the Web3 social track.