Web3 Social Track: Potential Engine for Future Bull Run

Every bull run has different starting engines, and each bull run engine has undergone a long gestation process during the bear market. With the development of Web3 technology and infrastructure, the social track has ushered in new development opportunities.

Will the Web3 social track become the next bull run engine?

As an application layer track that requires developers to fully unleash their creativity, social networking, identity, NFTs, DAOs, fan economy, and more can all be classified under the category of Web3 social. The social track is still in its early stages, but as some projects go live and gain popularity, market attention is gradually increasing.

The social application Friend.Tech on the L2 chain BASE quickly became popular after its launch on August 10, attracting over 120,000 registered addresses in less than 20 days, with daily active addresses exceeding 20,000.

Applications such as CyberConnect and Lens Protocol have also attracted a large number of users and market attention.

This article explores the current development status and product features of Web3 social, while analyzing several leading projects and examining the risks and challenges faced by this sector. Overall, the prospects for Web3 social are promising, with good investment potential and development space.

Why Pay Attention to Social Media

The cryptocurrency sector has always been viewed as an interdisciplinary technology that intersects computer science, finance, cryptography, and mathematics. However, due to factors such as its relatively short emergence time, imperfect infrastructure, inconsistent regulatory standards, and high learning thresholds, widespread global adoption and usage have not yet been achieved. With the continuous improvement of smart contract public chains represented by Ethereum, on-chain applications have experienced an explosion since 2020, with cumulative DeFi user addresses exceeding 40 million. DeFi has taken the lead in bringing users into on-chain interactions, and its real and convenient application scenarios have promoted the construction and development of the on-chain economy, attracting and cultivating a group of on-chain users. Subsequently, starting in 2021, blockchain games and NFTs led a new wave of user influx, with new on-chain gameplay, token economic design, and diversified value systems helping the Web3 sector attract a large number of new users. Among them, blockchain games attracted many Web2 gamers and low-income groups due to the gold farming effect, while NFTs attracted collectors, art enthusiasts, and various brand merchants because of their attributes of identity value, collectible value, and brand value.

Since 2022, the market has entered a bear market, with the previously hot sectors such as gaming and NFTs experiencing a decline in interest. The Ponzi economic model has collapsed rapidly due to insufficient incremental growth, and the growth of Web3 users has encountered bottlenecks. Currently, innovation in Web3 continues, with developers exploring new possibilities in areas such as infrastructure, zero-knowledge proofs, payments, identity, and DeFi 2.0. However, the lack of sufficient users remains one of the core issues facing the development of Web3. Against the backdrop of a bear market, many ecosystems and their projects face the dilemma of having completed projects but lacking real users. Excluding airdrop studios and multi-wallet users, the actual number of on-chain users may not be optimistic.

From the supply side, the current development of Web3 needs to expand more application scenarios and create more gameplay to attract new users. The social track is expected to become the next track to explode Web3 users. From the demand side, the social track has been proven to have huge potential in the traditional internet field, with a large user base and huge commercial value. From the early MSN to the mid-term Facebook, Instagram, and then to the later TikTok, every iteration of social technology has been accompanied by the birth of internet giants, creating a large number of employment opportunities in the industrial chain. As people's awareness of the privacy value and commercial value of data ownership increases, more and more voices are calling for users to master their social information and data through Web3, enjoying the value of their own identity and behavioral data. Therefore, exploring Web3 social projects is one of the most promising and commercially valuable directions for the foreseeable future.

With the maturation of ecosystems like CyberConnect and Lens Protocol, the entire social sector ecosystem is becoming increasingly large, currently in a pre-explosion phase, and recently some social projects have attracted market attention. For example, the biggest KOL in the crypto circle, Elon Musk, took over Twitter, and his repeated endorsements of Dogecoin and the inclusion of Bitcoin in Tesla's official documents have brought global traffic to the crypto space. Although he stated that Twitter will never issue tokens, speculation about Twitter's social identity, token reward payments, and other discussions have been ongoing in the market for a long time. In addition, Lens Protocol completed a $15 million financing round, internet social giants like Instagram are issuing NFTs, and Cyber tokens have been simultaneously listed on multiple top exchanges, with the industry continuing to expand and develop.

Characteristics of the Social Track

There is currently no unified definition for Web3 social, and we can categorize all products that involve the publishing and exchanging of information between people, which can be used for user profiling, into the social domain. From the current development results, it mainly includes social public chains, social graphs, social identities, various social applications, service tools, etc.

In the Web2 space, traditional social platforms such as Twitter, Instagram, and TikTok have amassed a large number of users and derived mature and rich business models. When we talk about Web3 social, we need to verify its necessity and feasibility for development. Compared to Web2, Web3 has an insufficient user base for social development and is currently still in the stage of technological exploration. Overall, this article believes that the key factors for the development of Web3 social include:

1. Anonymity, censorship resistance

One of the biggest advantages of Web3 social compared to Web2 social is its anonymity and resistance to censorship, a characteristic that has been validated as one of the user demands. In the Web2 realm, data is controlled by centralized institutions, and users may have their data arbitrarily censored, forced to delete or modify social statements, and so on. Essentially, Web2 social is still a regulated social model, where users cannot protect their privacy. On the other hand, decentralized Web3 inherently possesses characteristics that protect user privacy and resist censorship by centralized institutions, which can meet users' demands for privacy protection and personal safety.

2. Users have ownership of data.

Under the Web2 social model, user data ownership belongs to centralized platform institutions. By mastering user data, platforms can create user profiles, analyze user behavior preferences, and then deliver corresponding advertisements and products to maximize traffic monetization. At the same time, the data itself also possesses certain commercial analysis value. In the Web3 field, user data ownership can be given to users, allowing them to capture the commercial value of data traffic. Designing projects that enable users to conveniently realize the monetization of data value is attractive to users. In fact, this model has been attempted in the Web2 business model with some success. For example, Pinduoduo offers cash rewards for watching videos and invites friends to participate in "砍一刀"(, which essentially serves as a social network for user acquisition. The cash rewards for these activities are attempts by users to monetize traffic. Currently, there have been many attempts in the Web3 field in this regard, such as Nostra based on the Bitcoin Lightning Network, Lens based on Polygon, and multi-chain protocol CyberConnect, all trying to return user data ownership to users. This article believes that in Web3, due to the diversity of tokens, the volatility of token values, and the richness of token economic design, there can be many interesting gameplay options that attract users when it comes to the commercial value of data ownership. This has the potential to create wealth effects and user acquisition effects that may even exceed those generated during the last bull run of chain games.

) 3. Easy to use

One of the elements of social projects is to achieve abundant and free flow of information within the circle, and abundant information relies on a large number of users. How to attract a large number of users is the biggest challenge and opportunity faced by Web3 social projects. One of the important reasons for the limitations in the development of the crypto space is the small user base. Firstly, there is a certain learning threshold for users to enter the crypto space, requiring a certain level of computer and crypto knowledge to participate in on-chain interactions. Secondly, current crypto projects are relatively complex compared to Web2 user tools, making them not simple and convenient enough. Taking EOA wallets as an example, complex mnemonic phrases and storage methods, potential risks of phishing and theft of private keys, issues of software updates and compatibility, etc., all affect user experience, keeping a large number of Web2 users outside the crypto world. Relatively, this also means that once the issues of learning costs and entry barriers can be resolved, and once social projects that are easy to use and allow users to operate seamlessly are born, it will bring huge user traffic.

4. Composability

In Web2 social networks, due to the existence of various centralized institutions, large data islands have actually formed. The internet giants composed of these massive data islands possess data access rights and pricing power. Other projects wanting to use this data or build applications on it must obtain permission from all data-owning institutions. At the same time, there are compatibility issues and potential competitive relationships between the various large data islands, ultimately resulting in many Web2 applications not being interoperable. Users often have to register new accounts and accumulate information and data again when using a single platform. This article believes that ideal Web3 social products have the opportunity to solve the data island problem. Solutions like POAP and ENS that depict user profiles can be seen as attempts to address the data island issue. In the future, there may be simpler, no-threshold standard protocols that help users conveniently manage data ownership while being compatible with access to most protocols. This area is one of the key exploration directions of DID.

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Overview of Top Projects

According to different project types, social projects mainly include several categories such as social graphs, social applications, and tool projects.

) social graph

Social graphs serve as infrastructure in Web3 social, providing common standards and data sources for other application projects. A social graph should have rich data sources, broad composability, and low barriers to use. From this perspective, the necessity of independently built new public chain social projects and native social projects built on less popular public chains is minimal, increasing isolation from other mature ecosystems. Currently, building universal standards for social identities on mature chains is the mainstream choice for the development of social graphs, with projects like Lens Protocol, CyberConnect, and RSS3 being the main players in this space.

CyberConnect

CyberConnect is a multi-chain social graph that can verify and consolidate user interaction data, providing users with digital business cards, social graphs, and smart contract wallets. It offers standard API data interfaces for other Dapp developers, enabling the migration of user data across multiple Dapps. Currently, CyberConnect has integrated with Polygon, Linea, and Optimism, and will subsequently connect with networks like Arbitrum, with the number of users expected to grow further. As of August 8, 2023, the total number of accounts reached 368,000, with a cumulative number of user operations at 738,000, while the total number of user profiles has exceeded 1.25 million.

In the current relatively sluggish market conditions, CyberConnect's daily active users (DAU) still maintain above 10,000, with overall traffic being quite large.

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)# Lens Protocol

Lens Protocol is a social project developed by the well-known DeFi lending project AAVE team. It is a social graph protocol built on Polygon that allows anyone to create non-custodial social profiles and build new social Dapps. Users can create their own social card NFTs by connecting their wallets and use these social cards to interact with other users. Users can also build corresponding interactive Dapps based on Lens. Users can log in using Lens, and interactions within the Lens ecosystem will be recorded in the Lens social card.

Currently