Web3 Social: The Next Bull Run Engine?

Every bull run has different engines of initiation, and behind every bull run engine, there is a long-term development history of a bear market. With the development of Web3 technology and infrastructure, the social track has also ushered in new opportunities.

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

As an application layer track that requires developers to fully unleash their imagination, social, identity, NFT, DAO, fans, and more can be classified into the category of Web3 social. The social track is still in its early stages; with the launch of some projects and creator incentive programs, the market enthusiasm for the social track is gradually rising.

The social application Friend.Tech on the L2 chain BASE has rapidly gained popularity since its launch on August 10th, with over 120,000 registered addresses and more than 20,000 active addresses in less than 20 days.

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

This article explores the current development status and product characteristics of Web3 social, analyzes several leading projects, and studies the risks and challenges faced by this sector. Overall, the prospects for the Web3 social sector are promising, with good investment potential and development outlook.

Why Pay Attention to Social Media

The cryptocurrency field has always been regarded as an interdisciplinary science that intersects with computer science, finance, cryptography, and mathematics. However, due to factors such as its short emergence time, inadequate infrastructure, inconsistent regulatory standards, and high learning thresholds, widespread adoption and use on a global scale have not yet been achieved. With the continuous improvement of public chains for smart contracts represented by Ethereum, on-chain Dapps have experienced an explosion since 2020, and the cumulative number of Defi user addresses has exceeded 40 million. Defi was the first to bring users into on-chain interactions, and its authentic and convenient application scenarios have driven the development of the on-chain economy, cultivating a group of on-chain users. Subsequently, in 2021, blockchain games and NFTs began to lead a new wave of user influx, with new on-chain gameplay, token economic designs, and diverse value systems helping the Web3 field attract a large number of new users. Among them, blockchain games have drawn in many Web2 gamers and low-income populations from the third world due to the gold mining effect, while NFTs, with attributes such as identity value, collectible value, and brand value, have attracted many collectors, art enthusiasts, and traditional brand merchants.

Since 2022, the market has entered a long bear market, with the previous hot sectors such as gaming and NFTs losing momentum. The Ponzi economic model has rapidly collapsed due to insufficient incremental growth, and Web3 user growth has hit a bottleneck. Currently, Web3 innovation continues, with developers constantly exploring new possibilities in infrastructure, zero-knowledge proofs, payments, identity, and Defi2.0, but the small number of users remains one of the core issues facing Web3 development. In the context of a bear market, many ecosystems and their projects face the awkward situation of having completed construction but lacking real users. Excluding airdrop studios and multi-wallet users, the number of real 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 ways to attract new users to join. The social track is expected to become the next track to ignite Web3 users; from the demand side, the social track has already demonstrated enormous potential in the traditional internet field, where a huge user base and commercial value have been fully realized. From the early days of MSN to the mid-term stages of Facebook, Instagram, and later TikTok, each technological iteration in the social track has been accompanied by the birth of internet giants and has created a large number of employment opportunities in the upstream and downstream of the industry chain. As people's awareness of the privacy and commercial value of data ownership increases, more voices are calling for users to take control of their social information and data through Web3, enjoying the value of their self-identity and behavioral data. Therefore, exploring social projects in the Web3 field is one of the directions with the most development prospects and commercial value in the near future.

As ecosystems like CyberConnect and Lens Protocol mature, the entire social sector ecosystem is becoming increasingly vast, currently in the pre-explosion phase. Recently, some social projects have attracted market attention. For instance, the largest KOL in the crypto space, Musk, taking over Twitter and repeatedly promoting Dogecoin, as well as incorporating Bitcoin into Tesla documents, have brought global traffic to the crypto field. Although it has been stated that Twitter will never issue tokens, speculation around Twitter's social identity and token reward payments has been discussed in the market for a long time. Additionally, Lens Protocol has completed a $15 million financing round, internet social giants like Instagram are issuing NFTs, and Cyber tokens are simultaneously listed on several top exchanges, with the industry continuously expanding and developing.

Characteristics of the Social Track

There is currently no unified definition for Web3 social. We can categorize all products that involve the publication, exchange of information between people, and are used for user profiling into the social domain. From the current development achievements, this mainly includes social public chains, social graphs, social identities, various social applications, and service tools.

In the Web2 field, traditional social platforms such as Twitter, Instagram, TikTok, etc. have a large number of users and have derived mature and rich business models. When it comes to Web3 social, it is necessary to validate its necessity and feasibility for development. Compared to Web2, Web3 has an insufficient user base in 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, anti-censorship

One of the biggest advantages of Web3 social compared to Web2 social is anonymity and censorship resistance, which has already been validated as one of the user demands today. In the Web2 realm, data is controlled by centralized institutions, and users may face arbitrary censorship of their data, being forced to delete or modify social commentary, and so on. Essentially, Web2 social is still a social model regulated by a system, where users cannot protect their privacy. In contrast, decentralized Web3 inherently has the characteristics of protecting user privacy and resisting censorship from centralized institutions, and these characteristics can meet users' demands for privacy protection and maintaining their own security.

2. Users have full ownership of data.

Under the Web2 social model, users' data ownership belongs to centralized platform organizations. By mastering user data, platforms can create user profiles, analyze user behavior preferences, and then deliver corresponding advertisements and products, maximizing traffic monetization. The data itself also has certain commercial analytical value. In the Web3 domain, users can obtain the commercial value of data traffic by having data ownership. From the user's perspective, designing projects that allow users to conveniently realize the monetization of data value has a certain appeal. In fact, this model has been attempted in Web2 business models and has achieved certain results. For example, Pinduoduo offers cash rewards for watching videos and invites friends to participate in "cutting a knife" (, essentially a social network for user acquisition ), where cash rewards are attempts for users to realize traffic monetization. Currently, there have been many attempts in the Web3 field in this area, such as Nostra based on the Bitcoin Lightning Network, Lens based on Polygon, and the multi-chain protocol CyberConnect, all trying to return data ownership to users. This article believes that in Web3, due to the diversity of tokens, the volatility of token value, and the richness of token economic design, many interesting ways to attract users can be derived from the commercial value monetization of data ownership in Web3, possibly even surpassing the wealth creation effect and user acquisition effect generated during the last bull run of chain games.

3. Simple and easy to use

One of the key elements of social projects is to achieve abundant and free flow of information within the community, 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 limited development of the current crypto space is the small user base. Firstly, there is a certain learning threshold for users to enter the crypto space; users need to master some computer and crypto knowledge to participate in on-chain interactions. Secondly, current crypto projects are relatively more complex compared to Web2 user tools, lacking simplicity and convenience. For instance, with EOA wallets, the complex mnemonic phrases and storage methods, potential risks of phishing and theft of private keys, and issues of software updates and compatibility all affect the user experience. This keeps a large number of Web2 users outside the crypto world. Conversely, this also means that once the issues of learning costs and entry barriers are resolved, and once a social project is born that is easy to use and allows users to operate without feeling it, it will bring in a huge influx of users.

4. Composability

In Web2 social networks, due to the existence of various centralized institutions, massive data islands have effectively formed. The internet giants constituted by these enormous data islands possess the authority to access data and set pricing, and projects in other categories that wish to use this data or build applications on it must obtain permission from all data-holding institutions. Meanwhile, there are compatibility issues and potential competitive relationships between these large data islands, which ultimately leads to 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 may have the opportunity to address the issue of data islands. Initiatives like POAP and ENS, which depict user profiles, can be seen as attempts to solve the data island problem. In the future, there may emerge simpler, barrier-free standard protocols that help users conveniently gain data ownership while being compatible with access to most protocols. This area is one of the key exploration directions for DID.

Overview of Leading Projects

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

social graph

The social graph serves as the infrastructure in Web3 social, providing universal standards, data information sources, and more for other application projects. The social graph should possess characteristics such as rich data sources, wide composability, and low barriers to entry. From this perspective, the necessity of newly built social projects on independent public chains and native social projects built on obscure public chains is relatively low, as it increases isolation from other mature ecosystems. Currently, building general standards for social identities on mature chains is the mainstream choice for the development of social graphs, including mainstream projects in this field such as Lens Protocol, CyberConnect, and RSS3.

CyberConnect

CyberConnect is a multi-chain social graph that can verify and consolidate user interaction data, providing users with personal business cards, social graphs, and smart contract wallets. It offers standardized 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 further integrate with networks such as Arbitrum in the future, with the number of users expected to grow further. As of August 8, 2023, the total number of accounts reached 368k, with a total of 738k user operations, and the total user profiles have exceeded 1.25m.

In the current relatively sluggish market conditions, CyberConnect's daily active users (DAU) still maintain above 10k, indicating a significant overall traffic.

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, allowing anyone to create non-custodial social profiles and build new social Dapps. Users can create their own social business card NFTs by connecting their wallets and interact with other users using these business cards. Users can also use Lens's.