Opportunities and Mission of Web3 Social

Recently, the discourse around Web3 has been filled with negativity, as if Web3 is just a large field of retail investors. However, in my view, Ponzi is neutral; it is a financing technique that reduces project operational costs and serves as a means to support the eventual success of a project. Whether in DeFi, social, or other tracks, there have always been builders who continue to strive. As long as the pace of progress hasn't stopped, the Web3 revolution has not failed. All technological innovations emerge in a surge, and a short-term downturn is insufficient to prove that the industry lacks prospects. We firmly believe in the power of cryptocurrency and look forward to a decentralized future.

This article aims to outline the achievements of Web3 builders in the social field over the past eight years from a development perspective, summarize experiences and lessons learned, and seek potential opportunities and blueprints. Although Web3 social has not yet fully matured, the industry's development results are still noteworthy. Different people have different expectations for Web3; some hope for a better experience and to obtain a superior form of spiritual opium, while others need to protect their personal data sovereignty more comprehensively. As Web3 technology continues to advance and the threshold and costs keep decreasing, the emergence of real products may very well be happening right now.

The Underlying Demand Theory of Web3 Social

Any successful product is built on solid demand. One of the most criticized aspects of Web3 projects is their inability to integrate with the real economy. To break the stereotype that "Web3 is just a way to exploit investors," we need to fundamentally demonstrate the demand for social interaction in Web3.

Humans are social animals with social needs. People need to establish connections with others, perceive the emotional attitudes and psychological activities of others, and receive feedback to correct their own emotional cognition. This need is as essential as eating, drinking, and breathing; it is ingrained in our genes. This is the fundamental need for social interaction, which can be summarized as connection, mental interpretation, and self-coordination.

Holding tokens is a brand new way of connecting. An open and verifiable database expands the dimensions of information we can gain from connections. A new information environment will breed new social relationships and interaction methods.

We see that the psychological motivations behind most social behaviors on the internet can be summarized as: the need for self-presentation, the need for emotional venting, and the need for seeking recognition. Compared to traditional offline socializing, the online world has created more social scenarios through multimedia. The internet has evolved from forums, BBS, chat rooms to blogs, instant messaging, social media, and gaming spaces. These new scenarios include different interpersonal relationship networks, content, and presentation methods, leading to the emergence of successful projects.

Looking at the development of social networking on the internet, economies of scale are a significant characteristic. Historical experience tells us that it is impossible for social projects or products to survive if they do not establish economies of scale in social activities conducted among a specific group of people for specific purposes.

Compared to the global Web2 social giants with millions of concurrent users, the scale of Web3 social is even less than a fraction of that. Economies of scale are a mountain; if economies of scale cannot be formed in a certain scenario, one cannot escape the fate of being subsidized to death. The scale of social networks and content determines whether social nature and social motivation can be better realized. How can a product without scale help users expand their social connections? How can it achieve personal display, and how can it reach empathy with others?

The development direction of Web3 has been set since the concept was proposed. In short, it is an industrial ecosystem supported by a trusted open data environment and a financial environment backed by tokens. How can such an environment give birth to a new industrial pattern? With underlying information support across databases and organizations, the ability to freely choose front-end, composable and pluggable social interfaces is a unique advantage of Web3 social. Tokens are a typical feature of Web3, where social support facilitates token issuance, and the interaction of rights quantified by tokens is the core content, while the scenarios that organize social relationships are unique application scenarios of Web3 social.

In recent years, the Web3 industry has really gone to great lengths to gain scale advantages in the local social market.

The Development Context of Web3 Social

This chapter aims to demonstrate that Web3 social is continuously progressing, thereby indicating that the accumulated experiences and lessons of the industry, along with the ongoing advancements in technology, are continually pushing us closer to the singularity of industry explosion.

The development of social projects shows two parallel development trends, stemming from the advantages provided to entrepreneurs by the Web3 environment.

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

Competition of Decentralized Social Technology Standards

If we consider humans to be social animals, our information input determines what kind of person we are. Therefore, the power of internet social platforms is immensely great. We can hardly imagine the serious consequences of handing this power over to companies and governments. When we lose sovereignty over social information, we also lose the freedom of cognition and choice. The Facebook personal data leak scandal led by Cambridge Analytica tells us how easily our will can be manipulated. We and our descendants need to have control over our own data sovereignty. Therefore, decentralized social technology solutions will be a necessity in the future.

To achieve decentralized social networking, breakthroughs must be made in communication protocols, data, and applications. The communication technology used to achieve global consensus in blockchain may not be suitable for decentralized social networking communications. Therefore, based on the experience of STEEM, new generation projects such as Bluesky, Nostr, Lens, and Farcaster have proposed their own decentralized social protocols. By sacrificing some degree of data decentralization, all protocols have made significant progress. Imitating web2 social tools on any of these protocols is no longer a problem, and even because decentralization has been achieved, users have greater autonomy. Users have the right to maintain their intangible assets within the system. However, as mentioned earlier, the business side of Web3 faces a tremendous scale disadvantage.

Technology is not the issue. How to move the mountain of economies of scale that blocks the road to success is the challenge faced by all project parties proposing solutions. To penetrate this disadvantage, token incentives have become the most direct means for the vast majority of projects in the short term.

Token Incentive Revolution Hits a Snag

The birth of tokens is akin to opening Pandora's box. From the moment all web3 users enter the industry, they are forced to confront a complex financial environment. For project teams, adopting tokens allows them to use users' desires as subsidies, thereby reducing the operational costs of the project.

The revolution of token incentives faces 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 facing witch attacks.

These two issues have not been fully resolved to this day. We introduce a case that helps us understand.

The STEEM blockchain can be considered a pioneer of the entire Web3 social industry. To this day, not only do many of the concepts and structural designs it proposed continue to be imitated and referenced by current projects, but it has also nurtured a group of blockchain application teams and projects. In 2016, the STEEM blockchain initially made innovative attempts in multiple dimensions such as token incentives for content, token incentives for real-person curation, data availability layers, and account hierarchical security.

Applications built on the STEEM blockchain are a social media platform, where the quality of media content is determined by users weighted by the amount of tokens staked. In the early stages of the project, the founding team had absolute advantages both in reputation and in the amount of staked tokens. At that time, content production and filtering recommendations based on token staking weight were effective. Like the vast majority of projects that use token incentives, the enormous wealth effect attracts a swarm of witches. However, the token staking on the STEEM blockchain includes punitive powers, which can make it somewhat immune to witch attacks.

This effectiveness is based on the centralization of assets and power and the solidity of consensus. When founder BM left, the founding team fell apart, and the project was sold to the infamous Sun Yuchen, leading to a collapse of consensus. In the early stages, the collapse of consensus resulted in more individuals opting for witch attacks to profit: token holders liked each other, and proxy mining ran rampant. In the later stages, when algorithmic recommendation systems and AIGC technology matured, this content production and recommendation system based on token-weighted voting reached its moment of exiting the historical stage. Today's top social media have achieved user content that is tailored to each individual; this refined content selection cannot be matched by human resources plus simple content tagging for sorting and pushing.

After STEEM, many projects have used token issuance to accelerate the scale expansion of their platforms, such as Torum, BBS, and any venture that aims to scale has adopted token incentives. Of course, later on, there were also cases like Lens protocol that used the expectation of free benefits. These incentives contradict the "non-monetary rewards" element of social interactions. Experiments have shown that external material rewards reduce intrinsic psychological rewards, which leads to the mixing of non-social content in social content. Social connections are information channels, and the value of social platforms lies in aggregating information within social channels. However, this incentivization, which adds noise, actually results in lower social efficiency. It makes a channel that is already scarce in information face even more noise, leading to inevitable decline.

Like Degen on Farcaster, a portion of tokens is distributed through rewards. This is using Meme tokens to incentivize social projects with the unique financial function of web3 ( rather than content creation or recommendations ). By introducing the financial attributes of crypto social networks, it creates a wealth effect and triggers ecological prosperity. A platform can only have one token, but it can have countless Meme tokens. Meme tokens can fail, but platform tokens cannot. Using Meme tokens to boost social projects will become a superior technique for token incentive platform projects. 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 campaign. 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 ), launching platforms, and so on. Although I have not found signs of Farcaster breaking through Lens's business boundaries ( or the current industry bottleneck ), this emergence is worth focusing on.

Content Autonomous Revolution Phase Setbacks

Web3 focuses on decentralization, which in business means breaking monopolies.

The starting point of Web3 social should be in 2016-2017. At that time, Web2 social products had already developed rapidly. In the last two cycles, social projects were all focusing on the narrative of content autonomy. Various projects were attempting to put content "on chain", and based on the foundation of content "on chain", work could be done to assetize content.

Born in 2016, STEEM has fallen behind due to the disintegration of the project team and delayed development progress. Although it had implemented content on-chain when the project was launched, it lacks an EVM environment and cannot run smart contracts. After the DeFi summer that began in 2020, it gradually fell behind. The crown of content on-chain has been passed to Mirror. Mirror's selling point is that it provides a relatively friendly text content editing environment. Users can publish their text content by signing with their wallet. Content on-chain is immutable. Other users can subscribe to and follow a certain account. Additionally, they can mint the content into NFTs and trade them in the NFT market. So far, this project continues to operate, and although traffic has declined somewhat, some Degen players still use this project to publish content and engage in some content NFT minting activities.

Mirror is an excellent web3 product that embodies the spirit of minimalism and utilizes a trustworthy and open database exceptionally well. Anyone can assert rights to content data on the internet through wallet signatures. The content that has been asserted can be issued as NFTs and traded in the NFTfi environment under the EVM ecosystem. The user churn of Mirror is essentially 1, relatively.