The Web3 social track is expected to become the next bull run engine

Every bull run has different engines for ignition, and each bull run engine has undergone a long nurturing process during the bear market. From the frenzy of MEME to the summer of DeFi, 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 needs to give full play to the creativity of developers, social networking, identity, NFT, DAO, fan economy, etc. can all be classified into the category of Web3 social. At present, the social track is still in its early stages, but with the launch and innovation of some projects, the market heat is gradually rising.

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

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

This article will explore the current development status and product characteristics of Web3 social, and analyze several leading projects. It will also discuss the risks and challenges faced by this sector. Overall, the future of the Web3 social sector looks promising, with good investment potential and development prospects.

Why Pay Attention to Social Media

The field of cryptocurrency has always been regarded as an interdisciplinary science involving computer science, finance, cryptography, mathematics, and other disciplines. However, due to factors such as a short development period, inadequate infrastructure, inconsistent regulatory standards, and high learning thresholds, widespread adoption and use on a global scale have not yet been achieved. With the improvement of public chains represented by Ethereum and smart contracts, on-chain applications have experienced an explosion since 2020. As shown in the figure below, the cumulative number of DeFi user addresses has exceeded 40 million. DeFi has taken the lead in bringing users into on-chain interactions, and its real and convenient application scenarios have promoted the development of the on-chain economy, attracting and cultivating a group of on-chain users. Subsequently, starting from 2021, gaming and NFTs have led a new wave of user influx, with new on-chain gameplay, Ponzi economic designs, and diverse value systems helping Web3 attract a large number of new users. Among them, blockchain games, due to the gold farming effect, attracted a large number of Web2 gamers and low-income groups, while NFTs, with their attributes of identity value, collectible value, and brand value, attracted collectors, art enthusiasts, and various brand merchants.

Total cumulative DeFi user addresses on the entire chain

Since 2022, the market has entered a prolonged bear market, with the previous hot topics like gaming and NFTs losing momentum. The Ponzi economic model collapses rapidly when there is insufficient growth. Web3 user growth has encountered bottlenecks. Currently, Web3 innovation continues, with developers constantly exploring new possibilities in infrastructure, zero-knowledge proofs, payments, identity, and DeFi 2.0, but the insufficient number of users remains one of the core issues facing Web3 development. In the bear market environment, many ecosystems and their projects face the dilemma of 'products are ready but lack 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 development of Web3 needs to expand more application scenarios and create more gameplay to attract new users. Currently, the social sector is expected to become the next area to ignite Web3 users. From the demand side, the social sector has been proven to have enormous potential in traditional internet, with a huge user base and commercial value fully reflected in this field. From the early MSN to the mid-term Facebook and Instagram, and then to the later TikTok, each iteration of social technology has been accompanied by the birth of internet giants and has spawned 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 manage their social information and data through Web3, enjoying the value of their own identity and behavioral data. Therefore, the exploration of Web3 social projects is one of the most promising and commercially valuable directions for development in the near future.

As the ecosystems of CyberConnect, Lens Protocol, and others mature, the entire social sector's ecosystem is becoming increasingly powerful. The social sector is currently in the early stages of an explosion, and recently some social projects have attracted market attention. For example, the biggest KOL in the crypto circle, Musk, taking over Twitter, his repeated endorsements of Dogecoin, and including Bitcoin in Tesla's official documents have brought global traffic to the crypto field. Although it is stated that Twitter will never issue tokens, speculations around Twitter's social identity, token reward payments, and other related topics have been discussed in the market for a long time. In addition, Lens Protocol has completed a $15 million financing round, internet social giants like Instagram are issuing NFTs, and the Cyber token has been launched on multiple top exchanges simultaneously, indicating industry expansion and development.

Characteristics of the Social Track

There is currently no unified definition for Web3 social. We can categorize all products related to information publishing, exchange between people, and user profiling into the social domain. From the current development achievements, it mainly includes social public chains, social graphs, social identities, various types of social applications, and service tools.

In the Web2 realm, traditional social platforms like Twitter, Instagram, and TikTok have amassed a large user base and developed mature and rich business models. When we talk about Web3 social, we need to validate its necessity and feasibility for development. Compared to Web2, Web3 has an insufficient user base in social aspects and is currently still in the stage of technical 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 resistance to censorship, a feature that has already been validated as a user demand today. In the Web2 domain, data is controlled by centralized institutions, and users may face arbitrary censorship of data, be forced to delete or modify social statements, etc. Essentially, Web2 social remains a social model under a regulated 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, which can meet users' demands for privacy protection and maintaining their own security.

2. Users have ownership of data.

Under the Web2 social model, user data ownership belongs to centralized platform organizations. The platform maximizes monetization by mastering user data, creating user profiles, analyzing user behavior preferences, and then delivering corresponding advertisements and products, while the data itself also possesses certain commercial analytical value. In the Web3 field, user data ownership can be transferred to users, allowing them to gain commercial value from data traffic. Designing projects that enable users to easily realize data value monetization is attractive from the user's perspective. In fact, this model has already been attempted in Web2 business models and achieved certain results. For example, Pinduoduo provides cash rewards for watching videos and invites friends to participate in "cutting a knife" (, essentially a social network 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 regard, such as Nostra based on the Bitcoin Lightning Network, Lens based on Polygon, and the multi-chain protocol CyberConnect, all of which are trying to return user data ownership to users. This article believes that in Web3, due to the diversity of tokens, the volatility of the value of tokens, and the richness of token economic design, there can be many interesting ways to derive commercial value from data ownership in Web3 that attract users, potentially creating a wealth effect and user acquisition effect that meet or even exceed those from the last bull run in chain games.

3. Simple and easy to use

One of the elements of social projects is to achieve abundant and free flow of information within the community, which 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 cryptocurrency field is the small user base. First, there is a certain learning threshold for users to enter the cryptocurrency field; they need to master certain computer and cryptocurrency knowledge to participate in on-chain interactions. Second, current cryptocurrency projects are relatively complex compared to Web2 user tools, which are not simple and convenient enough. Taking EOA wallets as an example, the complex mnemonic phrases and storage methods, potential risks of phishing and key theft, and issues related to software updates and compatibility all affect the user experience. These factors keep a large number of Web2 users out of the cryptocurrency world. Relatively speaking, this also means that once the issues of learning costs and entry barriers can be solved, and once a social project that is easy to use and allows users to operate without feeling it is born, it will bring massive user traffic.

4. Composability

In Web2 social networks, the existence of various centralized institutions has actually created massive data islands. The internet giants formed by these enormous data islands possess data access permissions and pricing power. Projects from other categories wishing to use this data or build applications on it must obtain permission from all data-holding institutions. Additionally, there are compatibility issues and potential competitive relationships between these large data islands, ultimately leading to a situation where many Web2 applications do not interoperate. Users often have to register new accounts and accumulate information and data again when using a different platform. This article argues that ideal Web3 social products have the opportunity to solve the data island problem, with attempts like POAP and ENS representing efforts to address this issue. In the future, simpler, barrier-free standard protocols may emerge, helping users easily manage data ownership while being compatible with most protocol integrations. This area is one of the key exploration directions for DID.

Overview of Leading Projects

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

social graph

Social graphs serve as an infrastructure function in Web3 social, providing universal standards, data information sources, and more for other application projects. Social graphs should possess characteristics such as rich data sources, wide composability, and low usage thresholds. From this perspective, the necessity of building standalone new public chain social projects and native social projects on obscure public chains is not significant, 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, with Lens Protocol, CyberConnect, and RSS3 being mainstream projects in this space.

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 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 such as Arbitrum, with the user base expected to grow further. As shown in the figure below, as of August 8, 2023, the cumulative number of accounts reached 368k, the total number of user operations reached 738k, and the total user profiles exceeded 1.25m.

CyberConnect User Data

In the currently sluggish market conditions, CyberConnect's daily average traffic (DAU) still maintains above 10k, indicating a large overall traffic.

CyberConnect Traffic Data

Lens Protocol

Lens Protocol is a well-known social project developed by the AAVE team, a veteran in the DeFi lending space. 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 business card NFTs by connecting their wallets and interact with other users using their business cards. Users can also build corresponding interactive Dapps based on Lens. ( Users can log in using Lens, interact within the Lens ecosystem, and the interaction records will be saved to the Lens social.