Web3 Social Track: The Next Bull Run Engine?

Every bull run has different starting engines, and behind each bull run engine is a long-term development process of the bear market. With the development of Web3 technology and infrastructure, the social track has also 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 imagination, social, identity, NFT, DAO, fans, and more can all be categorized under the Web3 social category. The social track is currently still in its very early stages, and with the launch of some projects and creator incentive programs, the market heat of the social track is gradually rising.

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

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

This article discusses the current development status of Web3 social, the characteristics of track products, and analyzes several leading projects. In addition, it also studies the risks and challenges faced by this track. Overall, the prospects for the Web3 social track are promising, with good investment potential and development outlook.

Why Pay Attention to Social Media

The crypto sector is regarded as an interdisciplinary science that intersects computer science, finance, cryptography, mathematics, and other fields. However, due to factors such as its short emergence time, inadequate infrastructure, inconsistent regulatory standards, and high learning thresholds, it has not yet achieved widespread global adoption and usage. With the improvement of smart contract public chains represented by Ethereum, on-chain Dapps experienced an explosion starting in 2020, and the cumulative number of Defi user addresses has now exceeded 40 million. Defi has taken the lead in introducing users to on-chain interactions, and its real and convenient application scenarios have driven the construction and development of the on-chain economy, attracting and cultivating a group of on-chain Degens. Subsequently, starting in 2021, blockchain games and NFTs led a new wave of user influx, with new on-chain gameplay, the token economy design of the Ponzi effect, and a diverse value system helping the Web3 field attract a large number of new users. Among them, blockchain games attracted a large number of Web2 gamers and low-income populations from the third world due to the gold mining effect, while NFTs attracted many collectors, art enthusiasts, and traditional brand merchants due to their identity value, collectible value, and brand value attributes.

Since 2022, the market has entered a prolonged bear market, with the previously popular sectors such as gaming and NFTs losing momentum, and the Ponzi economic model collapsing rapidly due to insufficient increments. Web3 user growth has hit a bottleneck. Currently, Web3 innovation continues, with developers constantly exploring new possibilities in various fields such as infrastructure, zero-knowledge proofs, payments, identity, and Defi 2.0. However, the small number of users remains one of the core issues facing Web3 development. In the bear market, many ecosystems and their projects face the dilemma of having completed construction but lacking real users. If we exclude various 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 gameplay to attract new users. At present, the social track is expected to become the next track to ignite Web3 users; from the demand side, the social track has been proven to have strong potential in the traditional internet field, with a huge user base and commercial value being fully realized in this track. From the early days of MSN to the mid-term Facebook, Instagram, and later Tiktok, each technological iteration in the social track has been accompanied by the birth of internet giants and has spawned a large number of employment opportunities in the upstream and downstream of the industrial chain. As people's awareness of the privacy and commercial value of data ownership increases, more voices are calling for users to control their social information and data through Web3, allowing users to enjoy the value of their own identity and behavioral data. Therefore, the exploration of social projects within the Web3 field is one of the topics with the most development prospects and commercial value in the near future.

With the maturity of ecosystems like CyberConnect and Lens Protocol, the entire social sector ecosystem is becoming increasingly grand. Currently, the whole social sector is in the pre-explosion stage, and recently, some social projects have attracted market attention. For example, a well-known tech entrepreneur took over a social platform, and their repeated endorsements for a certain cryptocurrency and the inclusion of that cryptocurrency in their company's official documents have brought global traffic to the crypto field. Although they claim that the social platform will never issue tokens, speculations about social identities, token rewards, and payments surrounding the platform have been discussed in the market for a long time. In addition, Lens Protocol completed a $15 million financing round, a well-known social platform issued NFTs, and Cyber tokens were launched simultaneously on multiple top exchanges, indicating industry expansion and development.

Characteristics of the Social Track

For Web3 social, there is currently no unified definition. We can categorize all products related to the publication, exchange of information between people, and those usable for user characterization 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 field, traditional social platforms such as Twitter, Instagram, and Tiktok have amassed a large number of users and have developed mature and rich business models. When we talk about Web3 social, it is necessary to verify the necessity and feasibility of Web3 social development. Compared to Web2, Web3 lacks a sufficient user base for social development and is currently still in the stage of technological exploration. Overall, 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 its anonymity and resistance to censorship, a feature that has already been validated as one of the demands of users today. In the Web2 domain, data is controlled by centralized institutions, where users may face arbitrary scrutiny of their data, and be forced to delete or modify their social expressions. Essentially, Web2 social remains a social model under regulatory systems, where users cannot protect their privacy. In contrast, decentralized Web3 inherently possesses the characteristics of protecting user privacy and resisting censorship from centralized institutions, which can meet users' demands for privacy protection and self-security.

2. Users have control over data ownership.

In the Web2 social model, users' data ownership belongs to centralized platform organizations. By mastering users' data, platforms can create user profiles, analyze user behavioral preferences, and subsequently deliver corresponding advertisements and products to maximize monetization of traffic. At the same time, the data itself also possesses certain commercial analytical value. In the Web3 domain, users can achieve the commercial value of data traffic by gaining data ownership. Designing projects that allow users to easily realize the monetization of data value is attractive to users from their perspective. In fact, this model has already been attempted in the business models of Web2 with certain success. For example, some e-commerce platforms offer cash rewards for watching videos and invite friends to participate in "cut a knife" (, which essentially serves as an attempt to attract new users through social networks ) and offers cash rewards, all of which are efforts for users to realize traffic monetization. Currently, there have been many attempts in the Web3 domain in this area, such as Nostra based on the Bitcoin Lightning Network, Lens based on Polygon, and 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 values, and the richness of token economic designs, there can be many interesting gameplay derived from the commercial value of data ownership that attract users, potentially creating wealth effects and user acquisition effects that even surpass those generated during the last bull run of 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 circles, 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 in the cryptocurrency field is the small user base. Firstly, there is a certain learning threshold for users to enter the cryptocurrency field; they need to master certain computer and encryption knowledge to participate in on-chain interactions. Secondly, the current cryptocurrency projects are relatively complex compared to the user tools in Web2, making them not simple and convenient enough. Taking EOA wallets as an example, the complicated mnemonic phrases and storage methods, the potential risks of phishing and theft of private keys, and issues of software updates and compatibility all affect user experience. This keeps a large number of Web2 users outside the cryptocurrency world. Relatively speaking, this also means that once the issues of learning costs and entry barriers can be resolved, and once a social project that is easy to use and allows users to operate without feeling it is born, it will bring enormous user traffic.

4. Composability

In Web2 social networking, the existence of various centralized institutions has actually created large data islands. The internet giants formed by these massive data islands have data access permissions and pricing power. Other projects wanting to use this data or build applications on it need to obtain permission from all data-owning institutions. At the same time, there are compatibility issues and potential competitive relationships between these massive data islands, resulting in many Web2 applications not being interoperable. Users often have to register new accounts and accumulate information and data anew when using a single platform. This article believes that ideal Web3 social products may have the opportunity to solve the problem of data islands. Attempts to address the issue of data islands can be seen in user profile representations similar to POAP and ENS. In the future, simpler and barrier-free standard protocols may emerge, helping users easily gain data ownership while being compatible with the access of most protocols. This area is one of the key exploration directions of 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 infrastructure in Web3 social, providing common standards, data information sources, and more for other application projects. Social graphs should possess characteristics such as rich data sources, broad composability, and low usage thresholds. From this perspective, there is little necessity for new social projects built on standalone public chains or native social projects built on obscure public chains, as they increase 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, including mainstream projects in this track such as Lens Protocol, CyberConnect, and RSS3.

CyberConnect

CyberConnect is a multi-chain social graph that can verify and sediment 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 further connect with networks like Arbitrum in the future, with user numbers expected to grow further. As of August 8, 2023, the cumulative account number has reached 368k, with a total of 738k user operations, and the total user profiles have exceeded 1.25m.

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

Lens Protocol

Lens Protocol is a well-known and long-established Defi lending project AAVE group