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 bear markets. 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 full utilization of developers' imagination, social, identity, NFT, DAO, and fans can all be classified 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 L2 chain BASE has rapidly gained popularity since its launch on August 10. In less than 20 days since its launch, it has over 120,000 registered addresses and more than 20,000 daily active addresses.

Applications and tools 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 also analyzes several leading projects. In addition, it 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 prospects.

Why Pay Attention to Social Media

The cryptocurrency field has always been regarded as an interdisciplinary science that intersects computer science, finance, cryptography, and mathematics. However, due to factors such as its relatively short emergence time, incomplete infrastructure, inconsistent regulatory standards, and high learning thresholds, it has not yet achieved widespread popularity and usage globally. With the continuous improvement of smart contract public chains represented by Ethereum, the development of on-chain Dapps experienced an explosion starting in 2020, with the cumulative number of DeFi user addresses exceeding 40 million. DeFi was the first to bring users into 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 users. Subsequently, starting in 2021, blockchain games and NFTs led a new wave of user influx, and new on-chain gameplay, the token economy design of the Ponzi effect, and diverse value systems helped the Web3 field attract a large number of new users.

Since 2022, the market has experienced a prolonged bear market, with the previously booming gaming, NFT, and other sectors losing their heat. The Ponzi economic model has collapsed rapidly due to insufficient growth, and Web3 user growth has reached a bottleneck. Currently, innovation in Web3 continues, with developers 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 the development of the Web3 field. Even today, still in a bear market, many ecosystems and their projects are in the predicament of having completed construction but lacking real users. Excluding 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 race to ignite Web3 users; from the demand side, the social track has been proven to have super strong potential in the traditional Internet field, with its huge user base and commercial value fully realized in this track. From the early days of MSN to the mid-stage with Facebook and Instagram, and later TikTok, each technological iteration in the social track has been accompanied by the birth of Internet giants, creating numerous employment opportunities in the upstream and downstream of the industry chain. As people's awareness of the privacy value 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 self-identity and behavioral data. Therefore, exploring social projects within the Web3 field is one of the most promising and commercially valuable topics in the near future.

As ecosystems like CyberConnect and Lens Protocol mature, the entire social sector is becoming increasingly grand. Currently, the entire social sector is in a pre-explosion phase, and recently, some social projects have attracted market attention. For instance, the well-known KOL Elon Musk taking over Twitter, his repeated endorsements of Dogecoin, and incorporating Bitcoin into Tesla's official documents have all brought a global influx of traffic to the crypto space. Although he stated that Twitter will never issue tokens, speculations regarding Twitter's social identity, token rewards, and payment have been discussed in the market for a long time. Additionally, Lens Protocol has completed a $15 million funding round, internet social giants like Instagram are issuing NFTs, and Cyber tokens are being listed on multiple top exchanges, indicating industry expansion and development.

Characteristics of the Social Track

As for Web3 social, there is currently no unified definition. We can classify all products that involve the publishing and exchange of information between people, and that can be used for user profiling, into the social domain. From the current developments, it mainly includes social public chains, social graphs, social identities, various types of social applications, and service tools.

In the Web2 space, traditional social platforms such as Twitter, Instagram, and TikTok have amassed a large user base and have developed mature and rich business models. When we talk about Web3 social, we need to validate the necessity and feasibility of Web3 social development. Compared to Web2, Web3 has a lack of 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, 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 users' needs today. In the Web2 field, data is held by centralized institutions, and users may have their data information arbitrarily censored, be forced to delete and modify their social speech, etc. Essentially, Web2 social is still a form of 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 safety.

2. Users have control over data ownership

In the social model of Web2, users' data ownership belongs to centralized platform organizations. By mastering users' data, platforms can create user profiles, analyze user behavior preferences, and subsequently deliver corresponding advertisements and products, achieving maximum monetization of traffic. At the same time, the data itself also possesses certain commercial analysis value. In the Web3 field, user data ownership can be leveraged to enable users to obtain the commercial value of data traffic. From the user's perspective, designing projects that allow users to conveniently realize the monetization of data value is attractive to users. In fact, this model has already been attempted in the business models of Web2, achieving certain results. For instance, the cash rewards for watching videos provided by Pinduoduo and inviting friends to participate in "cutting a knife" ( are essentially attempts to monetize traffic through social network expansion ), both resulting in cash rewards for users. Currently, there have been numerous 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 attempting to return data ownership to users. This article believes that in Web3, due to the diversity of tokens, the volatility of the tokens' intrinsic value, and the richness of token economic design, a wealth of interesting gameplay attracting users can emerge from the commercial value monetization of data ownership in Web3, potentially exceeding the wealth creation effect and user expansion effect 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 a rich 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 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 encryption knowledge to participate in on-chain interactions. Second, the current cryptocurrency projects are relatively more complex compared to the user tools of Web2, 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 stealing private keys, as well as issues related to software updates, iterations, and compatibility, all affect user experience. This keeps a large number of Web2 users outside the cryptocurrency world. Relatively, this also means that once the issues of learning costs and entry barriers are resolved, and once social projects that are easy to use and allow users to operate without feeling the complexity are born, it will bring a huge influx of users.

4. Composability

In Web2 social networks, the presence of various centralized institutions has actually formed large data islands. The internet giants formed by these huge data islands have data access permissions and pricing power. Other projects wishing to use this data or build applications on it need to obtain permission from all data-holding institutions. At the same time, there are compatibility issues and potential competitive relationships among these large data islands, ultimately 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 data island problem. Initiatives like POAP and ENS, which depict user profiles, can be seen as attempts to address the issue of data islands. In the future, simpler, no-threshold standard protocols may emerge that help users conveniently master data ownership while also being compatible with the majority of protocols. This area is one of the key exploration directions of DID.

Overview of Top Projects

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

social graph

Social graphs serve as infrastructure in Web3 social, providing universal standards, data information sources, and more for other application projects. Social graphs should have rich data sources, wide composability, and low entry barriers. From this perspective, the necessity of independently constructed new public chain social projects and native social projects built on niche public chains is relatively low, 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, with Lens Protocol, CyberConnect, and RSS3 being leading projects in this field.

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, while offering standard API data interfaces for other Dapp developers to facilitate the migration of user data across multiple Dapps. Currently, CyberConnect has integrated with Polygon, Linea, and Optimism, and will later connect with networks such as Arbitrum, with user numbers expected to continue to grow. As of August 8, 2023, the total number of accounts has reached 368k, with a cumulative user operation count of 738k, and the total number of user profiles has exceeded 1.25m.

However, in the currently relatively sluggish market conditions, CyberConnect's daily active users (DAU) still maintain above 10k, with overall traffic being quite large.

Lens Protocol

Lens Protocol is a well-known social project developed by the AAVE team, a long-established DeFi lending project. 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 connect their wallets to access.