Abstract

In the attention economy, good social media platform can capture billion of users everyday and generate billions of dollars. Decentralised social (DeSoc) can be the key for blockchain to onboard billions of users from non-crypto-native users and provide the “real-value” application to the general public. This article will explore the concept of decentralised social media, what is the current stage of social media on web2, how DeSoc solves the issue, why DeSoc is not thriving yet, who are the major players in space, the difference between DeSoc and SocialFi and the actions which investors can take now. Readers who have basic understanding of DeSocs could start with from the “major players in DeSocs space”.

What is DeSoc?

Social media has became the indistinguishable daily necessity consumption for every human beings since mid-1990s. Social media was first helping to connect friends, sharing opinions and photos, then became a super app for advertisement space, shopping, streaming, businesses, news consumption, institutions announcement, messaging, payment transfer, gaming, transportation services, healthcare and more. According to The Business Research Company research report on the global social media market, it stated “The global social media market grew from $193.52 billion in 2022 to $231.1 billion in 2023 at a compound annual growth rate (CAGR) of 19.4%. The social media market is expected to grow to $434.87 billion in 2027 at a CAGR of 17.1%”.

Rather than being controlled by giant centralised entities, decentralised social networks provide services with user data and content stored on blockchain with independent servers spread across the globe.

What are the issues users deal with by using web2 social media?

Web2: Censorship and dependency by the platform. Users could spend years building their social profile just to find that the profile is banned for unclear reasons, profile data is lost due to server issues, the platform changed so much that users are not comfortable staying in, a new and better platform available or worst of all, the platform is winding down.

Web3: Users own their data in DeSoc instead of being data supplier and the data is stored in decentralised blockchain node around the world. This design allows censorship resistance, secure and transparent social platform for free speech. Users’ data are stored on decentralised storage solution such as IPFS - Filecoin, Arweave, Storj, Theta, etc, empower data is securely stored, encrypted and redundancy (withstand number of storage nodes go offline). Users are allowed to jump in between platforms within the same social graph (more detail below), ease the worry of losing everything if one platform disappears overnight. Developers are able to focus on delivering the best user-centric experience platform and worry less on acquiring users as there are already existing users in the chosen social graph.

Web2: “Selling your soul to tech-giant, CEO buys penthouse in Bahamas.”

Web2 giants often keep majority of the profit to themselves, full-time content creators’ earning could be slashed anytime by the hand of giants with no where else to go but accept, because the barrier of moving their subscribers and hard-works contents from one platform to another.

Web3: “Fair competition among platform to your profile, transparent in revenue flow.”

Web3 social media usually provide a fair and transparent economic model. Rewards users for their content creation in a very transparent manner and profit sharing for group access with fair market-based price discovery (prices fluctuate based on subscribers’ demand).

What are the challenges DeSoc faced?

If decentralised social network are as good as described above, why don’t it thrive already? In short, we could say decentralised social network is still in their infant stage. Further elaborate, DeSocs today are costly, unfriendly user experience. excessive freedom in content creation and lack of network effect.

Decentralised social network is not free by all means. While Web2 giants have lower cost in users acquisition in early stage and later finance from investors using the user counts, Web3 DeSocs have higher cost in users acquisition as user activities are needed to post on blockchain to have those activities immutable. Scalability for millions of users and billions of posts is required for functional DeSocs. DeSocs need to lower the cost by deploying ultra cheap gas and fast chains, or subsidise the costs to reduce the barrier for non-tech people to join the network.

Secondly, DeSocs today are not the friendliest user platform. Many features available in Web2 apps might not be available in DeSocs, because of the difficulty to integrate the feature into blockchain cryptography (such as post deletion), unable to attach top talents from the Web2 giants or there isn’t enough funding to implement every little details. Even the very basic start like sign-in with Metamask wallet, could be as easy as ABC for crypto native personnels, but for the average users, it’s already a barrier. These could be improved with wallet account attraction, growing adoption of DeSocs users, which turn higher valuation in funding to deliver better works in user experience.

Third, the greatest pros of DeSocs which is censorship resistance. However, Wild Wild West also brings unlawful, age sensitive, gambling, hate speeches, malicious links, spams and other unpleasant content into space. Therefore, it is important for protocols to implement certain moderation or algorithms while users have the freedom to accept it or switch away from it.

Web2 generally gates their users in a closed ecosystem, increase the barrier for users to switch platforms. Social network exists only if there is a social community. Currently, there isn’t a “fatal” reason for your friends, your families, your favourite celebrities, news channels, institutions and others to abandon their hard-built followers and move to a ghost town despite the obvious advantages. Even DeSoc founders find no choice but to continue engaging with community in X, despite the fact it is their rivals. DeSocs need to create a comparable environment to Web2 at first, easy transition of profile (if any) and maybe some marketing magic to attract organic users to the platforms.

Major players in DeSoc Space

Base layers are the safest and the most complicated option as the investment narrative for DeSocs, because dapps generally post direct gas contribution to their underlying blockchain. However, the gas contribution might be unsustainable or insignificant to the overall gas consumed, thus not reflecting the base layer token prices in the long-run. Notable base layer for current popular DeSocs including Base (Friendtech), OP (Farcaster, DeBank), Polygon (Lens, CyberConnect’s majority users) and DeSo.

As of mid November,

- Friendtech contributed 8.5% 30-day average gas contribution to Base among other known dapps, which is slightly significant.

- Farcaster had a fairly successful permissionless launch, acquired approximately 6807 new registers since. The registering activities do not have a large impact on Optimism, as its average fee contribution to Optimism only accounts for 0.5%. Higher degree of contribution or more users who bridged more assets to OP is needed to have any dynamic changes.

- The two protocols above show that SocialFi, with speculation opportunity, plays a bigger role in attracting the current degens communities. Therefore, DeBank tokenomics would play an important role for users to flee into Superchain.

- Lens Protocol which utilised Polygon PoS as the transaction stimulation process (profiles, network, tokenisation of content) and Momoka L3 as the data availability layer. Since Momoka is designed to lower the fees and increase scalability of Lens user activities, Lens Protocol Profiles only contribute less than 0.7% to Polygon PoS.

- CyberConnect contributed average 0.23ETH and 1BNB daily profile minting fees to Ethereum and BNB relatively.