A shortened version of this article was originally published on Overpriced JPEGs on November 6th, 2023.
The last couple of months have been a whirlwind of activity around web3 social protocols and the consumer applications built on top of them. From the explosion of friend.tech (and its copious copycats), Farcaster becoming permissionless and migrating to OP, and the launch of Lens V2 on mainnet (originally announced in July), it’s an incredibly exciting time to be building, participating, and engaging in this space.
For those who may just be curious spectators but want to better understand the trends in this space, I thought it’d be interesting to write a deep dive into web3, decentralized social, and why this space is so exciting to me and prominent leaders in the space (and also apparently to the VCs plowing hundreds of millions of dollars into the space so far).
But first — a quick background on me and Holder to give you context on why I’m even writing about this in the first place. Holder is a marketing tech and messaging platform for web3 brands and creators. We also are building in the Lens and Farcaster ecosystems and have integrations into both web2 social platforms (Discord and X/Twitter) and web3 social platforms (Lens and Farcaster). Check it out for yourself!
But deep down, I’m personally just a marketer at heart and love all things marketing tech. I grew up in marketing tech, having worked at ExactTarget in its heyday before we sold to Salesforce for $2.5B — Salesforce’s largest acquisition at the time. We were one of the early email marketing pioneers. We were also coming of age right as web2 social media was born and social media marketing was just beginning. We built and acquired a handful of social media management and measurement products over the years and our team helped onboard many of the Fortune 500 to Facebook and Twitter in that time period.
All of that to say that I hold a special place in my heart for the business side of social media, social media marketing, and new technology in general. So when thinking about the opportunity for web3 social networks and platforms, I get incredibly excited and nerd out pretty quickly.
So what makes web3 social so special? In my opinion, it breaks down into four key areas:
- on-chain social graphs
- programmatic incentives and monetization
- permissionless platforms
- interoperable data
On-Chain Social Graphs
One of the most powerful benefits of a web3 social network is the fact that the social graph itself is on the blockchain. Not only am I talking about the fact that the literal post interactions and engagement live on the blockchain (like in networks like Farcaster and Lens), but the existing blockchain is a social graph in itself. You are able to map relationships, relationship strength, influence, and a plethora of other “social” data, all based on an individual’s wallet address and on-chain interactions. That data lives on an open, immutable chain that can be leveraged in countless ways to build a social graph and on-chain identity around a user.
This is incredibly valuable for both builders and the end users. Builders are uniquely able to circumvent much of the “cold start problem” that all social networks and marketplaces struggle with today. The end user also benefits from a more contextualized, personalized experience. Your graph is pre-populated based on who you already interact with and on-chain shared experiences (like conference POAPs, NFTs, DAO participation, etc.). No level of data-scraping magic would make that possible for a network like Twitter(X) or Facebook.
All your on-chain data and social graph is also an asset owned by you and your wallet address. This gives you the ability to bring that social graph with you wherever you go, even if the platform you love is purchased by a billionaire who decides to start charging for blue checks.
Naturally, this also makes social platforms better and better over time because they can build off any other interoperable social content out there. In turn, this also presents major challenges for defensibility and the ability to build loyal user bases (more on that below).
Programmatic Incentives & Monetization
The other major unlock for web3 social is the ability to program incentives and monetization in easier ways. We’ve seen this in nearly every breakout consumer social application building on a blockchain so far. From friend.tech’s unique bonding curve to the Lens collects product and creator monetization strategy, every platform is building shared revenue streams, permissionless monetization, and other gamified financial elements that help the users share in the upside of the platform usage and growth itself. Leveraging incentive designs and in-protocol creator monetization are major ways I think we’ll see platforms capture loyal users and brand defensibility.
Even among the major centralized social media players, the focus on creator-based monetization and revenue sharing has been growing dramatically over the last 12 to 18 months. What makes this unique in a blockchain-based world is the fact that the user account is tied directly to a wallet address and financial instrument (tokens) that are able to capture and share that information. The payouts and revenue share are also completely permissionless and verifiable on-chain versus a Twitter/X or YouTube revenue share black box.
I believe all of this will lead to many of the mass consumer adoption plays we’ll see on top of blockchain technology in the future.
We’re also seeing platforms like friend.tech take this to the extreme with their impending airdrop and many users piling into airdrop farms. Ultimately, though, this incentivizes some unnatural user engagement and subsidized growth numbers, which is a slippery slope. But it’s the major growth hack for blockchain companies.
You just have to remember the Charlie Munger adage:
“Show me the incentives and I will show you the outcome.”
For the most part, the prominent web3 social protocols have also been built with permissionless in mind from day one. This allows for a handful of unique features and ecosystem opportunities, the first of which is the existence of interoperable third-party clients. Anyone is able to build their own client on top of Lens or Farcaster and incorporate their own monetization, growth, and product strategy. I could even spend a weekend building my own personalized client that operates just the way I want with my own favorite fonts, colors, features, and fine-tuned feed.
Just among Lens and Farcaster, we’ve seen a dozen or so clients pop up building on top of their protocols — all done in a permissionless way. Some of the top clients in the Lens ecosystem include Orb (mobile-first), Hey (desktop client), Phaver, Buttrfly, Tape (video platform), and Dumpling (streaming content). Some of the top clients in the Farcaster ecosystem include Warpcast, Aburra, Jam, Flink, Discove, and many more. We’ve even seen platforms like Yup launch that are the web3 social super apps, bringing together Lens, Farcaster, Twitter, Bluesky, Threads, and more in one app.
This also democratizes the roadmap for the protocol and empowers any developer to build and create their own prioritized roadmap. They have the power to add the features they want to see on the protocol and in the ecosystem. One great example of this is Aburra (formerly Alphacaster). Their team built one of the first third-party clients on Farcaster that was DAO-aware, allowing you to receive in-app notifications for DAO votes and vote directly in the app. They’ve since added audio capabilities into their application, allowing for audio spaces to live directly on top of Farcaster.
According to billzh.eth, co-founder of Aburra, this open, permissionless structure is what he believes will power the future:
“Aburra is web3 clubhouse for creators and DAOs. We want to create a social media platform where there are shared economics. It differentiates itself from web2 platforms by tapping into the open social graph and creating web3-native revenue streams via NFTs. We are bullish on permissionless social networks like Farcaster because it allows different applications to compose with each other and grow the pie together.”
Interoperable Content & Data
One of the last areas I wanted to explore is particularly around building protocols with interoperability content and data. Yes, this is very related to being permissionless, but I want to go a little bit deeper specifically into the broader opportunities created using the open data underpinning platforms like Lens, Farcaster, and friend.tech. Not only can developers create their own client and product on top of this social graph, but entire ecosystems, communities, and tools are being built that leverage and support the protocol itself, leveraging this interoperable data.
One great example of this is Airstack. They are building web3 data APIs and have built integrations directly into both Lens and Farcaster, allowing developers to easily leverage and use Lens and Farcaster data in their applications. We do this at Holder, resolving wallet identities with their web3 social identities and letting brands use that data to drive messaging campaigns or segment their audience.
We also saw this with Perk Shop’s unique friend.tech integration. Even though your friend.tech account isn’t tied to a user’s primary non-custodial wallet, they were quickly able to create an integration leveraging Twitter and friend.tech data to let you token-gate perks and airdrops to users who own one of your keys.
This has also led to amazing communities forming around these ecosystems, like Purple, a permissionless DAO built on Nouns Builder (the first DAO actually deployed on Builder) whose goal is to proliferate and expand the Farcaster protocol and ecosystem. I joined Purple in February (Purple #112) and love the Purple community. We just crossed our one-year anniversary and have over 45 proposals that have helped fund small grants via Prop House, sponsor IRL Farcaster meetups, and fund larger on-chain proposals that proliferate Farcaster and/or build on top of the protocol. Our community discussions are even public on a Farcaster channel. Needless to say, Purple wouldn’t exist without decentralized socials.
We certainly have a long way to go for mass consumer adoption and web3 social to live up to its potential, but as Brian Armstrong noted after his epic AMA on Farcaster earlier this week, “Farcaster rocks and decentralized social is one of my top contenders for winning in the next crypto cycle.”