Decentralised Social Media
Thematic Analysis #1
This is the first article in our Thematic Analysis series. In this series, we talk about broader trends and emerging concepts in the crypto space, looking towards the future and analysing how Web3 is evolving in real-time. Let’s dive in!
Theme: Decentralised Social Media
The rise of the big tech companies occurred due to the creation of networks which onboarded users at an unprecedented rate and connected the entire world at the click of a button for the first time. Over the last 10 years we have seen almost every industry get disrupted by the internet and social networking websites. Entirely new business models have been birthed and have permeated all aspects of our daily lives. But this massive progress has come at a cost that we have only just started to feel and is primarily because of the way internet/social media companies extract value from its users.
Traditional social media companies are owners of user data. Value mostly accrues to the platform and not users and creators because of the ad-driven model currently being used. According to Chris Dixon, social networking companies first attract users with free services like Facebook or Instagram. Being free enables a rapid build-up of network effects because on the surface it seems like there is no cost to the user. But over time, after they have reached a critical mass of users, they start extracting value from their users. They do this by collecting data on users and then selling that data to companies who then use that data for targeted advertisements. Since only these behemoth social media companies have access to this wealth of data, only they are able to create competitive feeds of information for users to consume.
The problem is that the ad-driven model forces walled gardens around content created on their platforms. So, there is no composability, and users and creators are forced to continue using these apps. For example, you cannot port over your Instagram followers to Twitter or vice-versa. There is also the risk of being de-platformed at any given moment. We're stuck in a loop: users have to use these companies' apps because they have a monopoly on the content, and because of this, creators are forced into continuing to give their content up to them in order to get reach, in a vicious cycle that continues to empower these companies at the expense of creators and society as a whole. These companies have managed to create a global network effect around a private pool of content that they solely monopolise. Moreover, this centralization of content seems unavoidable: There's value in combining all of the content into a single pool, since it allows for curation at a global scale, but whoever we put in charge of maintaining the pool is ultimately going to become a centralised gatekeeper like what we have today. A solution would arise if we had a way to shift the network effect to a public pool of content that no individual entity controls – but can it be done?
So, what is the solution?
A decentralised social media application.
Web3 Social Protocols 💻
Web3 social protocols want to make the relationship between creators and users much more mutually beneficial for all users, instead of having a platform in the middle accrue all of the value. All user interactions (likes, follows, etc.) are tracked on-chain, and every time this data is added to the blockchain, it is associated with a particular user or creator. The blockchain is essentially performing the role of the traditional Web2 social media company, but the key difference is that all data is publicly visible and completely portable and user-owned.
Web3 social protocols aim to create permissionless systems where users have their data on a ‘social graph’. In the context of a blockchain, a graph is an indexing protocol. Indexing reduces the time needed to find a particular piece of information. An easy-to-understand example of this is an index in a book, which helps you find the page where that information might exist. Without the use of graphs, you would have to search each recorded block in a blockchain in order to find the information you’re looking for. Obviously, this is no good as it would take a long time. Graphs bring order, structure, and connection to data in a way that makes it easier and quicker to query and find the specific information you need.
It is useful to think of a social graph as a data structure. A social graph creates all of the social relationships between accounts, helping with order and structure in the world of social media in order to offer a richer, more engaging experience. The problem with Web2 networks today is that they all read and own user data from their own centralized databases. There is no portability. Your profile, friends, and content are locked to a specific network and owned by the network operator. This causes each network to fight a zero-sum game for your attention.
Developers find such a graph easier to build on top of as well because they don’t need to work at a specific tech company to get access to the underlying data. The data has gone from being a commodity or precious resource to more of a public utility.
Let's dive into 3 different Web3 social protocols.
DeSo is the 'Decentralised Social Blockchain', a Layer 1 blockchain aiming to create and scale decentralised social applications. Backed by Chamath Palihapitiya’s Social Capital, DeSo aims to put all social media data from users on a blockchain. Once on a blockchain, companies can run nodes and create curated feeds, e.g., an ESPN feed, a Politico feed, etc. Instead of being owned in a black box by private companies, user data now gets stored on a blockchain.
But what does this actually mean?
For example, imagine if ESPN ran a node that curated a feed of the best sports content. Or if Politico ran a node that curated a feed of the best political content. Since DeSo is fully open-source, these companies could customise their UI and build custom algorithms to rank influencers and posts in a way that serves their specific target customer. The end-result would be a product that should be completely bespoke for each customer. This has the potential to move us from a world in which a handful of juggernauts (Facebook, Instagram, TikTok, etc.) control the dominant feeds to one in which consumers will have thousands of feeds to choose from, each with its own specific focus. A creator interaction with their fans would be much more personal, and a company’s relationship with its customers would be more tailored. Users have more power, because they can choose who they give access to their data to and are further rewarded with curated feeds.
If not ad-driven, how will monetisation work? The answer, of course, is a token. DeSo Coin, to be exact, which can be used to buy creator coins. Creator coins are similar to a fractional NFT of a real person. Buying creator coins would allow holders (fans) unique engagement like stakeholder meetings, premium messages, sponsored posts, premium content, distributions and engagement, and NFT usage for a variety of purposes. A percentage of the sale of each NFT can be sent back to a creator's coin-holders as a cash flow (including on secondary sales). DeSo NFTs therefore "close the loop" between a creator's activities on DeSo and the value of their coin, therefore in sum enabling creator coins to be directly linked to a creator's activity on the platform.
The actual utility of the DeSo token is questionable. If you’re going to use a token to buy the creator coins, and that is the only visible utility for it, then ETH or a stablecoin base asset would work better and make much more intuitive sense to the user to buy. If the answer is that DeSo operates on its own blockchain and needs the token to provide security to the network, then the question becomes: why does DeSo need its own blockchain? If it is a high-throughput blockchain in the vein of Solana, then it has to make a trade-off on the decentralisation, security, and scalability trilemma, and it is important to assess the magnitude of this trade-off. If the blockchain is more centralised, then you risk running into the same problems faced with Web2 social media companies. Moreover, needing its own token adds a layer of friction for users, making it more difficult to onboard non-crypto native users. If you’re only buying a token as a specific payment method for another token, then the difficulty of buying the ‘end’ tokens (i.e., the creator tokens) gets higher. It also means that there is no incentive to ever hold the DeSo coin, which adds to the sell pressure on the token.
The creator tokens, however, are critical. It is how creators accrue value to themselves, by making the revenues that they earn more liquid. If DeSo creates a token standard for creator tokens, it will be incredibly valuable since anyone can then spin up their own creator tokens, opening up a new way for creators to interact with their fans.
Lens Protocol is a composable, user-owned, and open social graph built on top of the Polygon blockchain that any application can plug into. It is the ‘infrastructure’ layer for social media, rather than a specific application itself. It provides the tools that applications can be built with. Users own their data and can bring it to any application built on top of Lens Protocol. As the true owners of their content, creators should not need to worry about losing their content, audience, and livelihood based on the whims of an individual platform's algorithms and policies. Additionally, each application using Lens Protocol benefits the whole ecosystem, turning the zero-sum game into a collaborative one. Developers can design meaningful social experiences without needing to turn to feedback mechanisms to lock in a user's attention.
So how exactly does it work?
It starts with users who create profiles and interact with each other via these profiles. "Profile" (as used here) refers specifically to Lens profiles; "user" refers to standard crypto-wallets. Users create a profile on the Lens Hub for which they receive an NFT. The NFT controls the Lens profile and thus the owner of the NFT has sole control over the profile. Profile owners have different abilities such as publishing (posting, commenting, and sharing), following others, and setting a profile image, for example. The Profile NFT contains the history of all of the posts, mirrors (shares), comments, and other content you generate. They also have a ‘Follow’ feature, which can be used to follow other profiles; users get ‘Follow’ NFTs that signify the profiles they are following. What this means is that instead of all this data being stored with Facebook, for example, it would instead be deployed as ERC721 NFTs on the Polygon blockchain with you, the user, as the owner of it. You would then get to decide how you want to use your data, how you want to monetize it and essentially how you want to build your own social graph.
Lens has provided functionality for developers to build dApps on top of the protocol using the data from user NFTs, mainly Profile NFTs (only if they are given permissioned access by the owners of the NFTs). Some of the dApps that have been built are:
LensFrens – Discovery of other Lens profiles;
Alpha Finance – Social DeFi Investing App;
Refract – Crypto link board for news and articles;
Sepana – Search Engine for Lens
Iris – Token-gated creator content;
Clipto – Own clips from your favourite content creators.
The protocol is built from the ground up with modularity in mind. Lens Protocol is currently overseen by a multisig wallet, which will be expanded to a broader DAO, which can develop and vote on new modules and expanded functionality in the future. The proposed DAO governance will be an important factor to follow closely and assess.
The true unlock for Lens will be when all of its core features (i.e., that everything is an NFT) are abstracted away and a truly user-friendly application is created on top of it that continually drives users towards using it. That dApp may have to be mobile-first, since every successful social media platform today prioritises the mobile experience.
A useful dashboard for Lens stats is here.
Under development for the last three years, Peer is building a decentralised social network that is can be described as most akin to a Web3 version of Facebook, but with a token rewarding creators, user-owned data, and a different type of business model.
Peer’s social network is built on its own blockchain, which it (claims) is faster than Solana and Avalanche. Peer aims to solve the problem that in current Web2 networks, you usually only see a slice of the total available information or content out there that is shown to you and get stuck in an echo chamber. Peer aims to solve this issue by rearchitecting the timeline and feed algorithm into a ‘Fluid Timeline’. The timeline isn’t only vertical scrolling, but vertical and horizontal scrolling, where the horizontal axis represents time and the vertical axis is a distance away from the user, with closer stories shared first. This allows users to discover content both closer and further away from their interests which is an entirely new form of social discovery.
Peer is attempting to be more than ‘just’ a social network, although that is difficult enough in the first place. They want to be a ‘Metaverse’ company too. They plan to start with the social network app, then build out their own hardware, including wearables, head-mounted displays, and other devices and accessories that would enable users to fully immerse themselves in an ecosystem built on open standards. Their 5-year roadmap looks incredibly ambitious:
Peer wants to create an end-to-end social media experience, with hardware for AR and VR rolled out in just a few years. VR has been a tough nut to crack for the Web2 giants like Meta, who have endless cash reserves and have invested billions in the hardware and software. It is a really, really difficult ask for a new company to be able to effectively commercialise AR and VR in such a short span of time. If you read Matthew Ball’s epic series of articles about the Metaverse, we’re still pretty far from a well-developed metaverse and the technical and hardware requirements will need more cycles to become consumer-ready.
A mission to ‘create a 3D experience in AR and VR where time and space become vectors’ seems pretty vague, so the end-result is also not clear. There’s a big difference between ideas and reality, and at this point such an ambitious roadmap may be more detrimental than helpful, since it distracts the team’s focus from focusing on the core product (whatever it may be) and getting that right. It would be more convincing to focus on a specific part of the roadmap and work hard to get that right.
It’s simply too early to judge how Peer will turn out, however, and the overall vision and execution are paramount to get absolutely correct if Peer is to succeed.
Closing Thoughts ⌛
At the end of the day, social media is not only about the hardware and software. The user experience is highly dependent upon the manner in which they interact with other users on the platform. Social media represents the human experience – it is messy and there’s a lot that needs to be sorted out in terms of how human beings interact with each other on these platforms. It’s crucial for a protocol to continue to work at fine-tuning that aspect, although it’s not possible to have one homogenous social media platform for every single person on the planet. The important thing is to give users the ability to use the same data across apps. Protocols that give users the maximal amount of power via data portability and ownership to create and move between varied, bespoke social experiences are more likely to be successful.
To join this journey into the worlds of tech, business, and Web3, subscribe below!
This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the article authors and do not represent those of people, institutions or organizations that those authors may or may not be associated with in professional or personal capacity, unless explicitly stated. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.
👇🏽 please hit the ♥️ button below if you enjoyed this post.