Web3 Social Track: The Next Bull Run Engine?

Each bull run is driven by different engines, and behind each engine lies a long accumulation of bear markets. From the frenzy of MEME to the summer of DeFi, with the development of Web3 technology and infrastructure, the social track has also welcomed new opportunities.

Will Web3 social become the engine of the next bull run?

As an application layer track that requires developers to fully unleash their creativity, social, identity, NFTs, DAOs, fan economy, and more can all be classified under the category of Web3 social. Currently, the social track is still in its early stages, but with the launch of Cyber tokens, the renaming of Twitter, and the introduction of creator incentive programs, market enthusiasm is gradually increasing.

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

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

This article will explore the current state of Web3 social development, product characteristics, analyze several leading projects, and examine the risks and challenges faced by this sector. Overall, we are optimistic about the future development of the Web3 social sector, believing that this field has good investment potential and development prospects.

Why Pay Attention to Social Media

The cryptocurrency field has always been regarded as an intersection of computer science, finance, cryptography, mathematics, and other disciplines. However, due to factors such as its short development time, incomplete infrastructure, unclear regulation, and certain learning barriers, widespread adoption and use on a global scale has not yet been achieved. With the continuous improvement of smart contract public chains represented by Ethereum, the development of on-chain DApps has experienced an explosion since 2020. As shown in the figure below, the cumulative number of DeFi user addresses has exceeded 40 million. DeFi was the first to bring users into on-chain interactions, and its real and convenient application scenarios have promoted the construction and development of the on-chain economy, attracting and cultivating a group of on-chain users. Since 2021, GameFi and NFTs have sparked a new wave of users. New on-chain gameplay, token economic design, and a diverse value system have helped the Web3 field attract a large number of new users. Among them, GameFi, due to its gold mining effect, has attracted a large number of Web2 gamers and low-income groups from the third world, while NFTs, with their identity, collection, and brand value, have attracted many collectors, art enthusiasts, and traditional brand merchants to enter the market.

Since 2022, the market has entered a prolonged bear market, and the previously hot tracks like GameFi and NFT have lost their luster. The Ponzi economic model has rapidly collapsed under insufficient incremental growth, and Web3 user growth has encountered bottlenecks. Currently, innovation in Web3 is still ongoing, with developers continuously exploring new possibilities in areas such as infrastructure, zero-knowledge proofs, payments, identity, and DeFi 2.0. However, the lack of sufficient users remains one of the core issues facing Web3 development. In a bear market environment, many ecosystems and their projects have been completed, but they lack real users. If we exclude airdrop studios and multi-wallet users, the actual number of 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 play methods to attract new users. The social track is expected to become the next field to ignite Web3 users. From the demand side, the social track has been proven to have huge potential in the traditional Internet field, with a large user base and commercial value fully reflected in this area. From the early MSN, to the mid-term Facebook and Instagram, to the recent TikTok, each iteration of social technology has been accompanied by the birth of Internet giants and has driven a large number of employment opportunities in the industrial chain. As people's awareness of the privacy and commercial value of data ownership increases, more and more voices are calling for users to master their social information and data through Web3, enjoying the value of their own identity and behavioral data. Therefore, exploring Web3 social projects is one of the most promising and commercially valuable directions for the foreseeable future.

With the maturation of ecosystems like CyberConnect and Lens Protocol, the entire social sector ecology is becoming increasingly rich. The social sector is currently in the pre-explosion phase, and recently some social projects have attracted market attention. For instance, the largest KOL in the crypto space, Elon Musk, acquired Twitter, and his repeated endorsements of Dogecoin and the inclusion of Bitcoin in Tesla's official documents have brought global traffic to the crypto field. Although he stated that Twitter will never issue tokens, there has been long-standing market speculation and discussion about social identities related to Twitter and token reward payments. In addition, Lens Protocol has completed a $15 million financing, internet social giants like Instagram have issued NFTs, and Cyber tokens have been simultaneously listed on multiple leading exchanges, indicating an expansion and development trend in the industry.

Characteristics of Social Track

There is currently no unified definition for Web3 social. We can categorize all products involving the publishing, exchanging of information between people, and those applicable for user profiling as part of the social domain. From the current development outcomes, it mainly includes social public chains, social graphs, social identities, various social applications, and service tools.

In the Web2 field, traditional social platforms such as Twitter, Instagram, and TikTok have already established a large user base and derived mature and rich business models. When we discuss Web3 social, we need to validate its necessity and feasibility for development. Compared to Web2, Web3 has an insufficient user base in social development and is 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 characteristic that has already been validated as one of the user demands today. In the Web2 realm, data is controlled by centralized entities, and users may be subject to arbitrary censorship of their data, forced to delete or modify their social statements, and so on. Essentially, Web2 social is still a regulated model, where users cannot protect their privacy. In contrast, decentralized Web3 inherently possesses the characteristics of protecting user privacy and resisting censorship by centralized entities, which can meet users' demands for privacy protection and maintaining their own safety.

2. Users master data ownership

In the Web2 social model, user data ownership belongs to centralized platform institutions. Platforms can achieve user profiling, analyze user behavior preferences, and then deliver corresponding advertisements and products to maximize traffic monetization by mastering user data. At the same time, the data itself also has certain commercial analytical value. In the Web3 field, the commercial value of data traffic can be achieved by allowing users to have data ownership. From the user's perspective, designing projects that enable users to conveniently realize data value monetization is attractive to users. In fact, this model has been attempted in Web2 business models and has achieved certain results. For example, the cash rewards for watching videos provided by Pinduoduo and inviting friends to participate in "cut a knife" ( are essentially attempts to monetize traffic for users through social network acquisition ) for cash rewards. Currently, there have been many attempts in the Web3 field in this area, such as Nostra based on the Bitcoin Lightning Network, Lens based on Polygon, and the multi-chain protocol CyberConnect, all trying to return user 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 design, many interesting ways to attract users can be derived from the commercial value of data ownership, potentially creating wealth effects and acquisition effects that even surpass those generated in the last GameFi bull run.

3. Easy to use

One of the elements of social projects is to achieve abundant and free flow of information within the community, 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 entering the cryptocurrency field, requiring them to master some computer and cryptocurrency knowledge in order to participate in on-chain interactions. Second, the current cryptocurrency projects are relatively more complex compared to Web2 user tools, lacking simplicity and convenience. Taking EOA wallets as an example, the complex mnemonic phrases and storage methods, the potential risks of phishing and private key theft, and issues of software updates and compatibility all affect user experience. These factors keep a large number of Web2 users out of the cryptocurrency world. Relatively, this also means that once the issues of learning costs and entry barriers are solved, and once a social project that is easy to use and allows users to operate without feeling is born, it will bring huge user traffic.

4. Composability

In Web2 social media, the existence of various centralized institutions has actually formed large data islands. The internet giants constituted by huge data islands have data access permissions and pricing power, and other projects in different categories that want to use this data or build applications on it need to obtain permission from all data holders. At the same time, there are compatibility issues and potential competitive relationships between the large data islands, ultimately leading to a situation where many Web2 applications do not interoperate; users often have to register new accounts and accumulate information and data again when using a single platform. This article believes that ideal Web3 social products have the opportunity to solve the problem of data islands, and the depiction of user profiles by POAP, ENS, etc. can be seen as an attempt to address the data island issue. In the future, there may be simpler, threshold-free standard protocols that help users conveniently master data ownership while being compatible with most protocols, and 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 tool projects.

social graph

Social graphs serve as the infrastructure in Web3 social, providing universal standards, data information sources, and more for other application projects. Social graphs should feature rich data sources, broad composability, and low barriers to use. From this perspective, the necessity of independently constructed new public chain social projects and native social projects built on niche public chains is not significant, as it increases isolation from other mature ecosystems. Currently, building social identity universal standards on mature chains is the mainstream choice for the development of social graphs, including mainstream projects like Lens Protocol, CyberConnect, and RSS3, which all fall under this category.

CyberConnect

CyberConnect is a multi-chain social graph that can verify and accumulate user interaction data, providing users with personal profiles, social graphs, and smart contract wallets. It offers standard API data interfaces for other DApp developers to facilitate user data migration across multiple DApps. Currently, CyberConnect has integrated with Polygon, Linea, and Optimism, and will further integrate with networks like Arbitrum in the future, with user numbers expected to grow further. As shown in the figure below, as of August 8, 2023, the total number of accounts reached 368k, the total number of user operations reached 738k, and the total number of user profiles has exceeded 1.25m.

In the currently 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 veteran 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 create their own social business card NFTs by connecting their wallets and interact with other users using these social business cards. Users can also build on top of Lens.