Nostr In-Depth Research Report: Tokenless, Jack Dorsey-backed decentralized social protocol

Author: 0x00pluto

Question: What exactly is Nostr?

In the process of digging deeper, I found a large number of articles from the Internet (Special thanks to the authors of these articles), so I sorted out these materials according to the structure.

On the one hand, I hope it will be useful to everyone, and on the other hand, I hope to make a summary to improve the learning effect.

Because of love, so continue to learn and explore~

Let’s first introduce the project in the vernacular

The Nostr project, imagine a borderless social square where everyone can talk, share and listen freely, with no central radio tower and no dedicated broadcaster. It is a decentralized social network that does not rely on any single server or company to store and manage information. Instead, it uses a decentralized approach where everyone can set up their own “Relay” to receive messages from others, just as they would adjust the radio frequency at home.

In this network, your identity is protected by a pair of keys – one public and one private, a bit like your home email address and keys. Your address is public, people know where to send letters, and the keys are private, and only you can open your mailbox to pick up letters. Every message you send is “signed” with a private key, ensuring that the sender is you, just like you signed the letter.

Nostr is like a vast ocean of tiny mailboxes where everyone is free to throw messages into the ocean while others can choose to listen to your channel and pick them up. There is no central control, everyone is the master of their own voice, and a social network that truly belongs to everyone is built.

For those of you who need to get a brief overview of your project, this is enough. Below are the full study notes.

0.Project Introduction

! [Nostr In-Depth Study: Tokenless, Jack Dorsey-Backed Decentralized Social Protocol] (https://cdn-img.panewslab.com//panews/2022/11/9/images/1aa33d14d810f95de9fde8225c7d4ac6.)

Nostr is a decentralized social networking protocol that provides an open and permissionless social platform over a distributed network.

1. Research Highlights

1.1. Core Investment Logic

On the team side: At this time, there is not much information about the specific members of the Nostr team. However, depending on the open-source nature of the project and its decentralized philosophy, the team may consist of cross-domain developers who work collaboratively to advance the project.

Financing: As an open-source license, the Nostr project does not have clear funding information. Open source projects often rely on community support, which may include donations, voluntary contributions, and possibly sponsor support.

Technical aspects: Nostr uses concise data structures and network protocols to achieve its functionality. An Event is the basic unit of data, while a Relay is the node used to deliver the event. Users interact with Relay through the client to complete functions such as publishing and subscribing to information.

Track: Nostr’s decentralized social network track is gradually becoming a hot topic in the field of blockchain and cryptography, especially in terms of privacy protection and censorship resistance. The potential of this track continues to grow as users become more aware of the autonomy of social platforms and data ownership.

1.2. Valuation

Since Nostr is an open-source project and is not commercially available, there is no clear market valuation. Valuations often need to take into account a number of factors, such as user base, business model, revenue stream, and market potential, which are not applicable or fully transparent to Nostr.

1.3. Project Risk

Technical Implementation Risks: Nostr relies on the stability and scalability of decentralized technology, and any technical flaws may affect user experience and system security. Market Acceptance: Decentralized social networks are not yet widely accepted by the general public, and user habits and market education can be challenging. Regulatory Risk: Different countries and regions have different legal attitudes towards crypto technology and decentralized applications, and there may be regulatory uncertainty. Security Risks: As a decentralized network, Nostr may be exposed to security threats, including but not limited to 51% attacks, node collusion, etc.

In summary, Nostr, as a decentralized social protocol, presents a unique way to build a social network, but it also faces implementation challenges and market risks. Investors should fully evaluate these factors when considering supporting such projects.

2. Project Overview

2.1. Project Basics

Nostr is a decentralized protocol that aims to create a censorship-resistant global social network. It doesn’t rely on a central server, uses encryption keys and signatures to secure communications, and forwards posts through multiple relay servers.

2.2. Team Situation

2.2.1. Overall Situation

The overall picture of the Nostr project team is a bit mysterious, as it doesn’t have a clear team structure like traditional companies as a decentralized open source project. Initially, discussions at Nostr began in November 2020 in a Telegram group where participants discussed the possibilities of decentralized social networks and ways to fund such projects. From the beginning, team members were thinking about how to effectively promote the Nostr platform.

2.2.2. Core Members

The founder of Nostr is Fiatjaf, who is also the developer of Bitcoin and the Lightning Network. He provided important technical support for the establishment of Nostr. Jack Dorsey, the former CEO of Twitter, also expressed his support for Nostr and joined the project as a supporter and spokesperson, providing funding for it. Both were key figures in the project, and their addition not only raised Nostr’s visibility, but also added trust and credibility to the project’s development.

2.3. Financing

Nostr is an open-source decentralized social networking protocol, so it is financed differently than traditional commercial companies. From the information available so far, Nostr has not gone through a funding round in the traditional sense. In the early days of Nostr’s development, community members may have volunteered to build and grow the project out of love for the project and support for the idea of decentralization. As the project grew, former Twitter CEO Jack Dorsey donated 14 bitcoins to Nostr, a support that may have been one of the ways Nostr received funding. Information on other investors has not yet been ascertained.

2.4. Past Developments and Roadmap

2.4.1. Past Developments

The Nostr project started in 2020 and has attracted attention since its inception for its decentralized nature and censorship-resistant capabilities. The growth of the project is closely related to the active participation of the community, especially when Jack Dorsey’s involvement has led to the visibility of Nostr, which has had a positive impact on the development of the project.

2.4.2. Current Progress

Currently, the Nostr protocol has several client applications, such as Damus, which is based on the Nostr protocol, which is designed as a decentralized social platform. The emergence and development of these applications is a sign that the Nostr ecosystem is growing.

2.4.3. Development Plan and Roadmap

Although there are no specific development plans and roadmap details at this time, the open and decentralized nature of Nostr has attracted many developers and community members to actively explore and innovate. Based on the level of community activity and current development trends, it is foreseeable that the Nostr ecosystem will continue to develop in the future, and more business models and applications may emerge

3. Project analysis

3.1. Project Background

The context in which the Nostr project emerged is multifaceted. First and foremost, it is a reflection and innovation of existing social media models, especially in terms of censorship-resistant and decentralization. Second, the emergence of Nostr is a response to data privacy violations and censorship policies under the control of centralized social platforms. Against this backdrop, Nostr aims to redefine people’s online social experience through a decentralized approach that enables users to bypass the control and censorship mechanisms of centralized social media companies.

3.1.1. Background

The Nostr Protocol was designed to challenge existing social media models, particularly the pursuit of free speech and censorship resistance. Due to censorship and privacy concerns on existing social platforms, people are increasingly seeking a more open and free social networking environment. The core idea of Nostr is to provide users with a censorship-resistant social experience through a decentralized network protocol.

3.1.2. Technical Background

Technically, Nostr employs an account system based on public-private key pairs, which does not rely on traditional usernames and passwords, but instead uses a public and private key system similar to cryptocurrencies, which increases the anonymity and security of users. A public-private key pair is the core of a user’s identity, with the public key being similar to the username and the private key being used for the signature, ensuring that the source of the information is verifiable and secure. Nostr does not rely on any central server, but operates through a client and a relayer, where the relayer is responsible for forwarding messages between users, but does not store any information, so there is no single point of failure or censorship.

Against this technological backdrop, Nostr seeks to break the grip of traditional social media companies over user data, as well as the censorship policies they may implement. This design allows users to have more autonomy and freedom of speech. In addition, Nostr’s technical architecture and philosophy are closely linked to the ideas of cryptocurrency and Web3, and its close integration with the cryptocurrency community is one of the reasons why it has gained traction.

3.2. Project Rationale

The core idea of the Nostr project is to build a clean, open-source decentralized social protocol, and its goal is to create a global, censorship-resistant social networking platform. Nostr works on a few fundamental concepts, including public-private key pairs, clients, and repeaters. Together, these elements support the operation of the Nostr protocol.

The public-private key pair is the foundation of a Nostr account, similar to the authentication method of cryptocurrency, where the public key is equivalent to the username and the private key is the password. This design ensures the security and privacy of the user’s identity, but also means that once the private key is lost, it cannot be reset like a traditional password.

Nostr doesn’t rely on any central server and operates through cryptography’s keys and signatures. Each user runs a client, which can be native or a web client, and uses a relayer for content publishing and updating. Users need to sign content with their own keys and send it to multiple relayers, which can be other users or servers hosted by themselves. In order to get updates, users can query these repeaters for information. This design of Nostr allows anyone to run the relayer, simplifying the data transfer process while also ensuring that the relayer does not need to be trusted, as all signatures are verified on the client side.

Nostr is designed to give each relay or even each user control over their own data, reducing reliance on third-party services, in contrast to how some existing social platforms like Twitter operate. Platforms such as Twitter may restrict users due to business models, censorship policies, and other factors, and Nostr tries to solve these problems by decentralizing them.

The key rationale and core business logic of this project lies in its decentralized structure and key-based user authentication system, which are designed to create a persistent social networking space that is free from the control and censorship of a central authority. This approach allows users to communicate and publish content freely without sacrificing privacy and security.

3.3. Technical characteristics of the project

The Nostr project leverages a range of key technical features to realize its vision of a decentralized social network. The project uses a unique service framework that includes clients and so-called “relays”. In this framework, clients can connect to one or more relays that are distributed in different locations, and these relays do not communicate directly with each other and remain independent.

This structure allows clients to operate independently of each other and independently of Relay, which takes on the role of data store. Users can privately share their Relay access URLs on some centralized social platforms or through other software, so that other users can load the data stored in the corresponding Relay through the Nostr client software and communicate.

There are two conditions that need to be met when using the Nostr app: download the Nostr client software and subscribe to Relay. Users can choose to set up their own Relay server or subscribe to an existing public Relay service. There are also “public relays” in the Nostr ecosystem that provide registration functions, through which users can generate key pairs and use the service without having to build their own relay server.

In terms of technical implementation, when a client sends data to Relay, it needs to send data to all subscribed Relays, which is a requirement of the protocol, although it is not mandatory. Regarding accounts, Nostr’s user accounts do not rely on Relay and can be generated directly locally on the client, where the private key is used as the password and the public key is equivalent to the account number.

In terms of data transmission, the websocket protocol is used for data transmission between the client and Relay, and the data format is JSON. The standard data format follows a simple structure: “[Commands, Arguments, Arguments…]”. For example, when a client publishes an event, it uses the “EVENT” command and attaches a JSON format of the event data, and the specific action of the event depends on the value of the parameter “kind”.

! [Nostr In-Depth Study: Tokenless, Jack Dorsey-Backed Decentralized Social Protocol] (https://cdn-img.panewslab.com//panews/2022/11/9/images/a255653987f940fac165cd6fdd7ad86b.)

! [Nostr In-Depth Study: Tokenless, Jack Dorsey-Backed Decentralized Social Protocol] (https://cdn-img.panewslab.com//panews/2022/11/9/images/de8cbea0ce29a7de61cede2f1e5933ba.)

! [Nostr In-Depth Study: Tokenless, Jack Dorsey-Backed Decentralized Social Protocol] (https://cdn-img.panewslab.com//panews/2022/11/9/images/1f6b8ad2c47ecb0b7ddcc722edd7f607.)

3.4. Project Ecological Application

Nostr’s ecosystem consists of several projects, with the exception of Damus, an iOS app based on the Nostr protocol that offers basic social media features such as a homepage, direct messages, search, and notifications. Another app is Amethyst, which is only available on Android and offers a group chat feature. A key feature of these products is that users do not need an account number and password, but instead log in with a private key and a public key as their identity ID.

In addition to these apps, Nostr also recommends a number of front-end social apps, such as Anigma, Branle, Nostr.ch, and Nostros, which each provide users with a different style and different runtime environment. In total, the Nostr ecosystem has grown to 46 projects to date, including some interesting little apps such as NIP-05 (a unique domain specification proposal), Jester (a Nostr-based online chess game), Blockcore Notes (a note-taking app that supports Nostr and Web5), and NostrID (a Nostr ID management app for iOS).

As for the operation process of the project, Nostr focuses on the social infrastructure at the protocol layer, and the specific productization capabilities are implemented by third-party apps, so that users’ social behaviors can be interconnected between different apps. This design makes Nostr’s ecosystem both decentralized and flexible.

3.5. Project Data

The Nostr project has shown some growth since its launch. On November 16, 2020, discussions about the Nostr project in Telegram began, focusing on the possibilities of decentralized social networks and financial support. The team then spent the next few days exploring and evolving its browser-based application, and in December began discussing technical issues such as using private keys and standardizing event types. In December 2022, former Twitter CEO Jack Dorsey joined Nostr as a supporter and spokesperson, bringing a significant boost to the project’s profile and a significant increase in the number of stars of the Nostr protocol on GitHub. As for social media data, the Damus app has surpassed 720,000 users in just a few days. These data show the development and user acceptance of Nostr from its initial stage to the present.

4. Industry space and potential

4.1. Track Analysis

4.1.1. Project Classification

The Nostr project falls under the umbrella of social media protocols, which aim to solve the censorship and data ownership issues of existing social platforms in a decentralized way.

4.1.2. Market (track) size

From the beginning of the 21st century to the present, the rapid development of social media has given birth to numerous social media giants such as Twitter, WeChat, Instagram, etc. With the rise of the concept of decentralization, social media protocols have begun to focus on censorship resistance and immutability, which has opened up a lot of room for projects like Nostr to grow.

4.1.3. Core Competitive Factors

The main competitive advantage of decentralized social media protocols, such as Nostr, over traditional social media platforms is decentralization, permissionlessness, and censorship resistance. Projects such as Nostr use these selling points to attract users from existing marketplaces against centralized social media giants.

4.2. Competitor Analysis

As a decentralized social networking protocol, Nostr may face competitors such as ActivityPub, Farcaster, and Lens Protocol. These protocols or platforms are also committed to building a decentralized social network ecosystem, each with different technical characteristics and community development strategies. Nostr’s competitive advantage may lie in its clean and scalable design, as well as its emphasis on privacy and user autonomy.

5. Preliminary value assessment

5.1. Core Issues

**Question 1: What is the business cycle of the project? **

The Nostr project is currently in the early stages of development. Since its inception in November 2020, Nostr has been gradually evolving its social protocol. By the beginning of 2023, the Nostr protocol and its Nostr-based application, Damus, began to experience a blowout growth in the number of users, with the number of public keys reaching 500,000+, showing a rapid growth trend.

Question 2: What are the main variables in the operation of the project?**

The main variables in the operation of the Nostr project include the simplicity of the technical architecture, the solution to the trust problem of users, and its detokenized economic model. It operates in the simplest way to send information externally using a public key. User growth and community formation rely on Nostr’s censorship resistance and openness, but these factors are currently difficult to quantify and measure.

Question 3: How is the project managed and governed?**

There is no clear information on how Nostr is managed and governed. Nostr’s design philosophy leans towards decentralization and liberalism, presupposing a simple mode of operation for clients and relays, and leaving things like economic incentives to the market.

Question 4: Does the project have a solid competitive advantage?**

Nostr’s competitive advantage lies in its minimalist technical design and ability to resist censorship. Users are free to use multiple relays, which can be changed over and over again, maintaining the freedom and privacy of communication. In addition, the support of Bitcoin and the Lightning Network also provides a unique advantage for Nostr.

Question 5: How does Relay work? Who can build it?

Relay, or relayer, is an integral part of the Nostr protocol, and it is responsible for delivering users’ messages to the network. Any individual or organization with a server can set up their own Relay node. The setup process is not complicated, and users can choose from a variety of cloud servers or VPS hosting, and take advantage of the free trial services of some platforms, so that you can test Relay without incurring costs. In addition, a domain name needs to be registered, and it will be resolved to the server’s IP address.

This includes using an SSH client to remotely log in to the server, installing the Umbrel tool, and installing the Nostr Relay application with a single click of a single command. Once installed, users can enter the domain name in their browser to access the backend, go to the app store and install Nostr Relay, and once everything is set up, they can start using the relayer.

This process not only simplifies the technical barrier to entry, but also enables anyone interested in decentralized social networks to contribute to maintaining and enhancing the health and vitality of the Nostr network.

Question 6: What does Nostr have to do with blockchain? **

Nostr’s relationship with blockchain technology is indirect, and they share the idea of decentralization but operate differently. Nostr is an open-source decentralized social networking protocol that is not a blockchain project but aims to provide infrastructure for decentralized applications. The Nostr protocol consists of a client and a relay. The client is responsible for signing and verifying the information, which is operated by the user. The relay can capture, store, and forward any client information connected to it to other clients. Anyone can run a relay, but unlike blockchains, Nostr’s relays don’t communicate directly with each other.

Nostr is designed to allow for the flexibility to use a variety of tags and event types, so users can customize how they interact based on specific scenarios. For example, add the ID of another event to the tag to reference the content, or add the event ID that you want to be deleted to delete the published content. This design allows Nostr to be highly flexible and scalable in terms of functionality.

The main difference between Nostr’s operation and traditional blockchain projects is that Nostr does not rely on blockchain technology to maintain the network or verify transactions. It does not use a chain structure to store data, but relies on the relay end to handle the transmission and storage of data. This means that Nostr does not require mining or other cryptocurrency-related mechanisms to function. As a result, the decentralized nature of the Nostr protocol stems primarily from its network structure and open-source nature, rather than blockchain technology.

In summary, Nostr is a blockchain-independent decentralized social protocol that innovates by providing an open network that anyone can participate in, but it does not rely on blockchain technology to achieve its decentralization goals. Nostr, through its unique client-side and relay-side structure, provides a decentralized platform where anyone can build and run their own relay, which in turn supports the construction of decentralized social media platforms.

6. SWOT Analysis

Strengths

• Nostr is an open social protocol, which means that anyone can build or modify the client, encouraging innovation.
• It provides a different economic incentive model from traditional social media through Bitcoin tipping, reducing the reliance on advertising.
• The Nostr project has attracted the attention and support of high-profile figures such as Jack Dorsey, which has increased its visibility and credibility.

劣势（Weaknesses）

• Currently, the applications of the Nostr ecosystem are in their early stages, with imperfect functionality and bugs in the user experience.
• Lack of sufficient users and content creators to join may limit its growth and reach.

Opportunities

• As a decentralized protocol, Nostr has the opportunity to break the existing social media monopoly and attract users who have a high need for privacy and freedom of expression.
• Other technologies, such as the Lightning Network, can be integrated to extend its capabilities and use cases.

威胁（Threats）

• Regulatory pressures could pose challenges to cryptocurrencies and decentralized services.
• Incumbent social media giants may take steps to suppress or mimic Nostr’s features, thereby influencing its uniqueness.