Exploring the Web3 Social Sector

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Singapore –Information Direct– HTX

Writer: Juliet Tang, Funding Analyst at HTX Ventures


As Web3 know-how and infrastructure develop, the Web3 social sector is going through new alternatives. Anonymity, censorship resistance, and person information possession, amongst different options, are attractive customers and builders to discover novel social instruments. Some builders and traders have ventured into the sector, giving rise to lots of of Web3 social initiatives spanning domains like social interplay, identification, NFTs, DAOs, and fan engagement. Notably, instruments like CyberConnect and Lens Protocol have garnered giant person bases and large consideration. On this article, we delve into the developments of the Web3 social sector and the distinctive options of Web3 social merchandise. We additionally analyze a number of main Web3 social initiatives and look at the dangers and challenges going through the sector.

Why ought to we take note of the social sector?

The cryptocurrency area has been thought of an interdisciplinary subject involving pc science, finance, cryptography, arithmetic, and extra. Nevertheless, its adoption on a worldwide scale is but to be achieved, as a consequence of its brief existence, insufficient infrastructure, and ranging regulatory requirements, in addition to a steep studying curve and related prices. As good contract public chains like Ethereum enhance, on-chain DApps have witnessed a growth since 2020. Up to now, there are greater than 40 million DeFi person addresses, as proven within the determine beneath. Defi led the way in which in bringing customers to on-chain interactions, utilizing practical, handy use circumstances to drive on-chain financial system and foster a variety of on-chain Degens. In 2021, blockchain video games and NFTs started to usher in a brand new wave of traits, buying quite a few new Web3 customers with novel gameplays, Ponzi tokenomics designs[1], and a various worth system. Particularly, blockchain video games, by permitting customers to transform in-game belongings into real-world worth, have attracted Web2 players and low-income people in creating international locations. NFTs, with attributes of identification, collectability, and model worth, have drawn in collectors, artwork lovers, and conventional model house owners.

Since 2022, the crypto market has skilled a protracted bearish sentiment. The once-prominent video games and NFTs have waned in reputation, and the Ponzi-like financial system has collapsed as a consequence of insufficient increments, leading to a stagnation of Web3 person development. Regardless of ongoing improvements, in addition to persistent efforts to discover new prospects in infrastructure, zero-knowledge proofs, fee, identification, and DeFi 2.0, a restricted person base stays a necessary problem for the event of Web3. Amid the lingering bearish market, many ecosystems discover themselves in an ungainly state of affairs the place initiatives are in place with out sufficient actual customers. The variety of actual on-chain customers, excluding airdrop studios and customers with a number of wallets, might be not encouraging.

To draw new customers, Web3 wants to supply extra use circumstances and create varied gameplays. Presently, the social sector is anticipated to be the subsequent catalyst for driving Web3 person development. This sector has proven huge potential within the conventional web house, leveraging its huge person base and business worth to the fullest. From MSN to Fb, Instagram, and now TikTok, every technological improve has spurred the rise of recent web giants and created quite a few job alternatives all through the trade chain. With rising consciousness of the privateness and business worth of knowledge possession, extra voices are advocating for customers to manage their social data and information by Web3 to benefit from the worth of identification and behavioral information. For that reason, exploring Web3 social initiatives is predicted to be probably the most promising and worthwhile subjects within the coming interval.

As ecosystems like Cyber Join and Lens Protocol mature, the Net 3 social sector is rising extra sturdy. Though in an early stage of a growth, it has garnered market consideration with some eye-catching initiatives. For example, Elon Musk, probably the most influential figures in crypto, has captured world focus by endorsing Dogecoin and incorporating Bitcoin into Tesla’s official documentation. Regardless of his assertion that Twitter won’t ever problem tokens, subjects resembling social identification and token rewards have been broadly mentioned. Furthermore, occasions like Lens Protocol’s profitable fundraising of $15 million, the issuance of NFTs by web giants like Instagram, and the itemizing of CYBER and different tokens on main exchanges have all contributed to the expansion of the Web3 social sector.

Traits of the Web3 social sector

There is not a common definition of what Web3 social is, however we are able to put merchandise involving data publication and alternate amongst people and person characterization into this subject. Based mostly on present developments, these primarily embrace social public chains, social graphs, social identities, social purposes, and repair instruments.

Within the Web2 realm, conventional social media platforms like Twitter, Instagram, and TikTok have amassed a big person base and developed mature and numerous enterprise fashions. Nevertheless, the need and feasibility of creating Web3 social want validation. Not like Web2, Web3 has a restricted person base and continues to be within the stage of technological exploration. On this article, we imagine that the important thing elements for a flourishing Web3 social sector embrace:

1. Anonymity and censorship resistance

Some of the outstanding benefits of Web3 social, in comparison with Web2 social, is its anonymity and censorship resistance. This function has been confirmed a person want. In Web2, as information is managed by centralized establishments, customers might be arbitrarily censored and compelled to delete or alter their posts on social media. Basically, Web2 social is a social mannequin that operates beneath surveillance, leaving customers unable to guard their privateness. However, the decentralized Web3 social inherently safeguards person privateness and resists centralized institutional censorship, satisfying customers’ want for privateness safety and safety.

2. Consumer information possession

Within the Web2 social mannequin, person information is owned by centralized platforms. Leveraging person information, these platforms create person profiles to research person habits for focused commercials and merchandise. This method maximizes visitors monetization whereas highlighting the worth of knowledge for enterprise evaluation. In Web3, customers can achieve business worth from their information by controlling information possession. From a person perspective, initiatives that facilitate information worth monetization are interesting. In reality, this mannequin has made some positive factors in Web2. For example, Pinduoduo, a Chinese language e-commerce platform identified for its competitively priced merchandise, presents money rewards for watching movies or inviting pals to affix actions (a technique of buying new customers by social networks), enabling customers to monetize their visitors. Up to now, the Web3 house has seen a number of makes an attempt to return information possession to customers, with initiatives like Bitcoin Lightning Community-based Nostra, Polygon-based Lens, and multi-chain protocol CyberConnect. We imagine that with numerous and unstable tokens and a wealthy design for the token financial system, monetizing information possession can generate quite a few participating gameplays, rising wealth and new customers extra successfully than the earlier bullish marketplace for blockchain video games.

3. Simple to make use of

One of many components of social initiatives is enabling the abundance and free circulate of data inside a neighborhood, and ample data depends on a big person base. Attracting a lot of customers is probably the most notable problem and alternative going through Web3 social initiatives. A crucial issue hindering the event of the crypto sector is its restricted person base. First, participating within the trade requires a steep studying curve – customers should purchase pc and crypto data to be concerned in on-chain interactions. Second, at the moment’s crypto initiatives are extra sophisticated than their Web2 counterparts. Taking EOA wallets for instance, person expertise is undermined by points like complicated seed phrases and storage strategies, phishing and personal key theft dangers, and software program updates and compatibility. This has prevented quite a few Web2 customers from coming into the crypto world. However, this additionally means than any initiatives which might be straightforward to make use of will entice an enormous inflow of customers.

4. Composability

In Web2 social, the presence of centralized establishments has resulted in huge information silos. Web giants shaped by these information silos management information entry and pricing, requiring different initiatives to ask for permission to make use of information or construct purposes upon the information. Moreover, incompatibility and potential competitors amongst these information silos hinder the interoperability of many Web2 purposes, leaving customers to register new accounts and re-accumulate data and information when switching platforms. We imagine that a perfect Web3 social product has the potential to remove information silos, as demonstrated by the person portrait descriptions supplied by POAP and ENS. We anticipate easier, simpler customary protocols to emerge, permitting entry to most protocols whereas empowering customers with handy management over information possession. This space is without doubt one of the key instructions that DID explores.

Overview of high initiatives

Based mostly on mission varieties, social initiatives primarily fall into three classes: social graphs, social purposes, and gear initiatives.

Social graphs

Social graphs function infrastructure in Web3 social, offering widespread requirements and information sources for different utility initiatives. A social graph ought to be wealthy in information sources, intensive in composability, and simple to make use of. For that reason, there is no such thing as a must construct standalone new public chain initiatives or native initiatives on much less widespread public chains, as they create isolation from mature ecosystems. Presently, the mainstream possibility for creating a social graph is to construct common requirements for social identities on mature chains. Outstanding initiatives embrace Lens Protocol, CyberConnect, and RSS3.


CyberConnect is a multi-chain social graph that validates and accumulates person interplay information. It gives customers with private profiles, social graphs, and good contract wallets, and presents DApp builders customary API information interfaces for migrating person information throughout DApps. Having linked with Polygon, Linea, and Optimism, CyberConnect will additional its integration with extra networks like Arbiturm, which is able to assist enhance its person base. As of August 8, 2023, CyberConnect has 368,000 person accounts, 738,000 person operations, and over 1.25 million person profiles.

Regardless of the present weak market efficiency, CyberConnect has maintained DAU of over 10,000, indicating giant general visitors.

Lens Protocol

Lens Protocol, developed by the famend DeFi lending mission AAVE’s group members, is a Polygon-based social graph protocol that permits anybody to create non-custodial social data and construct new social DApps. By their wallets, customers can create their very own social profiles to have interaction in social interactions. They’ll additionally construct interactive DApps primarily based on Lens (they’ll log in to Lense for interactions, and interplay information can even be saved of their Lens social profiles).

The picture beneath exhibits initiatives inside the Lens ecosystem. Over 100 initiatives have been constructed, together with social, play-to-earn, streaming, DAO instruments, advert administration, data sharing, on-line paid data, and lottery DApps. Whereas nonetheless in an early stage, these initiatives exhibit each amount and selection, rendering Lens much more ample than some public chains. Typically, this on-chain social ecosystem is extremely economically pleasant to creators.

Greater than 110,000 addresses have obtained their profiles. In accordance with the figures beneath, Lens has a person depend of over 360,000 and a transaction depend of 21.93 million. Each peaked in February 2023, indicating involvement from a lot of particular person customers or airdrop studios. Presently, every day on-chain transactions vary between 15,000 and 20,000, with 3,000 to 50,000 pockets addresses taking part in every day interactions. Such a big lively person base amid the bearish sentiment displays sound person information efficiency and development potential within the Web3 social sector.

Social graphs kind the infrastructure and customary instruments for the whole social sector. Common, easy, and handy social graphs assist flatten customers’ studying curves and cut back the boundaries between DApps whereas accumulating extra customers and information. The Polygon-based Lens Protocol focuses on constructing its personal social ecosystem. Against this, CyberConnect, as a substitute of making a content material platform and ecosystem, helps multi-chains and interactions with varied purposes. It’s also actively exploring methods to draw Web2 customers by wallets, and prioritizing open social profiles. Each initiatives are main within the social sector, which might expertise a growth as a result of progress of Lens Protocol and the introduction of extra of its initiatives.

Social purposes


Farcaster, created by Dan Romero, a former government at Coinbase, is a decentralized social media platform constructed on Ethereum and goals to compete with Twitter. It’s at the moment within the beta testing section. Farcaster permits Web2-like quick and low-cost decentralized social expertise by creating and storing on-chain person identities whereas storing different data in off-chain databases (or “Hubs”). Moreover, Farcaster ensures decentralization by permitting customers to make use of a self-custodial mannequin for sending and receiving messages with out gateways. The ecosystem now consists of practically 20 spinoff initiatives, spanning information evaluation, picture enhancement, trending subjects, associated subjects, and serps.

As of August 9, 2023, Farcaster has over 13,000 pockets addresses, together with these registered by crypto degens like Vitalik Buterin. As an impartial social utility, it boasts first rate person numbers and engagement – there was a 2.2% development in customers and a couple of,500 casts have been posted previously seven days.

On high of decentralized anonymity, driving Web2 customers from Twitter to Farcaster stays a analysis precedence for the platform’s initiatives.


Nostr is a decentralized open-source social transmission protocol that permits builders to construct DApps. With none centralized servers, Nostr transmits messages by a design of shopper and relay nodes. Not like Web2 social, the protocol achieves full decentralization, enabling censorship resistance and privateness safety. Damus, a Twitter-like social product constructed on Nostr, contains a decentralized, nameless, and ads-free expertise. Though nonetheless in an early stage, the product has been endorsed and backed by Jack Dorsey, the co-founder of Twitter.

As a totally open, nameless, and censorship-resistant decentralized product, Damus is extra aggressive than conventional social merchandise by way of privateness safety. It has an outlined market and audience. Nevertheless, to draw a broader base of Web2 customers, it could want new product design and options.

Good friend.Tech

Good friend.Tech, invested by Paradigm, is a social utility deployed on BASE, a Coinbase-affiliated L2 blockchain. Like conventional fan token/creator financial system initiatives, the appliance presents creators providers resembling fan communities and token issuance. Customers be part of a creator’s neighborhood by holding tokens issued by the creator. It has change into a smash hit since its launch on August 10. As of August 29, as proven within the chart, in lower than 20 days since its launch, it has garnered over 120,000 registered addresses, with greater than 20,000 lively addresses (customers who entry the person house).

For every transaction, customers must pay a ten% payment, together with 5% for the creator and 5% for the protocol. As depicted within the chart beneath, the protocol has amassed income of over $4 million as of August 28, 2023.

The fast surge of Good friend.Tech has captured consideration and triggered speculations in regards to the social sector. Individuals are curious in regards to the product’s method that enabled its achievements. On this article, we imagine that though Good friend.Tech follows the present design of social merchandise and token fashions, there are causes behind so successful, together with:

1. Ponzi-like tokenomics

Fan tokens are primarily designed in two methods. One is the issuance of fan tokens. Customers achieve entry to a creator’s neighborhood by holding a certain quantity of fan tokens. These tokens observe a market-based pricing mechanism and supply options like buybacks, burns, revenue sharing, and staking. The opposite is the issuance of fan NFTs. Customers can maintain fan NFTs to enter a creator’s neighborhood. Whereas additionally being priced on a market foundation, fan NFTs could supply new token mapping, new NFT airdrops, or different privileges.

Within the token financial system previous Good friend.Tech, followers purchase or promote tokens solely primarily based on their admiration for the creator, quite than the fluctuation of token costs. Nevertheless, Good friend.Tech launched a mixture of referral mechanism and Ponzi-like design to inject vitality into the fan token financial system. In accordance with Good friend.Tech, a degree shall be distributed inside six months. Though particular guidelines are nonetheless unknown, person factors are broadly believed to be related to token airdrops. The fusion of this technique and the referral mechanism encourages customers to ask their pals to affix Good friend.Tech. It additionally spurs them to purchase shares in varied creators to generate buying and selling charges and information. Like Blur’s airdrop technique, Good friend.Tech’s method attracts customers by providing long-term level incentives and airdrop expectations. In the meantime, the prolonged timeframe enhances buyer loyalty, enabling Good friend.Tech to take care of its market share after airdrops conclude.

Good friend.Tech has not disclosed the calculations of its tokenomics. Nevertheless, in keeping with Laurence Day’s broadly accepted estimation of the mannequin, as depicted within the chart beneath, Good friend.Tech’s fan tokens observe a worth curve represented by P = provide ^ 2 / 16,000. Beneath this mannequin, worth fluctuations are exponential, in each upward and downward instructions. As early traders have the chance to take pleasure in outstanding income, such a Ponzi-like design will proceed to drive costs up till a steadiness is reached between patrons and sellers. This can entice extra speculative individuals. However, it additionally implies that the previous few traders who have not profited will discover themselves holding precious tokens with out a market to promote. Alternatively, they’ll attempt to recuperate partial prices by constantly lowering costs till a brand new market equilibrium is reached. Nevertheless, when a quickly rising worth all of a sudden experiences a pointy decline, it usually triggers panic promoting, leading to a steep worth drop. In a nutshell, the incorporation of a Ponzi financial system is without doubt one of the most important causes for Good friend.Tech’s fast surge. An analogous design was seen within the Meme mission XEN, the place a Ponzi-like token financial system and dividend incentives for early customers shortly sparked a market frenzy.

2. Benefits of BASE’s early stage

Initially constructed on different blockchains, Good friend.Tech’s launch and recognition are intently associated to the thrill round BASE and the L2 house. For the reason that launch of Arbitrum in early 2023, the L2 house has delivered spectacular efficiency amid a bearish sentiment. The next Zksync ecosystem, OP Stack, and BASE have fueled market enthusiasm. Anticipated launches and token issuance of Starknet, Scroll, and Zksync later this 12 months, together with the upcoming Cancun improve, make L2 probably the most essential and promising sector within the crypto world for 2023. Furthermore, BASE is affiliated with Coinbase, a outstanding crypto alternate. By launching on BASE throughout its early stage, Good friend.Tech strategically capitalized in the marketplace’s focus and timing benefits.

3. Endorsement by Paradigm

Good friend.Tech earned substantial credibility by being backed by Paradigm, a top-tier funding fund for crypto. With no totally developed web site (solely a tough beta model), whitepapers, or explanatory paperwork, the mission nonetheless managed to achieve intensive belief and enthusiasm. Moreover, its Blur-like level incentive mechanism was presumably designed beneath the steering of Paradigm.

In conclusion, whereas Good friend.Tech follows a traditional product mechanism, it takes bolder approaches in tokenomics design, person acquisition, and advertising. Within the brief time period, Good friend.Tech may replicate Blur’s path to person development. Nevertheless, the mission’s long-term efficiency as a social product wants additional examination after it’s totally launched.

Software initiatives

Most social instruments are designed to serve DApp initiatives. For instance, Lens Protocol has Lenscan for searching information and LensDAO for group and neighborhood administration; Farcaster has Alertcaster for data alerts and FarQuest for launching surveys. Social instruments additionally comprise varied basic auxiliary instruments, resembling Debank Hello for social promotion and Utopia for DAO treasury governance, in addition to instruments for NFT design, account administration, and pockets administration.

In a nutshell, the social sector is a subject the place builders can unleash their creativity for purposes. Aside from social graphs and utility instruments, social purposes particularly, varied forms of social platforms, follower platforms, and streaming platforms are rising. Because the sector continues to be in its infancy, the passion and efforts from builders and traders will constantly assist it develop.

Dangers and challenges

Whereas the crypto social sector has attracted many builders and traders, it is important to acknowledge the dangers and challenges going through the sector. These mainly contain know-how, person development, and compliance.

Technological challenges

As social merchandise are application-focused, their growth depends on mature infrastructure and applied sciences. A rising person base will elevate extra and better necessities for social merchandise, whose progress wants resolving points like information storage, cross-chain data transmission, data transmission price, and community congestion. Nevertheless, at the moment’s infrastructure can not accommodate the emergence of Web2-scale social software program.

Consumer development

Aside from anonymity and censorship resistance, why would Web2 customers transfer to Web3 social purposes? Apparently, not all customers have extraordinarily excessive necessities for privateness safety. Quite a few customers fulfill their social wants on centralized social platforms. How can Web3 social merchandise purchase extra newcomers, apart from these customers? Ought to they focus solely on a privacy-conscious viewers? If utilizing financial incentives, how ought to they design the mannequin to keep away from financial loopholes or Ponzi-like pitfalls? Though Web3 social has garnered first rate market consideration and visitors, this pleasure stays inside the crypto neighborhood. Subsequently, whether or not to handle current points or create new options and calls for is the important thing query for Web3 social merchandise to extend their person base.


Web3 social merchandise have three main options distinguishing them from their Web2 rivals. First, Web3 merchandise are decentralized, censorship-resistant, and privacy-protected. Second, customers personal their information. Third, customers achieve the advantages from their information possession. Nonetheless, these promoting factors could change into dangers. Web3 merchandise are anticipated to draw unlawful and illicit practitioners whereas capturing the eye of regulatory businesses. With a maturing sector and a rising person base, developer safety and potential regulatory inquiries, amongst different points, should be thought of upfront.


Nonetheless in its early stage, the Web3 social sector depends on the event of infrastructure, together with, however not restricted to, cross-chain data transmission, information storage, decrease transaction price, and compliance. Right now’s social merchandise embody social graphs, social instruments, and social purposes. Social graphs kind the foundational layer, and social purposes are the most important in amount and canopy probably the most classes. Presently, a big variety of builders are experimenting with Web3 social product growth, and traders begin placing cash into the sector. Rising market curiosity is demonstrated by the launch of CYBER tokens in addition to Twitter’s rebranding and advert income sharing mannequin. Regardless of these alternatives, it’s a necessity to acknowledge the challenges going through Web3 social, together with immature infrastructure, person development, and compliance. General, we imagine the Web3 social sector exhibits promise by way of its prospects, traits, and market enthusiasm. With improved infrastructure and rising initiatives, traders, and tokens, we’re optimistic in regards to the sector’s funding potential and future.


Web3 Social: Road to Mass Adoption (binance.com)



One Origin, Two Paths: The Decentralized Social Journeys of Lens and CyberConnect (同源异流:Lens 和 CyberConnect 的去中心化社交路径) – Biteye (mirror.xyz)

Who Will Become the Next Hit? A Glance at Popular Web3 Social Projects (谁能成为爆款?一文盘点 Web3 社交赛道热门项目) – Web3Caff


About HTX

Based in 2013, HTX has developed from a crypto alternate right into a complete ecosystem of blockchain companies that span digital asset buying and selling, monetary derivatives, wallets, analysis, funding, incubation and different areas. HTX serves hundreds of thousands of customers worldwide, with a enterprise presence protecting over 160 international locations and areas throughout 5 continents. Its three growth methods – “world growth, know-how drives growth, and know-how for good” underpin its dedication to offering complete providers and values to world cryptocurrency fans.

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