Early investment themes in web3 social
With the web2 social space spanning across categories such as social networks (Facebook), video sharing (YouTube), photo sharing (Instagram), community platforms/forums (Reddit) and a host of tools for brand, influencer and community engagement and management, we can expect the constellation of web3 social to be as broad. While we shouldn’t expect (or want) every web2 social product to have a web3 equivalent for the sake of it, blockchain potentially offers new ways to extend or enhance the value proposition of some social products we use today, particularly when they embrace the ideas of vested communities, incentive alignment, value sharing/distribution via token economies, and operating social platforms as open economies.
The first wave of explorations into web3 social focused on NFT communities, social tokens and DAOs, generally using tokens as a means of binding a community together with incentives aligned around the success of the token and the community or artist it’s linked to. Today, the constellation of potential use cases of blockchain in the social space have expanded to a diverse set of interesting and potentially investible value propositions.
Open social protocols as infrastructure for portable user-owned data
We previously covered open social protocols in this article. To summarise, open social protocols like Lens, Farcaster and DeSo, record user profile, content and interaction data on a public blockchain, allowing users to share their data with (or use their data in) multiple apps of different types (e.g. a social media app, a finance app, and a game) using a single account (e.g. their wallet address), with each of these apps contributing more data to the user’s profile on the blockchain as the user interacts with it. These protocols provide the infrastructure for developers to create apps (essentially front-end experiences that read/write user data on a blockchain) in which users verifiably own their data and potentially have more control over how/when/where their data is used. Under this paradigm, instead of creating a new account for every social app, users “bring-their-own-account/data” to each app they choose to interact with, and have one wallet for navigating the web.
This proposition based on data portability becomes interesting when combined with a model that maintains privacy and user-determined access control over user data so that users are free to bring/rent their data to third party social apps of their choosing and be rewarded for doing so (by sharing in the financial value that these apps generate from the user’s data). Alternatively, if users are happy with their data being publicly available (similar to how Twitter/Instagram profiles and tweets/posts are generally visible to anyone), then such data portability could give rise to interesting opportunities for new user experiences in the social space, especially if combined with a use case in which it becomes meaningful and valuable for a user to “claim” or verify ownership of their data.
Decentralised communities centred around interest groups or creators
While early decentralised communities tended to be web3-native (e.g. NFT communities, investment DAOs, etc. composed of crypto-native users), cobbling together token-gated functionality/benefits and token-based governance on top of Discord and DAO platforms, we’re now beginning to see the emergence of platforms that enable creation, management and monetisation of web2 communities using web3 infrastructure. These communities might be interest groups that you commonly see on Facebook Groups (like Star Wars fans) or fans/supporters of a creator, influencer or artist. Platforms like Towns and Niche provide tools and infrastructure for member/creator-owned clubs/communities, enabling something similar to the unbundling of Facebook Groups (the group management functionality) from Facebook (the monolithic social network).
These platforms utilise the blockchain to enable not just token-gated access to communities (for members), but also monetisation of communities (for creators/owners) through sale of tokenised access (one-off, subscription-based or royalty-based from secondary sales), fees from digital goods/merchandise transactions, as well as transfer/sale of ownership of the community itself, if ownership of the community is recorded on-chain. These platforms may also offer an underlying protocol for developers to build a variety of user experiences on top of each community or the collection of communities, at which point they evolve into open social protocols, having started from the community destination/management use case and (hopefully) having gathered a critical mass of end users by this time.
Given that success in the social space requires large numbers of users (if not for individual communities, then for the collective population of all communities on platform), much larger than current web3 user populations, in order for network effects to kick in, these decentralised community platforms will need to (1) provide web2-friendly user experiences, (2) execute effective and extensive go-to-market strategies to acquire and onboard large numbers of web2 users, and (3) provide ready-made use cases (or even end-user destinations), beyond infrastructure for developers, that can attract web2 end-users from the get-go.
Discord-like web3-native community management platforms
The flip-side of decentralised web2 communities are web3-native communities that have been co-ordinating their activities on Discord with a combination of bots providing additional web3 functionality such as collab.land (for token-based identity verification), boto.io (for automated data feeds from external web3 platforms and marketplaces), etc. The key pain points for these communities are the UX friction and security concerns arising from using third-party bots connected to a web2-native channel-based group messaging platform like Discord, as well as the lack of built-in web3-native functionality such as member wallet registration, etc.
While numerous web3-native Discord alternatives have popped up over the past year, differentiation in this space is challenging and despite the complaints about Discord, many of these alternatives underestimate the level of user inertia and switching costs that they need to overcome in order to migrate users, scale adoption and displace Discord even for just the web3-native segment. These platforms will need more compelling product UX and stronger go-to-market strategies to convince end-users to migrate.1
Web3 messaging
Looking at the evolution of web2 social platforms, from profiles (MySpace), to feeds (Facebook), to messaging (WeChat), it’s unsurprising that web3 messaging has also surfaced as a theme in web3 social, with examples such as XMTP, Dialect, Notifi and Beoble. The core proposition here is wallet-to-wallet messaging as the primary communication channel in web3 (and beyond, if wallet-as-identity becomes mainstream), where users’ wallet addresses serve as their respective identities, between which users can send and receive messages. The most immediate need for this is in web3 marketplaces (e.g. OpenSea) where communication between token holders (directly identified by their wallet addresses) to negotiate deals could be beneficial. Beyond this, there’s a world of opportunity in enabling coordination through direct communication between wallets/token holders for which there’s a surprising amount of friction today. But the initial concerns that need to be addressed here are privacy (a wallet used as identity in communication gives third parties far more information about the user than a phone number or email address) and spam (we don’t want our wallets to become magnets for web3 marketing spam).
Even if these two problems are solved, the question remains - do we really need another messaging app, and what would convince users to adopt it at scale? While still a leap of imagination, this might well pan out if wallet addresses do indeed become our identities (for reasons beyond communication), then a wallet-native channel for communication, which could potentially lead to an ecosystem of dapps/services providing various forms of utility, service and value to users (similar to how WeChat created an ecosystem of mini-programs), could make sense and turn into an extremely valuable (token-based or not) network, based on messaging’s prime position in users’ lives, and the opportunity for a messaging platform, with its social graph, user profiles, etc., to become the primary channel for user acquisition and retention for third party services (like what WeChat achieved).
Brand engagement platforms
Over the last decade, web2 social media platforms like Facebook, Instagram and TikTok have become the most important channels for brands to acquire and engage customers. Yet, as trends point to the progressive decline and ascent of various social media platforms among generations of users (first Facebook, then Instagram, then Tiktok), as well as growing user concerns over the negative impact of the attention economy, brands are constantly looking out for new, more relevant and more effective channels to reach their specific audiences.
Enter web3 brand engagement platforms that offer brands new ways to acquire, engage and retain customers. Many of these are positioned as web3 loyalty programs like Superloyal and Starbucks’ own Odyssey experience, but they also include brand collaborations with NFT collections and platforms for brands to launch their own web3 experiences like Mint.
Some believe that this could be a way for web3 to go mainstream, with the help of big brands onboarding their customers to new web3 experiences, but I have a feeling this might be putting the cart before the horse. While we see brands dip their toes into web3 with various experiments, we haven’t yet seen them stick their necks out to onboard customers to web3. More likely, brands are willing to undertake these early experiments in web3 partnerships in order to prepare their businesses for the possibility of web3 going mainstream, but brand engagement platforms will only get big after mass adoption of web3, and not before. That said, even if we view these platforms as potential beneficiaries, rather than drivers or catalysts, of mass adoption of web3, it’s still useful to watch this space for new innovations in customer acquisition/engagement.
Socialisation of web3-native services/activities
A difficult proposition to get a handle on in terms of potential, but one which seems unique enough to be potentially compelling, is the idea of integrating social profiles/networks and social/interest graphs into crypto-native tools. We’ve started to see this across an array of web3 services including Easy (social wallet), Zapper (wallet analysis with social features), and Interface (social feed for Ethereum/Etherscan), offering a service that’s part-tool, part-community, and taking on the idea of a crypto-native Twitter from various angles. The social angle here is still quite early but remains one to keep an eye on to see how it evolves.
Among the themes mentioned above, I think the first two (open social protocols and decentralised communities, aka unbundled Facebook Groups) present the most mature propositions in terms of adding new value to the social space using functionality unique to blockchain. For all of these themes, I believe an interesting opportunity to dig further into is what composability2 can bring to the social space. Composability is a unique concept enabled by web3 and unsupported by web2, and if the social space were reorganised in such a decentralised way, just as we’ve seen in moving from centralised to decentralised finance, what kinds of innovative new unbundled, re-bundled, decomposed and recomposed social products, platforms, apps and services could emerge? Another potential opportunity lies in taking a leaf from web3 games, where players can engage in different gameplay styles, take on different roles in the game world/ecosystem, and are bound together by an open economy. Could this also present a model for web3 social? What emerges if we design and operate a social platform as an open economy and ecosystem, with users, content creators, community owners, brands, and other new types of participants interacting and adding value to each other across a tokenised economy?3 While the key primitives of web3 - ownership, portability and composability - are frequently challenged in the games space, might these ideas find more traction and be easier to adopt among social platforms and services?
Compared to where web2 social is today, it’s clear that web3 social is still in its infancy and we’re still a ways away from clear and proven propositions that add meaningful value to the space. As with games, we’re looking for use cases where blockchain technology actually brings something new to the table, and as developers experiment with these ideas and themes, we may start to see viable use cases emerge.
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Keep in mind that there’s nothing to stop decentralised web2 communities from supporting web3-native communities, or web3-native communities from getting adopted by web2 communities. The only reason they’re separate propositions at this point is that they’re approaching the same broad problem from different starting points and different initial audiences.
which I’ve heard succinctly defined as “permission-less interoperability”
Admittedly, this sounds like a broad description of what open social protocols could become.