Original author: HashBrown Research
Original title: Dissecting DeSoc in the Year 2023
Original compilation: Logicrw, BlockBeats
Translators Note: This article jointly published by the research institution HashBrown Research, Tako Protocol and Mask Network comprehensively reviews the important developments and innovations in the field of DeSoc (decentralized social media) in 2023, revealing the role of blockchain technology in the field of social media. profound impact and possible directions for future development. The article deeply explores DeSocs progress in privacy protection, data sovereignty, user experience improvement, etc., especially its technological innovation and application practices in key projects such as Lens Protocol and Farcaster Network. In addition, specific case studies on how projects such as Friend Tech and Stars Arena use blockchain technology to connect traditional social platforms such as Twitter demonstrate how DeSoc can transform users social behavior into investment behavior, thus bringing benefits to both creators and fans. new value and experience. The article also highlights the main challenges facing the DeSoc field, including interoperability, modularity, censorship and security issues. The resolution of these issues is crucial to the long-term development of DeSoc.
In 2023, a notable feature of the cryptocurrency market is that due to the bankruptcy of FTX in 2022, options and leverage trading of decentralized social (DeSoc) and decentralized finance (DeFi) are increasingly favored by institutions and retail investors. In terms of market performance, thanks to the continued demand for the two mainstream cryptocurrencies, Bitcoin and Ethereum, the overall market value of the cryptocurrency market will increase significantly in 2023. Bitcoin prices have risen from a low of $16,000-17,000 in January to over $42,000 currently. Meanwhile, Ethereum has also recovered from lows of $1,200-$1,300 to over $2,200, thanks to growing interest in DeFi and Layer 2 scaling solutions being built on the Ethereum mainnet program interest.
Cryptocurrency Market Review 2023
2023 will see major changes to the cryptocurrency regulatory landscape. Governments and financial regulators around the world are beginning to develop clearer guidance for the industry, which is increasing regulatory certainty, which in turn is boosting investor confidence and driving further institutional adoption of cryptocurrencies. The penalties and fines imposed on Sam Bankman Fried, who faced up to 115 years in prison for fraud and commingling client funds with his trading team Alameda Research, and CZ, who faced up to 115 years in prison for failing to comply with the Know You Agreement, provide further clarity. He was forced to resign from Binance after paying a $4.3 billion fine over KYC (KYC) guidelines and money laundering charges.
In addition, the rise of central bank digital currency (CBDC) in 2023 has attracted attention among many governments. Countries, including some major economies, have begun to explore the development and implementation of their own digital currencies, which not only brings a new level of competition to the cryptocurrency market, but also indirectly recognizes blockchain technology. At the end of the year, Bitcoin attracted more attention with news that BlackRock was pushing for a Bitcoin ETF. Many analysts predict that such an ETF could be approved by U.S. regulators in the first quarter of 2024. The entire crypto market subsequently speculated that Ethereum could be the next asset to receive ETF approval. All of this comes against the backdrop of a pause in interest rate hikes by the Federal Reserve, which it had done earlier this year in an effort to curb inflation. Finally, the Federal Reserve indicated that it would not raise interest rates further, and the market showed a bullish trend towards volatile assets such as cryptocurrencies.
Blockchain technology progress
In terms of technological advancements, 2023 witnessed continued innovation in blockchain technology, including the development of new protocols and decentralized applications. There are two main types of second-layer (Layer 2) scaling solutions: optimistic rollup (such as Arbitrum and Optimism) and blockchain based on zero-knowledge proof (such as ZK Sync and Polygons ZK EVM). These technologies aim to solve the scalability issues of existing blockchain networks like Ethereum and make transactions faster and more economical. These new breakthroughs have led leveraged traders who originally used centralized trading platforms like FTX to turn to on-chain perpetual protocols such as Arbitrum and Optimism, such as Perpetual, GMX and DYDX. Late 2022 to early 2023 also saw innovations on the Bitcoin network, including the burning of the first Ordinal NFT on the Bitcoin block and the emergence of the new BRC-20 asset class, which are new tokens issued directly on the Bitcoin network. currency. Although Bitcoin developers have disputed this, arguing that the Bitcoin network should not be used for such activities, this has only further fueled the acceptance of these novel digital assets.
Overall, 2023 is a year of rapid growth and maturation for the cryptocurrency industry, with increased adoption, regulatory developments, and technological advances combining to drive continued expansion and mainstream acceptance of cryptocurrencies.
DeSoc mainstream trends
In 2023, the DeSoc space has undergone several major changes. One notable trend is the rise of blockchain-based social media platforms such as Nostr, DeSo, Lens Protocol and Farcaster Network. These decentralized social graphs and their clients give users complete control over their data and identities, thanks to the distributed nature of blockchain. Users can interact and share content securely while maintaining ownership of their data without relying on centralized entities and data stores. This highlights an important trend: user privacy and data security are increasingly being taken seriously amid issues of censorship, demonetization and opaque algorithms in traditional social media. As concerns over data breaches and privacy violations intensify, DeSoc platforms are in the spotlight for their prioritization of user privacy. These platforms employ strong encryption protocols and enhanced security measures to ensure the privacy and security of user information and prevent the platforms themselves from profiting from the sale of user data to third parties.
Additionally, content moderation has become a hot topic in the DeSoc space in 2023. To address the risk of spreading misinformation and harmful content, these platforms have adopted innovative content moderation methods, such as community-driven moderation processes that allow users to actively participate in reporting and reviewing content, and the use of NFT technology to prevent bots from attacking users. In addition, the concept of decentralized governance will also receive more and more attention in 2023. These platforms introduce transparent and inclusive decision-making processes through community governance models. Users are given the right to vote on platform policies, feature updates, and even platform resource allocation. This approach ensures that decision-making power is distributed among users rather than centralized in some unregulated central authority. Overall, 2023 will be a year of change and growth for DeSoc. It has witnessed the development of blockchain-based platforms, increased focus on privacy and data security, innovative content moderation methods, and the rise of decentralized governance models.
DeSoc Investment Brief
In 2023, from Aave-backed Lens Protocol raising $15 million in a seed round in June to Lens-based applications Orb and Phaver raising $2.3 million and $7 million respectively in September and October, the intersection of DeSoc and cryptocurrency Witnessed a strong investment boom. In October, Lenster and Lenstube were renamed Hey and Tape respectively, indicating that all applications will compete and build with each other on the shared social network. Tako Protocol, which bills itself as a social monetization layer for Web 3 social, raised $2 million in a pre-seed round in August from big names like Mask Network and DWF Ventures. Tako subsequently made a strategic investment in Jam, the second largest client in Farcasters DeSoc graph, and changed its name to JamFrens, indicating its willingness to grow with the wider field. CyberConnect even listed its CYBER token on Binance in August, following the craze of social media applications in the cryptocurrency field. These foundational projects and their communities are all gathering momentum for the expected cryptocurrency bull run of 2024, but with the arrival of Farcaster Network V3 and Lens Protocol V2 and the addition of more users, competition is becoming increasingly fierce. Lets delve into the innovations of these leaders in the DeSoc field.
Lens Protocol and Farcaster Network
Digging deeper into SocialFis DeSoc space requires learning more about the Lens Protocol and Farcaster Network, as they are leading the way in creating open and decentralized social graphs on which developers can build application layers. This means that users can use one account to access multiple decentralized applications, such as the new decentralized YouTube, Twitter, Facebook, Instagram and even Pinterest. However, their relationships and online interactions are stored in a social graph, which guarantees data privacy and makes it possible for decisions about social graph moderation to be made through a decentralized autonomous organization. At the same time, it allows dapps to freely experiment and build on top of it with almost no restrictions.
For example, Lens has many different types of application layers built on top of its social graph that target different types of content. For example, Phaver is similar to Instagram, but with a points system and staking functionality. JamFrens and Hey are more like decentralized versions of Twitter, and JamFrens allows users to invest in their favorite Lens creators by trading Profile Keys. Tape is more focused on video content, similar to YouTube or Vimeo, while other apps on the Lens social graph are optimized for everything from making memes and making friends to getting cryptocurrency information. Warpcast and Flink are two dapps built on the Farcaster network, more similar to Reddit, but with almost no limits on the building possibilities. The account I use on Warpcast can also be used on Flink and vice versa. Other Farcaster-based platforms also allow me to log in using the account I created for Flink.
Both Lens and Farcaster make extensive use of NFT technology, ensuring that users can bring their accounts to any of these dapps and seamlessly interact with their social graphs. In both ecosystems, your account is tied to the NFT that lives in a crypto wallet, so using it on the new platform simply means connecting that wallet to their frontend and signing the transaction. Once you send content and interact with users there, it all gets sent to the Farcaster network or the Lens protocols social graph, depending on which one youre using. This is a major innovation because it means using a single account in your crypto wallet to use the new YouTube, Reddit, Twitter and Instagram in Web 3, rather than constantly logging in, forgetting passwords and resetting emails. But this is only part of DeSocs innovation. DeSoc’s story continues to unfold.
Farcaster Innovation
Farcaster originally introduced the concept of on-chain identities connected to a crypto wallet (or wallets), which was later adopted by Lens, making access to all applications running on the social graph permissionless. In order to prevent bot attacks and spam attacks from airdrop hunters, Farcaster requires an invitation, and Lens requires holding a Lens handle NFT. These defense mechanisms hinder user growth to a certain extent because they encourage users to create valuable content. But with the launch of Farcaster V3, they have opened it up to anyone who wants to join the network, and new users only need to pay a one-time fee of $7 plus on-chain transaction fees to use any dapp built on the Farcaster network, from Warpcast To Flink and then to JamFrens. As they opened, the number of users increased, with more than 6,807 people signing up without permission, while 1,402 users signed up in a trusted way, according to the Dune dashboard. From a small sample, the ratio of untrusted accounts to trusted accounts is close to 4.85:1, which shows what Farcasters core users are interested in.
Farcaster V3 also introduced a feature called warps that allow users to earn and share within their app, which is specific to their app and does not apply to the entire social graph. The number of warps required to perform specific on-chain operations will vary due to changing network gas fees, but Farcaster Network Optimism fees are extremely low. As of now, the total number of users of the Farcaster network has exceeded 46k.
Farcaster V3 also launched a new feature on its main client Warpcast - warps for users to make money and share on dapps. This is specific to the app and may not be available to all users of the social graph. Warps are a convenient way to perform on-chain operations directly within the Warpcast application, such as adding a new Farcaster application or minting specific NFTs. Warps are different from the open operations of Lens that we will learn more about next. They are exclusive to the Warpcast dapp and are centralized and off-chain. Warps are similar to rewards for regulars at your favorite coffee shop, i.e. the more you use Warpcast, the more “warps” you earn. Users with warps can connect to the Farcaster app, pay for a friends Farcaster connection, or gift 100 warps to another person every day. Due to fluctuations in gas fees, the number of warps required to perform a specific on-chain operation will vary based on the networks gas fees; however, Farcaster Network Optimisms fees are extremely low. To date, the total number of users of the Farcaster network has exceeded 46,000.
Lens innovation
At the same time, the Lens platform is not yet open to everyone, and is currently only open to those who have purchased Lens handle NFTs or received invitations from existing handle users. Stani, the founder of Lens Protocol, said that Lens will also be open to the outside world soon.
As of today, Lens has 125,964 user profiles, and its V2 version has been launched and applied to all related dapps. Lens V2 is special because it introduces a number of innovations that improve the current paradigm for social media content creators. Creators and developers are welcome to work together to gamify social media using smart contract technology, which is a big plus in blockchain and It’s all a new paradigm in social media. Prior to V2, Lens introduced the concept of collecting posts on its social graph through buttons on the application layer (such as Hey). More than 400,000 posts were collected, and users minted more than 3.5 million NFTs, underscoring the huge success of its DeSoc paradigm. Now, they are iterating and updating this feature with a feature called Open Actions that allows developers to build custom actions related to posts or published content. They call this new user action publish action, and these actions are performed by Lens configuration files. The innovation here is in associating action chains with users and content together, rather than anonymous tips that content creators cannot associate with their own work or quantitatively evaluate.
Using the tip post action allows indexers to link ERC-20 transfers to the Lens post that performed the action. This allows a creator like Lenny to track the number of tips each post receives, or he can track which handles are his top tippers, just to name a few uses. Posting actions can also provide rewards through a recommendation system, such as Lenny setting up a tipping behavior to reward users who interact with or spread his posted content, and if they help him get tips, they can get a portion of the tips. So if Jeff quotes Lennys post and Jan sees Lennys post because of Jeffs quote, when Jan tips Lenny, Jeff gets a portion of that as a commission. This applies not only to citations, but also to other user actions that help share published content, such as mirrors and comments. These innovations on Lens really help bring to the fore the potential of social media gamification. Another innovation worth mentioning is implemented by the Lens-based Dapp Orb, which makes community sub-wallet sharing possible as long as users choose to create it.
Tako Protocol quickly responded to the DeSoc and SocialFi waves in 2023, positioning itself as the monetization layer for Web 3 social. It aims to provide basic smart contract functions for various social applications. Being interoperable and open source, Tako enables developers to develop without permission. Its modular and versatile design is suitable for a variety of social graphs and their client dapps. Tako made a strategic investment in Jam and renamed it JamFrens, which has been launched on Lens Protocol. It has introduced tradable user profile keys and plans to launch them on the Farcaster network by the end of the year. This is intended to differentiate it from other client-side Dapps and showcase its interoperable gamification technology. Blockchain combined with gamification of social activities is critical to decentralizing the social graph. Middleware like Tako allows developers to focus on front-end and back-end development, while integrating Takos SDK or API only when the user community is ready to accept smart contract gamification methods. To this end, Tako has partnered with Lens to host the DeSoc Codex annual online hackathon in 2024. The event aims to invite global developers to innovate based on their DeSoc gamification technology and receive guidance from heavyweight players in the field such as Polygon Labs, Mask Network, Phaver and Consensys.
SoFi So Good
These trends are worth understanding because they pave the way for a more user-centric, democratized social media landscape, working in tandem with blockchain’s tokenization and gamification capabilities. But it’s worth noting that these guardians of privacy and data sovereignty remain sleeping giants, far from the biggest winners in an ever-changing crypto-social media landscape with no clear consensus on its future. The leading position is reserved for less decentralized, but still blockchain-based dapps that connect directly to traditional social media like Twitter, providing users with large fans and audiences the opportunity to monetize existing social media new way.
Specifically, apps like Friend Tech and Stars Arena leverage Twitters API to connect to Layer 2 blockchains like Base and Avalanche. Friend Tech in particular became an overnight phenomenon, popular with users and creators, creating hundreds of millions of dollars in ETH trading volume, because it was the first time that creators’ Twitter Profile Keys could be bought, sold, and speculated on. or shares. Since launching on August 10, 2023, Friend Tech has grown explosively, attracting more than 250,000 independent traders in just over a month and generating over $9.76 million in protocol fees for the platform. Both creators and fans benefit from Friend Techs unique bonding curve feature, where 5% of the transaction volume flows directly to the creators key being traded, and the other 5% is owned by the Friend Tech protocol. Anyone can become a creator and anyone can invest in creator keys early, so speculation on Twitter accounts activated on Friend Tech quickly reached a peak, attracting everyone from bots to speculators to real fans in the Ethereum economy focus on.
Friend Tech quickly brought cryptocurrencies into the mainstream by converting fans consumption behavior into investment behavior, inspiring the emerging connection between social media and blockchain, and creators can interact directly with fans who are now key holders. . Another unique thing about Friend Tech is that it bypasses Google Play and the Apple App Store by creating a Progressive Web App (PWA) that can iterate faster while cutting out the middlemen and gatekeepers’ revenue share. The spirit of cryptocurrency. Many industry builders took notice of Friend Techs overnight success, and despite the emergence of a few imitators, Friend Tech is currently the sole winner in this unique SocialFi market. Despite its success, its growth appears to have stalled as the price of creator keys peaked in Ethereum, creating a barrier for new entrants.
The model of using APIs to connect traditional social media platforms such as Twitter with Dapps has shown promising results in XPet, another Twitter plug-in game based on Arbitrum. XPet occupies a niche in the crypto space in the electronic pet space previously dominated by Base Chain-based FrenPets. Users only need to link their Twitter accounts to get a pet directly on the Twitter interface, which roams in the lower left corner of the feed. Users feed and care for their pets in a new window directly on Twitter. The gaming site encourages users to take good care of their pets and earn cryptocurrency rewards for doing so.
XPet has grossed nearly $13 million in revenue, with 6,823 unique users making more than 77,000 transactions on the platform in just over a month. The success of XPet strongly demonstrates that there is huge potential to experiment with innovation on existing social media platforms while providing novel ways for users, creators, and curators to interact and earn monetary rewards.
2024 DeSoc Storyline Observation
On that basis, here are our key narrative predictions for the SocialFi and DeSoc space in 2024:
interoperability
The biggest winners will be the project teams that successfully break down the barriers between the largest existing crypto communities on the blockchain. For users, sticking to a single chain causes them to miss out on the emerging ecosystem and airdrops aimed at bringing liquidity and user stickiness to the DeFi community. Likewise, from a project perspective, social media channels cannot exist in isolation. The chain-agnostic methodology of Lens Protocol and Tako Protocol is therefore particularly important.
Modular
“Be flexible and adapt or try hard.” Modularity refers to the ability of one project to smoothly integrate into the existing structure of another project with the shortest development time or lowest start-up cost. In this regard, Tako Protocol stands out from the competition as a middleware that relies neither on a specific chain nor on a specific social graph. This doesnt mean that non-modular projects wont succeed, but the more modular a project is, the more it embodies the spirit of Web3, which opposes monolithic giants in favor of harmonious cooperation with other Web3 players.
Censorship
Censorship has become one of the biggest issues in traditional social media today. At any time, platforms can reduce or eliminate a creator’s ability to monetize, which often sows distrust within the influencer community. Therefore, if the censorship-resistant DeSoc platform can prioritize establishing a fair and transparent creator economic system and effectively reduce censorship, it will eventually attract a large number of users.
safety
If Dapps and protocols cannot securely defend against hacker attacks or have a single point of failure, they will not be able to continue to exist or gain a substantial user base. DeSoc has certain advantages in security due to its decentralized nature, but not all SocialFi protocols can achieve this, such as Stars Arena, which has shown vulnerability to attacks or corruption of centralized leadership.
Early attention to the latest trends in the DeSoc and SocialFi space will yield huge rewards for users. To date, no DeSoc or SocialFi project has issued tokens to users, although almost all projects have set up a points system for the platform. In short, this means early participation pays off!
Finally, thanks to Mask Network and Hashbrown Labs for their help in completing this article. Special thanks also to Tako Protocol for emphasizing the importance of modularity. This concludes the story of 2023, let’s bring it to a close! Happy New Year to all our precious readers!
