Web3 social networking (1): the hustle and bustle is for profit, the financial nature of social networking

By Barrons, LBank Labs

Before discussing Web3 social networking, it is first necessary to clarify the relationship between the development of Web3 social networking and Web2 social networking, whether they are mutually exclusive or complementary. This will allow us to explore more deeply the potential and necessity of Web3 social development.

• Web 2.0 social focuses on information exchange. Its value lies in promoting the interaction between users, and the behavior traces left by users on the Internet can be further commercialized.
• Web 3.0 social focuses on value exchange. Value exchange can be achieved in two ways: the first is by monetizing social behavior; the second is by making investment behavior more social. Therefore, Web 3.0 social is often referred to as SocialFi, which is the best summary of Web 3.0 social.

Web3 socialization is not only a social behavior, but also a financial behavior. Similar to the development of Bitcoin from a small technical community, Satoshi Nakamoto's idea of a sovereign currency also attracted some cypherpunks to participate in discussions and development. Eventually, with the help of his social skills, Satoshi built a successful community. As the community grew, so did the price of Bitcoin. In Web3 social, social behavior not only contributes to financial behavior, financial behavior also contributes to social behavior. Taking CryptoPunks as an example, as the price of CryptoPunks rises, people buy CryptoPunks as their avatars one after another, and financial elements become a symbol of social status.

1. Refactoring Web3 social network

From a technical point of view, components such as assets, wallets, social protocols, and DApps work together to provide social services on the blockchain network. Below are step-by-step instructions on how these components interact with each other.

1. Assets: Reputation

In Web3, the value of social protocols is used for value interconnection between users. Users are social value mapped on cryptocurrencies and other assets. In social services, assets can be used for various purposes, such as incentivizing users, rewarding content creators, or providing exclusive features within the service. Social services can use cryptocurrencies, utility tokens, governance tokens or NFTs to represent value or rights within the platform.

2. Own account: Wallet

Users of blockchain social services need wallets to manage their digital assets. A wallet is a gateway to interact with the blockchain network, enabling users to store, send and receive assets such as cryptocurrencies and tokens. Wallets can also facilitate interactions with DApps by signing transactions and interacting with smart contracts.

3. Social Network: Behavioral interaction on the chain

A social protocol includes the rules, governance, and consensus mechanisms of a blockchain network. It is critical to ensuring that social services operate securely and transparently. For social services on the blockchain, social protocols can include token distribution mechanisms, voting systems, dispute resolution, or any other rules governing user interactions.

In summary, wallets, assets, social protocols, and DApps combine to provide social services on the blockchain network. Users interact with DApps through wallets, and trade with assets according to the rules defined by the social protocol. The decentralized nature of blockchain technology enables these services to provide greater security, transparency, and user empowerment.

2. Wallet: self-management and ownership of identity and assets

Blockchain social protocols are decentralized systems designed to facilitate communication, collaboration, and value exchange between users. These protocols typically rely on digital wallets to manage and store digital assets such as cryptocurrencies, tokens or non-fungible tokens (NFTs). Wallets play a vital role in these systems. These tools leverage the blockchain as a database, increasing transparency, data consistency, and availability. Transparency includes contributor dashboards, goal tracking and more innovative use cases including service provider accountability, crowdsourced consensus and contributor mining.

Here are some key aspects of a digital wallet in a blockchain social protocol:

• Identity and Access Management: Wallets serve as digital identities that enable users to access and interact with blockchain social protocols. Each wallet has a unique public address that can be shared with others to receive assets or participate in transactions. The private key associated with the wallet must be kept safe and private as it provides control over the assets stored in the wallet.
• Asset storage and management: Wallets store and manage various digital assets such as cryptocurrencies, utility tokens, governance tokens or NFTs. These assets can represent value, access rights or voting rights in a blockchain social protocol. Users can send, receive and manage assets using the wallet.
• Smart contract interaction: The wallet enables users to interact with smart contracts on the blockchain, and smart contracts can automatically execute various functions and processes in social protocols. Users can send transactions through the wallet to trigger specific smart contract functions.
• Governance and voting: In a decentralized social protocol, wallet holders can participate in governance decisions by voting. Users can use their wallets to vote on proposals or changes to the protocol based on the tokens they hold.
• As wallets play a more important role in authentication and asset management in social protocols, managed wallets will gradually be replaced by non-custodial wallets. Although managed wallets may be easier to use, due to third-party services having control over private keys , users may face more risks. Non-custodial wallets give users full control over their private keys, ensuring greater security and autonomy.

As a large number of Web2 users flood into the Web3 social field, private key management strategies and user interface design will become key factors for wallets to compete for the future Web3 social user market. The trend we can clearly see is that MPC wallets and smart contract wallets that pay more attention to user experience are beginning to be launched in the market. While ensuring that users have their own private keys, a better user experience can also be obtained.

All in all, wallets play a central role in blockchain social protocols, providing users with identities, enabling secure transactions, and facilitating the storage and management of digital assets. For anyone wishing to participate in a blockchain-based social network or platform, it is essential to understand how a wallet functions.

3. Web3 Social Reputation: On-Chain Credentials

The self-account function of the wallet endows individuals with self-identity and asset management capabilities, making on-chain credentials one of the most important assets for users. They are a trustless, secure and transparent way of authenticating and sharing information about a person, entity or device. By leveraging the immutability and consensus mechanisms of blockchain technology, on-chain credentials can provide proof of identity, achievement, skill or other attributes without relying on a centralized authority.

On-chain credentials can be used to create and manage digital identities that are secure, private, and controlled by users. These identities help authenticate users in decentralized applications (dApps), or grant access to restricted resources based on authenticated attributes.

People will be able to translate their online behavior into "reputation" on the blockchain. This can happen on the Lens Protocol community, Sound music platform, and ENS. Each wallet tied to an NFT profile that interacts with a crypto application will establish a history and begin to cryptographically establish an on-chain identity. This identity can unlock different things: airdrops (fully monetized), or access to a secret chat room on a social level.

Here are some of the key roles that on-chain credentials play in the Web3 network:

Source: LBank Labs

In conclusion, on-chain credentials provide a secure, decentralized and verifiable way to manage and share important information. By leveraging the unique properties of blockchain technology, on-chain credentials can create new opportunities for trustless and transparent interactions in a variety of industries and applications.

Example

Source: LBank Labs

By combining NFTs with an on-chain reputation system, the Web3 platform can create new ways to engage and reward users, while also increasing trust, transparency and accountability within its ecosystem. Only users who obtain an NFT profile can establish an identity on the Lens Protocol and gain community credibility. The core functionality of Lens Protocol is built on three ERC-721 NFT contracts: ProfileNFT, FollowNFT and CollectNFT. These tokens interact with independent contracts called modules, allowing Lens users to follow, post, collect, and comment on content published by ProfileNFTs. As the interaction is recorded on the chain, users gradually build their own on-chain account and reputation through continuous interaction with their unique NFT files.

Source: Messari's report "Solving The DAO Data Problem"

All in all, NFTs play an important role in the Web3 network by enabling unique ownership of digital assets, facilitating decentralized marketplaces, increasing user engagement, and providing new ways to manage assets and identities.

Trending

On-chain certificates with different application scopes have different user characteristics. From the perspective of application scope, whether it is the number of projects or the number of users, we can see that "NFT as a reputation indicator" is its most important use case. We can analyze different user activities from representative projects in four fields: ENS, PartyDAO, POAP, and Lens Protocol.

Source: LBank Labs (Data: Dune.xyz)

• ENS has relatively high user activity. Users can use ENS to register, update and transfer domain names, and can also map domain names to smart contract addresses. With the popularity of DeFi, NFT and Web3 applications, it is expected that the activity of ENS will continue to maintain a high level.
• PartyDAO's user activity may fluctuate with fluctuations in the NFT market. During times of market prosperity, users may be more active in participating in collective bidding activities organized by PartyDAO. However, user activity may decrease during market downturns. Additionally, with the development and innovation of the NFT market, and the emergence of new co-ownership models and auction methods, PartyBid's user activity may be affected to some extent. *POAP user activity may fluctuate with the number of events and activities. Users are likely to be more active in claiming and trading POAP badges when events and activities are frequent. However, user activity may decrease when events and activities are less frequent. *Lens Protocol user activity may depend on a variety of factors, such as platform functionality, user experience, and community building. To maintain high levels of activity, Lens Protocol needs to provide valuable features, engaging content, and a great user experience. Additionally, an active and engaged community is key to maintaining user engagement. With the development and innovation of the platform, user activity may gradually increase.

4. On-chain social interaction: SocialFi

SocialFi, short for social finance, is an emerging field that combines social networking with financial services to connect people in innovative ways. The core idea of SocialFi is to facilitate financial activities through social interaction, enabling people to build trust, share information, communicate and conduct financial transactions on online platforms.

To understand SocialFi, here are the key elements to consider:

• Trust and Transparency: In the SocialFi space, trust and transparency are built on public credit scores, historical transaction records, and personal experience sharing. This helps build trust between individuals, reducing transaction risk. As such, on-chain credentials are the foundation of the SocialFi ecosystem.
• Financial Inclusion: SocialFi aims to get more people involved in financial activities, especially those who have been neglected by the traditional financial system. Social finance can help these people access credit, investments, insurance, and other financial products and services.
• Community Support: Social finance platforms encourage users to support each other within the community by sharing experiences and knowledge. This helps reduce risk, increases financial literacy levels, and ultimately benefits more people.
• INVESTMENT INNOVATIONS: SocialFi gives investors more choice and innovative ways. For example, investments can be tailored to individual preferences and risk tolerance. In addition, social finance also advocates collective investment, allowing users to collectively share risks and benefits
• SocialFi (social finance) includes various financial products and services spread and traded through social networks. Here are some common SocialFi directions:
• Social Investing and Wealth Management: These platforms encourage users to share investment experiences, advice and strategies within the community. Investors can follow other successful investors on the platform, learn their investment strategies, and invest according to their own needs.
• Group Funding and Crowdfunding: These platforms use the power of social networks to help project creators raise funds. Through group fundraising and crowdfunding, individuals and businesses can more easily obtain the funds they need for innovative projects.
• Creator economy: The creator economy refers to the economic system formed around independent content creators, artists and influencers who use digital platforms to produce, distribute and make money. The growth of social media, streaming platforms, and other online channels has enabled creators to build their brands, connect with audiences, and earn revenue directly from their content.

1. Social Investment and Wealth Management

Social Investing and Wealth Management is an innovative approach to personal finance that combines social networking principles with traditional investing and wealth management practices. This approach enables individuals to share knowledge, insights and investment strategies, fostering a sense of community and collaboration in the pursuit of financial success.

Key aspects of social investing and wealth management include:

• Social Networking: Social investing platforms leverage the power of social networking to connect like-minded investors together, enabling them to share ideas, insights and strategies. These networks help create a sense of community and foster collaboration among users, which in turn facilitates more informed investment decisions.
• Knowledge Sharing: Users of social investment platforms can obtain a wealth of information from other investors, from market analysis and investment ideas to personal experiences and lessons learned. This open knowledge sharing can help users make more informed decisions and improve their investment skills.
• Copy trades and follow: Many social investing platforms offer features that allow users to follow or "copy" the trades of more experienced or successful investors. This can provide a valuable learning experience for new investors and potentially lead to better investment outcomes.

In conclusion, social investing and wealth management is an innovative approach to personal finance that harnesses the power of social networking to facilitate knowledge sharing, collaboration and community building among investors. By connecting like-minded individuals and fostering a spirit of collaboration, these platforms help users make smarter investment decisions, improve their financial skills, and achieve their financial goals.

Use Case: SyndicateDAO

SyndicateDAO is a Decentralized Autonomous Organization (DAO) dedicated to providing an innovative platform for decentralized investment groups. It aims to create a more inclusive and accessible investment environment for the decentralized finance (DeFi) world, enabling users to pool resources to invest in various projects in groups.

Source: LBank Labs

The total investment in Syndicate DAO is $7,967,293, and a total of 6,735 investment clubs have been established.

2. Collective Fundraising and Crowdfunding

Group fundraising and crowdfunding are innovative ways to use the power of social networks and online platforms to raise money for a project, cause or business. These methods allow individuals, organizations and entrepreneurs to raise capital, often in small amounts, from a large number of people to achieve their financial goals.

Various specialized crowdfunding platforms such as Kickstarter, Crowdfunder, and Gitcoin enable users to create fundraising campaigns, showcase projects, and solicit donations from backers. These platforms often provide tools and resources to help users effectively market their events and achieve their funding goals.

Their crowdfunding types include donation-based crowdfunding, reward-based crowdfunding, and equity-based crowdfunding. Each type has its own unique characteristics and may be suitable for different projects or funding needs.

• Gitcoin: Donation-based crowdfunding accepts supporters to donate funds, but does not expect any tangible return
• Kickstarter: Incentive-based crowdfunding offers backers benefits or rewards, such as products or services, in exchange for their contributions.
• Crowdfunder: Equity crowdfunding allows investors to obtain equity in a company or project in return for investment.

Crowdfunding and crowdfunding are popular because they are innovative ways to raise money using the power of social networks and online platforms. These approaches enable individuals, organizations and entrepreneurs to receive support from a wide range of people to help them achieve their financial goals and make their project, cause or business a success. The specific advantages are as follows:

• Project promotion and marketing: Successful crowdfunding campaigns often rely on effective promotion and marketing strategies to attract attention and support. Event creators can use social media, email campaigns, press releases, and other communication channels to spread the word about a project and engage potential supporters.
• Community Engagement: Building a supportive and engaged community is critical to successful group fundraising and crowdfunding campaigns. Campaign creators often engage with supporters through updates, comments, and other communication channels to maintain interest, build trust, and encourage more support.
• Fundraising goals and deadlines: Crowdfunding campaigns often have specific funding goals and deadlines to create a sense of urgency and encourage donations. In some cases, platforms may employ an "all or nothing" funding model, whereby creators are only paid if they reach their goals within a set time.

Example

Based on service size and selection criteria, we can present the collective fundraising and crowdfunding market map as follows. It can be seen from the market map that there is still a blank space in the field that can not only guarantee the quality of the project, but also provide large-scale market services. This will be the most worthwhile direction to explore in the future. Taking Gitcoin as an example, it tries to improve the quality of platform financing projects while ensuring large-scale services, while Coinlist expands its service objects while ensuring high project standards. How to expand the service scale while ensuring the quality of the project is still a challenging problem worth solving and exploring.

Source: 1Seed website

The following is an analysis of Gitcoin, Kickstarter, CoinList, and AngelList, focusing on three aspects: project financing success rate, user base, and user activity.

Source: LBank Labs

All in all, Gitcoin, Kickstarter, CoinList, and AngelList are all important platforms in their respective fields, but there are differences in project financing success rate, user base, and activity. Gitcoin and CoinList mainly target the blockchain and cryptocurrency space, while Kickstarter and AngelList focus on creative projects and start-ups, respectively. These platforms provide users with unique value and opportunities to seek investment or raise funds in different fields.

3. Creator Economy

The creator economy refers to the economic system formed around independent content creators, artists and influencers who use digital platforms to produce, distribute and monetize their works. The growth of social media, streaming platforms, and other online channels has enabled creators to build their brands, connect with audiences, and earn revenue directly from their content.

Key aspects of the creator economy, broadly defined, include:

• Content Creation: Creators produce a variety of content such as videos, podcasts, blog posts, music, art, and more. They usually specialize in a specific field and cater to the interests and preferences of their target audience.
• MONETIZATION: Creators can monetize their content through various revenue streams such as advertising, sponsored content, affiliate marketing, merch sales, donations and subscription models. The flexible mix of these approaches enables creators to build sustainable, diverse revenue streams.
• Audience Engagement: In the creator economy, building a loyal and engaged audience is critical for creators. They regularly engage with fans through comments, livestreams, social media and other channels to foster a sense of community and keep their audience interested.
• Creator Tools and Services: There is a growing ecosystem of tools and services that support creators, enabling them to produce high-quality content, manage their business, and optimize revenue. These tools include video editing software, analytics platforms, content management systems, and financial services designed for creators.
• Part-time economy overlaps: The creator economy often intersects with the "job economy" because many creators are freelancers or independent contractors. This work model offers flexibility and autonomy, but it also presents challenges such as income instability and lack of benefits.

In a nutshell, the creator economy is a rapidly growing field driven by independent content creators who use digital platforms to share their work, engage with audiences, and generate revenue. With the emergence of blockchain technology and the emergence of new platforms, the creator economy is likely to continue to develop, providing new opportunities and challenges for creators around the world.

The advantage of a creator economy based on Web3 is the ability to achieve broader financialization for creators. One of the most interesting cases is the tokenization of personal time, such as Matt issuing 100 BOI tokens, representing his 100 hours of work. These tokens can be redeemed for any service from UI/UX design, prototyping to branding.

Source: Boi website

As stated on DAPP Boi's official website:

"I've recently fallen in love with the idea of personal tokens -- cryptocurrency-based tokens whose value is derived from human performance."

One of the areas where blockchain has had a bigger impact on the creator economy is distribution platforms such as Mirror, Sound, and DOPE. They both allow creators to publish content in the form of smart contracts and monetize content through a variety of mechanisms, including subscriptions, pay-per-view, and other forms of micropayments. These platforms also allow creators to maintain ownership of their content and track engagement through analytics. Here are some key features:

• Ensure the decentralization, transparency and security of content and transactions. This helps creators safeguard their intellectual property while minimizing the risk of censorship and third-party interference.
• Creator economy and tokenization: They support the tokenization of creation through the issuance of tokens, non-fungible tokens (NFTs) and encrypted artwork. This allows creators to set prices, sell their work and make a profit.
• Community-driven: They take a community-driven approach to deciding who can be a creator on the platform. Existing creators can vote on whether to admit new creators, ensuring high-quality content on the platform.
• Crowdfunding and Sponsorship: Creators can use the platform to crowdfund projects and issue tokens as rewards for supporters. Additionally, creators can create sponsorship programs that allow fans to directly support their creations by purchasing tokens.
• Web3 Compatible: The platform fully adopts Web3 technology, providing creators with decentralized authentication, transaction and content ownership management functions. This allows creators to take full advantage of the benefits of a decentralized internet while maintaining control over their creations.

Example

Mirror

Mirror's functions include content creation, fundraising, reward sharing, and creation and distribution of tokens (NFT+ERC20). The figure below is a schematic diagram of the business and economic operation of creators on the platform officially drawn by Mirror.

Source: Mirror Blog

The Mirror platform has so far helped creators raise a total of 11,079.91 ETH. The total number of Mirror exclusive sponsors reached 19,509.

DOPE

Music Economies act as discoverers, investors, artist advisors, and own and manage commercial and copyright revenue streams in the music ecosystem.

Music Creators (12%) - Record Labels (76%) - Spotify (12%) - Fans

In the Web2 music industry, music economic companies play the core role of resource allocation, that is, to discover and incubate early artists, and push them to the market to obtain huge commercial value. 76% of the industry's revenues belong to record labels. This model is commercially reasonable and will remain an important channel for musicians to enter the market in the future.

However, the emergence of music NFT has brought another possibility to this industry, and music NFT can also play the role of a record company!

Music Creator (50%) - Music NFT (45%) - Dope (5% fee) - Fans

Source: LBank Labs & Dope

Summarize

The difference between the Web3 social network and the Web2 social network lies in the underlying technical architecture, and the different data storage and transmission methods of the blockchain also bring new functions to the Web3 social network. The biggest change blockchain brings to Web3 social is the financial nature of social interaction. Therefore, social reputation, creator economy, crowdfunding, etc. with financial attributes will be better integrated with Web3 social network. Of course, Web3 social not only has financial attributes, but also community self-organization attributes or DAO attributes. We will discuss this issue in the next article.