Web3 social networks give users ownership and portability over their data, identity, and relationships, while enabling permissionless development.
The web3 social stack consists of four layers: hosting, social primitives, profile, and applications.
One example is Farcaster: a Twitter-like social app built on top of an open social graph reminiscent of the protocol that powers email (SMTP).
By separating the underlying protocols from the apps themselves, we may one day see social networks that accrue wealth and power in new and more distributed ways.
Social networks are applications that allow people to connect, share information, and communicate. They’ve brought humanity together in unprecedented ways while creating massively influential companies with user bases larger than most countries.
Today’s “web2'' social giants exist as “walled gardens” where all user interactions take place within a closed ecosystem controlled by a single corporation. They own users’ identity, data, and even the relationships they create. Additionally, they dictate who can join and what developers are allowed to build on the network. This top-down control has created significant barriers for new competition, high switching costs for users, and in certain respects, power that rivals that of some governments.
In contrast, there’s a new flavor of “web3'' social networks in their infancy. By leveraging decentralized databases and smart contracts, they enable social interactions while giving users ownership and portability of their data, identity, and relationships across applications. They also allow developers to build without permission. By separating the underlying protocols from the apps themselves, they may ultimately lead to the rise of social networks that accrue wealth and power in new and (hopefully) more distributed ways.
So far what we’ve described is an open-source protocol with a more distributed server architecture that doesn’t necessarily need blockchains/crypto at all. That changes once a new user wishes to join Farcaster.
Farcaster leverages the Ethereum blockchain to create a decentralized registry. When a new user joins, Farcaster generates an Ethereum wallet address mapped to their username. The username itself is an NFT that represents a user’s identity and can be mapped to any application on the network. Just as no entity can revoke an NFT held in your wallet, no one can revoke your identity or the connections you create with it.
The team refers to this approach as sufficient decentralization. By decentralizing key components like identity, Farcaster can guarantee that users can always claim and post messages under a username that can’t be revoked. From there, most other actions are done off-chain, so the user experience isn’t held back by requiring users to pay gas costs for every action.
Farcaster’s approach is just one way to utilize the web3 social stack. While others like and are taking different approaches all transform and structure raw on-chain data into a form that Dapps can build upon, while offering two key value props that web2 networks can’t:
Users own a direct relationship with their audience
Developers can permissionlessly build apps on the network
When Twitter deplatforms you, you lose all your valuable followers or subscribers in the process. If there were multiple clients building on an open Twitter social graph, you could simply switch clients just like switching email providers and bring your network with you.
A developer choosing to build on the Farcaster protocol can tap into Farcaster’s existing social graph to circumvent the cold start problem of starting a network from scratch. This would allow, for example, a developer to create an app similar to TikTok that can be distributed to users on the Farcaster protocol from day one. This dynamic promotes competition and innovation at the application layer while preventing any one company from single-handedly capturing all the value social networks create.
The more people that join a social network, the more useful and valuable it becomes. Web2 companies who own the entire network can monetize the data users generate through ad sales, creating a powerful network effect and highly valuable businesses in the process.
This captive model has led us into the precarious position where individual companies can influence what information billions of people see. Recent events suggest corporations or single individuals aren’t equipped to wield that kind of power, as well intentioned as they may be.
When users can freely switch between social apps, much like taking your email contacts from Gmail to Outlook, it’s difficult for any single application to become disproportionately powerful through accumulating network effects. If 1B+ were to use Farcaster or similar protocols, value would accrue not to one company, but to the underlying social graph protocol itself.
As value accrues to the social graph, it will flow to users. Imagine you could take your Twitter followers to YouTube, TikTok, Facebook, and a thousand other social apps of the future. Your social capital would become portable and monetizable across many applications that all innovate and compete for your attention.
It’s too early to say how web3 social networks play out and it’s possible that the network effects of incumbents prove too large to overcome. However, it appears that decentralized social networks are an idea whose time has come and that alternatives to the web2 goliaths are worth building.
Disclosures and footnotes
* The creators of Farcaster, Dan Romero and Varun Srinivasan are former Coinbase employees.
* The following Coinbase Ventures portfolio companies appear in the above landscape: Zapper, Gallery, Taki, Farcaster, Nansen, DeBank, Syndicate, Highlight, Bonfire, Rally, Zerion, Metamask (via Consensys), Deso, XMTP, WalletConnect, Spruce, Disco, Snapshot, Yuga Labs, Mirror, Polygon, Arweave, Livepeer, Ceramic.
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