Returning power to the user
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.
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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.
* The “Hubs” feature is expected to be live in January 2023
*Farcaster is currently on Ethereum’s Goerli testnet with plans for mainnet migration in 1H 2023
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