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Primer: Decentralized Social Media

Tl;dr: Decentralized social media offers a new way for users to form communities and share ideas without the control of big tech. This new model of social networking embraces the web3 vision of a user-owned internet, leveraging blockchain technology, crypto tokens, and open source software to let users control and profit from the content they create. While “DeSoc” faces challenges related to scaling, costs, and content moderation, it has already given rise to numerous decentralized apps and attracted millions of users to its vision of social networking onchain.

By Coinbase Institute

July 19, 2023


I. Introduction  

Traditional web2 social media sites like Facebook and YouTube have transformed communication by connecting people around the globe. Over half of the world’s population uses social media, and the most popular sites generate billions of dollars in revenue. But users have become increasingly unhappy with the control that big companies have over our online social lives. 

Big tech companies ultimately own the content that users create, and rely on this content to generate profit from advertisers. Content moderation teams decide which posts are permissible, and can deplatform users, erasing years of content and cutting off creators from their fans in an instant. Sites use algorithms to promote certain posts and downplay others, which can facilitate echo chambers and misinformation. Companies also profit from tracking and selling user data, from browsing history to biometrics. Users who want to close their accounts risk losing the very identity they’ve created, including their posting history and follower list. Finally, big tech platforms are closed systems, which means they limit innovation by third party developers. 

DeSoc networks can solve these problems using blockchain technology and other web3 features like tokens, pseudonymity, and decentralized governance. DeSoc aims to guarantee that users “own a direct relationship with their audience” and with each other. Users can create accounts without providing personal information such as name or email address. They can join specific platforms that align with their interests, but communicate freely with users across many different sites from that platform. Users themselves determine content moderation policies. And users who want to leave a site can easily migrate their account data, including their handle, posts, and follower list, to a different site. 

Terms to know

Dapps” – DeSoc apps share many of the same features as DeFi and other decentralized apps (“dapps”). They typically operate on the blockchain, a database of transactions that are distributed and secured across a network of many computers, or nodes. Some blockchains also function as a type of distributed computer on which developers can build and deploy dapps. These dapps use the blockchain to store data, run software, and process transfers of crypto. 
Smart contracts” – are software programs that run automatically when certain conditions are met. They form the mechanism by which dapps are deployed and operate on blockchains. This software operates without any third party oversight, and the code is typically open-source. This feature makes it possible for any developer to innovate a new social network that can cater to a niche community or compete with broad-based incumbents.  

II. Decentralized Social Media 

The most prominent DeSoc networks exist as alternatives to popular sites like Twitter, Facebook, and YouTube. Others include fundraising platforms, professional networks, and ad-free blogging sites. For example:

  • an open social graph on which developers can build decentralized apps, including “InstaCaster,” which indexes images in an Instagram-like feed, and SearchCaster, which facilitates search for any post across the Farcaster network. 

  • Bluesky, a project funded by Twitter co-founder Jack Dorsey, is a Twitter-like social media site that offers users increased control over their personal data and allows them to curate custom feeds with community-specific moderation.

  • LBRY allows creators to distribute digital content like videos and songs on the blockchain, retaining full control over their content and transacting with consumers using the LRC coin. 

  • SpringRole is a professional platform that lets users build an authenticated identity online by demonstrating their work and receiving verifiable endorsements on the blockchain. 

  • The photo-sharing social network Pixelfed provides a decentralized and privacy-focused alternative to Instagram. 

A. Federated Networks 

A key feature of DeSoc networks is that they are federated, meaning that they are structured as a collection of independent but interconnected sites. Together, the separate sites—sometimes called “instances,” “servers,” or “pods”—form an overarching social network. Users belong to specific sites, but can interact with anyone in the network. This structure is similar to email: Gmail users have their own rules and user interface, but can interact with accounts from Yahoo and Outlook. 

Users can create their own site around a specific interest, goal, or hobby. Users also collectively decide on the rules for a site, including its approach to content moderation. And members can easily join multiple sites or leave a site by migrating all of their account data. This feature means that users own their data, and their identity, in the form of a unique username that cannot be taken away. 

Popularity of Different Communities on the Lens Protocol

B. Content Moderation  

One of the main goals of DeSoc platforms is to be “censorship-resistant.” This does not mean moderation-free. Instead, moderation is performed on a per-site basis and is driven by individual communities, rather than by a centralized committee. Although individual sites may choose to block certain users or types of media, no site can control the behavior of any other site, and there is no central authority that can ban a user or content from the network entirely. 

A key part of this structure is the ability of users to switch servers, which means they can join communities whose content moderation approach most closely aligns with their own. Unlike with centralized social media, users can easily port their identities, posts, and photos to different sites, and their followers will automatically refollow them at their new account. They can also ensure that their posts are never deleted.

Some DeSoc protocols support numerous communities, each with their own content guidelines, while others have very little moderation. Networks are experimenting with many different approaches to moderation, including:   

  • Community-based: content is moderated on an ongoing basis by users, who can flag and report inappropriate content. Other users then review the content and vote on its removal.  

  • Token-based: users who review and moderate content earn tokens that they can use to access additional features on the platform, or can exchange for other digital assets. 

  • Delegated: moderation is done by a subset of the community, with members chosen by the community or by a consensus algorithm. For example, Minds relies on a “jury” of 12 randomly-selected users to review flagged posts.   

  • Reputation-based: a variation on the community model, users earn reputation points based on their contributions to the network. Those with more points in turn gain influence over content moderation decisions. 

  • Algorithmic: algorithms detect and remove certain content, such as illegal or dangerous posts that incite violence.  

III. Potential Benefits of DeSoc Networks

Freedom of Expression and Privacy. Many DeSoc networks let users post pseudonymously, using an identity that cannot be connected to their real-world name. These networks also collect less data from users overall, allowing them to join a site without providing an email address or other personal information. Further, users can create multiple identities on the same site. Users are also less likely to be subject to content removal, deplatforming, and other forms of censorship, as there is no central entity to exercise such control. For example, the Diaspora network promises users “you can choose who you want to be.” The network uses a concept called “aspects” to give users granular control over information-sharing with different groups of followers, such as close friends, colleagues, or other community members.  

Because records on the blockchain are immutable, DeSoc networks also provide built-in tools for users who want to authenticate their real-world identity over time and across multiple platforms. SpringRole, mentioned above, lets users build a verified identity that showcases their professional accomplishments and links to verified credentials by third party institutions and colleagues. This blockchain-based alternative to LinkedIn issues tokens to reward users for providing attestations, and a mix of crypto and AI technology to prevent fraudulent profiles.  

Ownership and Monetization. DeSoc apps take a very different approach to monetization than traditional sites. Rather than relying on ads or data tracking, many issue native tokens to raise funds. They then reward users with additional tokens for posting or participating in conversations, thereby rewarding users for their engagement. For example, Mirror is a user-owned publishing platform that lets users crowdfund ideas and monetize content using the MIR token. And Peepeth is a decentralized blogging platform that distributes its own token as a reward for user engagement. Tokens can be used to gain access to premium features or traded for other cryptos.  

Innovation. Most dapps are built using open-source code, which means that developers can access, modify, and build on top of existing code without restriction. This encourages collaboration and accelerates innovation. Social media sites like Twitter initially welcomed third party developers, which contributed popular third party apps like Tweetbot and Twitteriffic, but these sites now strictly limit access and contributions by outside developers. Granting access to outside developers greatly lowers barriers to entry, allowing start-ups to innovate and compete with incumbents. This makes it possible for existing companies to “trivially spin up social apps and experiences” that complement their core businesses.   

For example, Lens Protocol is a decentralized social protocol that uses a “graph structure” to display individual users and the connections between them. Any blockchain-based social media platform or dapp can connect to this graph, and each user profile is saved as an NFT that contains a user’s content. Developers have built numerous social dapps on top of the protocol, including dapps for permissionless social media, video-sharing, and meme creation. And DeSo, one of the first blockchain-based social media platforms, supports numerous other projects, including:  

  • Setu – enables users to port their content from a web2 platform like Twitter to DeSo, offering real-time syncs for past and future content.  

  • VerifiedCreators – offers creators the option to verify their profile and link it to a real-world identity, then use that identity to promote and sell content across a range of NFT and social media platforms.   

  • Bitclout – lets users invest in their favorite content creators by purchasing “creator coins” from top influencers. Coin holders might enjoy special access to their favorite posters and can profit if the coins increase in value.  

A. Limitations

DeSoc networks face several challenges that, despite users’ frustration with traditional social sites, has led to slow adoption. For example, the monthly users of the social network Mastodon increased to over 2.5 million following Twitter’s sale in October 2022, but dropped to just 1.2 million six months later. One problem is that existing social media sites act as walled gardens that make it difficult or impossible for users to leave a site without giving up their content and social connections. Users on traditional sites do not own the content they post, or their follower lists, and nothing prevents companies from refusing to make that content exportable using common standards. 

DeSoc networks also face specific internal challenges related to ease of use and content moderation: 

Finding Friends and Content. The distributed nature of DeSoc networks can make it difficult for users to find particular friends and content. With an abundance of site names, search and navigation can be overwhelming. One report described the decentralized social network Mastodon as “confusing and frustrating for the average user.” These structures may end up increasing centralization, as users flock to the same site as a matter of convenience. Users may also prefer the algorithmic approach of traditional sites that promote content based on a user’s revealed preferences. While algorithms can create echo chambers, eliminating them entirely prevents users from receiving helpful content suggestions. 

A related limitation is delays in sending messages and notifications across different sites. Current transaction speeds are not suitable for large social networks, particularly for messaging, where users expect to send and receive messages in real time. Relying on decentralized networks also poses scalability problems. If the platforms become too slow or costly, users are likely to remain with traditional sites.  

Therefore, more research and innovation is needed to increase transaction speeds and innovate more transparent algorithms that benefit users and communities without promoting ideological extremes. For example, the decentralized network Bluesky offers an “open market” of algorithms that gives users more control over their experience. One potential solution developers are currently considering for the distribution issue are cross-chain bridges. These protocols enable the transfer of assets or data between different blockchain networks and nodes. In the context of DeSoc, this facilitates interoperability and connectivity between different servers, making it easier for users to find their social group despite the existence of multiple nodes.

Content Moderation. The anonymity provided by many DeSoc networks can result in increased levels of offensive content and users banned from other sites. For example, Diaspora, a decentralized social network with over 700,000 users, found it challenging to moderate and remove ISIS propaganda after similar accounts were banned by Twitter and YouTube. And Minds’ emphasis on free speech has made it an attractive site for extremist groups deplatformed from traditional sites, leading Minds to create the “jury” moderation system described above.  

DeSoc networks also face challenges in their commitment to “freer” speech and localized moderation—at times, the site-by-site approach can lead to de facto moderation across an entire network. For example, when the social network Gab moved from Twitter to the decentralized network Mastodon in 2019, it was blocked by many of the most popular servers, effectively removing it from most of the network in a bottom-up process of server-by-server moderation. 

In short, simply democratizing content moderation will not solve the free speech and deplatforming problems faced by conventional sites. Monitoring content and determining if, when, and how content or users should be removed from networks will be an ongoing challenge for all types of social media. Community-based moderation may suffer from difficulty reaching consensus, inconsistent enforcement, and a lack of training or support for moderators, who may regularly be confronted with violent and offensive content. For now, hybrid moderation models, similar to that used on Reddit, where community moderators maintain subreddits, may be the most common and effective moderation approach. 

IV. Policy Considerations   

DeSoc apps present many questions for U.S. policymakers, some rooted in conventional concerns about social media and others related to the use of crypto and blockchain technologies. DeSoc apps raise concerns about the potential spread of misinformation and propaganda, and the liability, if any, of decentralized protocols for illegal or harassing speech. They also lack regulatory clarity as to whether some tokens constitute securities, the application of data protection and consumer disclosure requirements, and the tax implications of token transactions. 

DeSoc apps, like all decentralized apps built on blockchain technology, have the ability to increase freedom and opportunity around the world. At its core, blockchain is a breakthrough technology that allows individuals to directly share information peer to peer, and has ushered in multiple use cases that benefit from the technology’s efficiency, transparency, and accessibility. In an onchain world, transparency and trust are built into decentralized protocols themselves, and these protections will only grow as the technology develops. Therefore, lawmakers and regulators concerned about social media should focus their efforts on centralized actors, where additional transparency and disclosure are needed.

For example, Section 230 of the Communications Decency Act of 1996 generally shields tech companies from liability for content published by users. The law was designed specifically to “encourage the development of technologies which maximize user control over what information is received by individuals” on the internet. Decentralized protocols are designed to ensure this exact outcome. By facilitating direct peer-to-peer exchange of information without a potentially liable third party, some have posited that DeSoc networks can “achieve the policy goals of Section 230” without a need to enforce the law itself. 

As the U.S. Supreme Court recently noted in Twitter, Inc. v. Taamneh, social media platforms do not associate themselves with harmful content merely by creating a platform for speech or by employing software programs that match content with users based on their preferences. Although the Court’s decision did not touch on decentralized networks specifically, it underscores the lack of liability for platforms that merely facilitate information exchange through software that is “agnostic as to the nature of the content.”²

A second, more controversial provision, Section 230(c)(2), allows tech companies to censor material in good faith if they find it objectionable, even if the relevant speech is protected by the First Amendment. Here, too, DeSoc can provide an answer to critics of this permissible moderation: the lack of centralized moderators means that no single authority can ban content from a network; no one “instance” or site controls the content on another site, and users who feel their speech is threatened can easily transport their content and followers to a different site.  

It will still be necessary, however, for DeSoc protocols to prevent the proliferation of certain types of illegal speech, such as copyright infringement, classified materials, and terrorist recruitment. While many DeSoc protocols employ some type of moderation system that can address such content, the immutability of the blockchain makes it difficult or impossible to remove illegal content once it appears on-chain. This problem, which has not been widespread but remains unresolved, has led some to suggest filters on blockchains that prevent the introduction of “unwanted data” in the first place. But any solution should ensure that the blockchains themselves remain permissionless and immutable, while decentralized apps built on top of these blockchains innovate to achieve the necessary legal compliance.   

Apart from free speech concerns, the lack of regulatory clarity surrounding crypto technology generally, including DeSoc apps, risks hampering innovation and adoption. Recent studies show that while the blockchain development ecosystem is growing, the U.S. is steadily losing market share of developers and capital investment to other countries that provide a greater regulatory clarity. As Coinbase has previously explained, the U.S. must embrace its historical approach of welcoming innovation while managing risks, rather than pushing new technology offshore. 

Regulators could both foster DeSoc innovation and protect consumers by developing a comprehensive regulatory regime for crypto assets generally, including those that make up a crucial part of the governance and rewards systems of DeSoc apps. Much-needed rules would clarify issues related to securities law, disclosure requirements, and the tax treatment of various crypto assets. Further, Congress could support innovation of DeSoc protocols by passing legislation that recognizes and protects their decentralized structure.  

¹ Fabri. "Lensverse Ecosystem Applications", January 10, 2023. ² Case No. 21-1496, at 23 (S.Ct. May 18, 2023).

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