đŹÂ Positives
Positive tractions: 130k+ users; 100k+ NFT profiles, with half of them active, and itâs increasing from launch. 700k+ posts and 1M collecting until Dec indicate active user interactions and relationship building
Strong founding team with successful web3 product (Aave) buildup experiences and great reputation
Market leader and pioneer in Decentralized Social Media, which is easier to have the network effect
đŹÂ Negatives
The market and segment are still in the early stage
Each operation requires signature verification and paying Polygon's gas fee, which affects the user experience. This would be a pain point for social Dapps with frequent information transactions.
Lens profile is built from scratch without integration with existing on-chain and off-chain data
đĄ Overall, Lens protocol is the leader in meddle layer sector of web3 social. Lens investment value would relate to how the sector performs overall. The point is 6.65 overall, indicating that it could be considered to invest but not a highly recommended investment. The social product life cycle starts with growth first and then monetization. Thus we recommend keeping track of its growth trend and user behavior changes in social media.
Lens protocol is part of the Web3 social sector. The social sector of Web3 is an emerging sector with a couple of players existing, but most of them are still in their early stages. The underlying thesis of web3 social is social data ownership, portability across platforms, end-to-end security, and anti-middleman. The most significant differences compared to web2 are in data ownership and portability.
We could separate most products in Web3 social into three categories -
Infrastructure. The infrastructure layer builds L1 chains specifically designed for building social Dapps for scaling. Social applications have more information exchange than financial Dapps, which require faster TPS and scaling features for storage and indexing. Deso is one pioneer in this section. Each wallet address represents one identity in Deso.
Middle layer. The middle layer is built based on existing infrastructure, providing protocol and a development platform for social Dapps. The middle layer designed the social graph components, and developers could build their social Dapps based on it.
Application and subsidiary tools. Applications are directly user-facing Dapps built on the Middle layer or Infrastructure. Each infrastructure and the middle layer has its own social application ecosystem currently.
Lens Protocol is part of the Middle layer built on the existing L1/L2 chain. Middle Layer designs the essential components of the social graph (including identity, content, social relations, etc.) to help developers better build social Dapps. The middle layer is the most popular sector for builders and investors in Web3 social since it might capture the biggest value -
They could leverage the existing infrastructure and L1 ecosystem depending on which one they are built on
The application built on them cannot capture the value compared to the middle layer. User could easily move between different Dapps built on the same protocol with their social graph data maintained since the userâs data components is designed in middle-layer protocols.
Though the middle layer might capture the biggest value in web3 social compared to other layer, the web3 social sector as a whole havenât shown a strong product market fit. There are two main reasons behind this:
Technical Dilemma: Social media-related applications are storage-heavy and request fast information processing speed. Currently, processing social media data on-chain is costly and slow compared to web2 centralized processor. A product such as Deso is aimed to solve this issue with a lower storage price (storing about 200 characters on-chain is $0.000017, compared to Ethereumâs $78.75) but still has a long way to go compared to web2 social giants.
User education dilemma: We havenât seen any applications or interactions that make the users perceive the benefits of data ownership and portability. How we convey this message to end users interaction is a key question for the killer web3 social app
đĄ Therefore, the web3 social sector is still in a very early stage and doesnât have a clear path. It has PMF in specific scenarios (eg. NFT transaction and GameFi-related wallet-to-wallet chatting). Still, it is not a key user pain point for both the web3 community and massive adoption. The technical and user education dilemma is the biggest challenge for massive adoption. The prosperity of social apps is related to the number of users brought in. As the middle layer, how thriving is Lens Protocolâs ecosystem and how many users are using applications in its ecosystem would be key factors to its success. Lenâs success is highly related to the whole sectorâs success.
Lens Protocol is a decentralized, composable and permissionless social graph protocol built by the team behind the decentralized Liquidity Protocol Aave on Feb 8th, 2022. All user-owned social graph data, including profile, content creation (post, share, comment), and social connection (follow, collect) are stored in NFT format. The social graph could be leveraged across the Lens ecosystem, and applications built on Lens would benefit from this.
One key aspect of the social layer is whether they store the social graph data in a decentralized way. Compared to the transaction and trading-related applications, social media requires faster information exchange and more extensive media storage. This is hard to achieve based on existing infrastructure with limited data exchange speed. For middle layer built on existing L1/L2 infrastructure, they need to balance decentralization and efficiency when making this decision. Lens stores all social graphs on chain, which sacrifices efficiency and speed.
ERC-721 standard - all social data stored in ERC-721 standard NFTs are widely accepted across platforms. This means another platform could access all social graph data stored in Lens.
Blockchain - Build on Polygon Proof-of-Stake blockchain with a lower fee and eco-friendly. It could interact with Polygon and Ethereum ecosystem.
Modules design - Lens use ERC-721 NFT to guarantee usersâ ownership of their social graph. Identity and user content are stored in ProfieNFT, and social interactions, including following and collecting, are designed in NFT for creators to monetize. Each NFT minting process is modularized into different modules.
Profile Module and ProfileNFT: When creating a user profile, ERC-721 NFT would be created via LensHub contract, which is the core entry point for all interactions on Lens. Publication actions (Post, Comment, Mirror) are posted on ProfileNFTs.
Reference Module: Determine who could comment and mirror the userâs publication.
Follow Module and FollowNFT: Profile NFT could attach Follow Module to enable other users to follow the profile. The profile owner could set up the condition of following to monetize. Followers would have the FollowNFT to demonstrate the ownership of this following action.
The Follow Module has a built-in governance feature to enable users to create DAO based on it.
Collect Module and CollectNFT: when creators want to monetize their content, they could enable the collect module, which allows other users to mint NFTs linked with the content URI. This NFT demonstrates the ownership of this collecting action
Modules design and SDK provide flexibility for developers to build different types of Social Dapps
1. Users and transaction volumes
Lens Protocol has 136,961 number of users and a total transaction of 6,856,025 (by Dec 12th). The user base and overall transaction volume are increasing continuously (the red part shown as below) with a growth rate of 16k per month.
2. Social Graph data analysis
Identity: Lens Protocol ProfileNFT
Lens NFT has 106,169 profile NFT holders and is continuously growing since its launch. 97% of the holders only hold one ProfileNFT. Lens Profile NFT is fundamental to interacting in the Lens ecosystem.
Active profiles are around 40k on Lens in Nov, which accounts for 40% of the total. This means half of the profiles on Lens are active, which performs better than its competitor Deso (15%) and other Web3 projects during the bear market. Close to 1/3 of profiles have engaged for more than 3 months, which demonstrates its good retention rate. However, since Lens has been launched only for a couple of months and is a new project, user retention remains to be seen.
Itâs now tradable on NFT platforms, including Opensea and Rarible. Lens NFT price is gradually getting higher since its launch and increased rapidly in Nov along with high trading volume.
Content creation: publication (post, comment, mirror)
Lens ecosystem has 709,952 posts in total. 54,928 (51.73%) profiles have posts, which means half of the users are content creators. The top 1000 profiles account for 39.67% of all posts. The overall costs are accumulated daily.
The total comments count number is 285,532, and top 1000 profile comments account for 36%. The most famous publication has 16,259 words which is 4 times the second one. Total mirrors are 330,840. Are top 1000 profiles account for 35% of all mirrors.
Social Relation: Follow and collect
97,936 profiles have followers, which accounts for 92% of all profiles. Top 1000 profile accounts for 43.62% of all following. The top 1 account has over 60K followers. 50% of profiles have less than 10 followers. The following activities are highly concentrated in top profiles. The total collection count is 1,089,643, and the top 1000 profiles account for 86% of all collections. We could notice that social relation actions are more concentrated in the top 1000 accounts, which gets aligned with the rules of all social media - most interactions would be concentrated on top accounts and content.
Overall, Lens has health traction with an increasing user base. User engagement and retention are in good condition compared to many web3 projects.
Currently, Lens There are more than 50 applications built on Lens, but most are in a very early stage. Lens launched Lensverse for users to explore the ecosystem. We list some vital players inside the ecosystem:
Lensfrens: a page to create the profile page on Lens.
Lenster.xyz: âdecentralized twitterâ, a decentralized and composable web app for users to post, share, comment, etc. The user base and engagement are continuously growing on Lenster, especially at the end of this year.
Lenstube: âdecentralized Youtubeâ, decentralized video-sharing social media
Orb: âdecentralized Linkedinâ, a decentralized professional social media mobile app with an on-chain credit system
Most applications are still very early with limited functionality.
Tractions: 54.8K users in Discord
Support: Lens has a support team, Aave family to support the community and answer questions. There is plenty of mod in each channel to interact with users.
Governance: Lens protocol has several innovations in engaging the community and making governance more efficient.
CultivatorDAO - aims to solve the content moderation issue
CultivatorDAO is the first decentralized community-owned content moderation to address spam and bots issues. Content moderation is controlled by internet companies in Web2 and a tough question when operating decentralized. CultivatorDAO creates a way for the community to monitor the content publicly and could be widely used across the social platform
Community Grants
Lens offers grants for the community to propose ideas that help the platform's development. The team encouraged the community to submit proposals, and they would evaluate each proposal.
The team plans to transform it into a DAO in the future to engage users more in the decision-making process and develop new features.
đĄ Overall, the community is new and active. The team and mod are responsive in the channel to answer questions.
In the social graph middle layer, Farcaster and CyberConnect are the main competitors in the market. Compared to storing all information on-chain and requiring a signature each time for an information transaction, competitors prioritize user experiences and store some social graph data off-chain. We listed some major competitors below -
The most competitive competitors are Farcaster and Cyberconnect in the middle layer. Farcaster only has identity data on-chain, which enables it to provide a more web2-alike user experience. Farcaster also has a high user engagement and active community.
Other competitors
Cronos ID is a decentralized identity and communication protocol built on Cronos. It provides â.croâ extension domain service and plans to release a notification service and messaging service to enable communication between wallets. However, since the Cronos ecosystem is gradually weakening, we didnât include it as a major competitor. RSS3 is also a social graph competitor, but the main focus is providing social data aggregating API, which might not be a direct competitor to Lens but is worth paying attention to.
Has an established Aave team behind it - the team founded one of the largest DeFi lending protocols Aave. When talking with the Lens team in EthSF, most of their members come from Aave.
Stani Kulechov - the founder and CEO of Aave who propose the idea of Lens
start to programming as a teenager
Interested in finance and Ether when studying University of Helsinki, and started to explore how it could change the traditional financial system
Release ETHLend in 2017 and then rebrand to Aave
FTX Ventures invested in the seed round. Most of Lens competitors has raised 10~15M, and usually, the valuation is 10x, Lens protocols valuation is probably at around 100M.