By Angie Wang, Connor Dempsey

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TLDR

• 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.

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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.  

With that, let’s unpack the web3 social stack, followed by a case study into Farcaster*: a “sufficiently decentralized” social protocol.  

The web3 social stack 

We subdivide the web3 social landscape into 4 layers: hosting, social primitives, profile, and applications. Note that this landscape is illustrative, and not exhaustive.

Hosting - At the bottom of the stack is the hosting layer, comprised first of blockchains upon which primitives that power social applications are run and where decentralized properties are derived. Second, decentralized storage protocols where certain (but not all) critical data is stored.

Social primitives - Next are social primitives: the foundational building blocks that provide a representation of individuals, the components of their identities (e.g. actions they’ve taken and assets they own), and their relationships between others.

Profile -Wallets can be thought of as a proverbial passport that allows users to bring their data to their application of choice, serving as the foundation for their "profile" for web3 social.

Applications - At the top of the stack are user-facing social applications. They leverage a combination of blockchains, storage protocols, and social primitives to create interfaces that end users engage with.

Applications can be categorized by the type of interaction they facilitate between users:

• Many-to-many (think Twitter) 

• One-to-one (think WhatsApp) 

• One-to-many (think YouTube) 

To understand what it all looks like in practice, let’s take a look at Farcaster: a Twitter-like social app built on top of an open social graph reminiscent of the protocol that powers email (SMTP). 

A web3 social case study: Farcaster 

At first glance, Farcaster is a user generated content feed resembling Twitter, but with a more decentralized server architecture, built on an open protocol, that leverages Ethereum for decentralized identity. 

The above is the Farcaster client, which interacts with a server hosting user data. Where Twitter’s lone client interacts with Twitter’s centralized server, Farcaster will allow anyone to host a server* and offer different features users can choose from. Unbundling the client from the server can prevent any single entity from accruing too much power, since users have options over where their data is hosted. This is similar to how you can export your Gmail contacts into Outlook, or how you can move assets from one cryptocurrency exchange to another. 

Beneath the Farcaster client is the Farcaster protocol, where things start to get interesting. You can’t take your Twitter followers to Instagram because Twitter’s competitive advantage comes from owning your social graph. The team building the Farcaster client is doing so on Farcaster’s open social graph protocol. Their true ambitions lie in attracting developers to build new and even competing clients on the same protocol. This is similar to how competing services (Substack, Mailchimp) are all built on simple mail transfer protocol (SMTP). 

Farcaster’s initial application has been selectively rolled out to around 6K users, but you can already see early signs of what’s possible with open social graph protocols. For example, someone built a client called “InstaCaster” that indexes all images posted by Farcaster users in an Instagram-like feed. Another built a client for search (SearchCaster). Building these clients requires unrestricted access to Farcaster data via APIs and isn’t currently possible on Twitter, where API access is restricted.

Farcaster from a user’s perspective 

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. 

Putting it into context 

Farcaster’s approach is just one way to utilize the web3 social stack. While others like Lens and DeSo 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:

1. Users own a direct relationship with their audience 

2. 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. 

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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