Dissecting DeSoc in the Year 2023

One of the most prominent themes in the cryptocurrency market was the increasing adoption of decentralized social media or DeSoc as well as DeFi perps and leverage trading by both institutional and retail investors with the latter sparked by the implosion of FTX in 2022. In terms of market performance, 2023 witnessed a significant surge in the overall cryptocurrency market capitalization, primarily driven by the continued demand for Bitcoin and Ethereum, the two leading cryptocurrencies. Bitcoin experienced a substantial price appreciation from its January 2023 lows in the 16k-17k range to just over $42,000 now. Meanwhile Ethereum largely followed suit and rebounded from its January lows in the $1,200-1,300 range to over $2,200 now as it benefited from the growing interest in decentralized finance (DeFi) applications and layer 2 rollups built upon their Ethereum Mainnet settlement layer.

2023 Crypto Snapshot

The regulatory landscape for cryptocurrency evolved significantly in 2023. Governments and financial regulators around the world began implementing clearer guidelines for the industry. This increased regulatory certainty helped to improve investor confidence, leading to further institutional adoption of cryptocurrencies. More clarity was later provided via the punishments and fines issued to Sam Bankman Fried and CZ respectively with the former facing a maximum sentence of 115 years for fraud and co-mingling customer funds with the trading group Alameda Research and the latter paying a $4.3B fine and having to step down from Binance for failing to comply with know-your-customer (KYC) guidelines in addition to money laundering charges that stemmed from that failure.

Furthermore, the rise of central bank digital currencies (CBDCs) gained traction in a variety of governments in 2023. Several countries, including major economies, started exploring the development and implementation of their own digital currencies. This development added a new layer of competition to the cryptocurrency space but also provided an indirect endorsement of the underlying blockchain technology. The tail end of 2023 saw increasing interest in Bitcoin as buzz built about a BlackRock push for a Bitcoin ETF. Many analysts have predicted that such an ETF could see an approval from US regulators as early as Q1 of 2024 and speculation on the entire crypto market subsequently mounted with Ethereum seemingly the next asset that could later see ETF approval. All of this took place against the backdrop of a Federal Reserve that has halted interest rate hikes amidst a stagnant US economy after raising the rates earlier in the year in an effort to nerf inflation. Ultimately, the Fed has signaled that greater interest rate hikes are not forthcoming, and the market has responded with bullishness for volatile assets like cryptocurrency.

In terms of technological advancements, 2023 witnessed the continued innovation in blockchain technology, with the development of new protocols and decentralized applications. The introduction of Layer 2 scaling solutions came in two flavors, optimistic rollups like Arbitrum and Optimism and zero-knowledge proof based blockchains like ZK Sync and Polygon’s ZK EVM which aimed to address the scalability issues of existing blockchain networks like Ethereum, enabling faster and cheaper transactions. These novel breakthroughs meant that leveraged traders who’d previously used CEXs like FTX flocked to perp protocols like Perpetual, GMX and DYDX on chains like Arbitrum and Optimism. The end of 2022 and the beginning of 2023 saw innovations take place on the Bitcoin network including the inscription of the first Ordinal NFTs on Bitcoin blocks and the emergence of another new asset class in BRC-20’s, new tokens issued directly on the Bitcoin network. Controversy arose amongst Bitcoin developers who proclaimed that the Bitcoin network was not meant for such activities, but this only further sparked the movement to embrace the newly controversial digital assets. Overall, 2023 was a year of rapid growth and maturation for the cryptocurrency industry.  Increasing adoption, regulatory developments, and technological advancements all contributed to the continued expansion and mainstream acceptance of crypto.

Major DeSoc Trends

In 2023, the decentralized social media space witnessed several major trends that truly shook things up. One significant trend was the rise of blockchain-based social media platforms like Nostr, DeSo, Lens Protocol and Farcaster Network. These decentralized social graphs and their corresponding clients allowed users to have complete control over their data and identity, thanks to the distributed nature of blockchain technology. Users could securely interact, share content, and maintain ownership of their data without relying on centralized entities and data storage methods to facilitate such actions. This underscored a significant trend toward user privacy and data security that erupted amidst issues with concerns over censorship, demonetization and opaque algorithms in the traditional social media space. With growing concerns about data breaches and privacy violations, decentralized social media platforms took center stage by prioritizing user privacy on crypto’s open and transparent payment rails. They championed strong encryption protocols and offered enhanced security measures, ensuring user information remained private and protected so that the platforms themselves could not profit from selling user data to third parties.

Additionally, content moderation became a hot topic in the decentralized social media space in 2023. To address concerns of spreading misinformation and harmful content, these platforms adopted innovative approaches to content moderation such as community-driven moderation processes, allowing users to play an active role in flagging and reviewing content, and using NFT technology to prevent bots from attacking their users. Furthermore, the concept of decentralized governance gained traction in 2023. These platforms introduced transparent and inclusive decision-making processes through community governance models. Users were given the power to vote on platform policies, feature updates, and even the allocation of platform resources. This approach ensured that decision-making power was distributed among the users, rather than being concentrated in the hands of a centralized, unchecked authority. Overall, 2023 was a transformative year for decentralized social media. It witnessed the growth of blockchain-based platforms, increased focus on privacy and data security, innovative content moderation approaches, and the rise of decentralized governance models.

DeSoc Investment Briefing

From Aave-backed Lens Protocol raising $15M in their seed round in June of 2023 to Lens-based apps like Orb and Phaver raising $2.3M and $7M in their seed rounds in September and October respectively, 2023 saw no shortage of speculation on the crossroads of decentralized social media and crypto. Lenster and Lenstube both rebranded in October 2023 to ‘Hey’ and ‘Tape’ respectively. Such an action made it clear that the social graph didn’t have any general apps associated with it, meaning that all apps would build and compete on a shared social network. Tako Protocol, which brands itself as the social monetization layer of Web 3 social, raised $2M in a pre-seed round from big players like Mask Network and DWF Ventures in August of 2023. Tako then made a strategic investment in Jam, the 2nd largest client of Farcaster’s DeSoc graph, and similarly rebranded to JamFrens signaling their intent to grow with the wider space. CyberConnect even got their $CYBER token listed on Binance in August of 2023 on the heels of hype for social media applications that have significant crypto exposure. Indeed, these foundational projects and their communities are all building momentum in advance of what many anticipate to be a 2024 crypto bull run, but the competition is getting more fierce as both Farcaster Network V3 and Lens Protocol V2 arrive and onboard more users permissionlessly in an effort to keep their decentralized social graphs optimally positioned for network-effect driven growth. Let’s dive into some of the innovations of each of these stalwarts of the DeSoc space.

Lens Protocol & Farcaster Network

Delving into the DeSoc segment of SocialFi requires deeper examination of both Lens Protocol and Farcaster Network as they’re at the forefront of the creation of open and decentralized social graphs that any developers can build application layers upon. Essentially what that means is that a user can have one account for any number of decentralized applications. That means that they could log into new decentralized Youtubes, Twitters, Facebooks, Instagrams and even Pinterests from one wallet id. Their relationships and online interactions; however, would all be sent and stored in one social graph; however, that ensures data privacy and likely a decentralized autonomous organization that makes choices about moderation of the social graph while allowing dapps the freedom to experiment and build what they want on top of it without much restriction.

Lens, for instance has many different applications layers built on top of its social graph that prioritize different types of content. Phaver, for instance, is quite similar to Instagram but has a points system and staking function. JamFrens and Hey, meanwhile look more like decentralized versions of Twitter; however, JamFrens allows you to invest in your favorite Lens creators by trading their profile keys. Tape prioritizes the video format much like a Youtube or a Vimeo and there are many others built upon the Lens social graph to optimize anything from meming, making friends, or gathering crypto alpha. Warpcast and Flink, the two dapps used by this author that are built on the Farcaster network are more reminiscent of Reddit, but there’s really no limitation to what can be built here meaning that the account I used for Warpcast can be used for Flink and vice veras. Other Farcaster-based platforms will also allow me to login via the account I created for Flink.

Both Lens and Farcaster make ample use of NFT technology to ensure that you can take your account to any of these dapps and still interact with their social graphs seamlessly. In both ecosystems, your account’s linked to an NFT located within your crypto wallet, so using it on a new platform just means connecting that wallet to their front-end and signing a transaction, but once you send content and interact with users there, it’s all sent to the Farcaster Network or Lens Protocol social graph depending upon which one you’re using. That’s a major innovation because it means using one account in your crypto wallet for the new Youtubes, Reddits, Twitters, and Instagrams within Web 3 instead of constantly logging in, forgetting passwords, and resetting in your email.  That’s just one innovation of DeSoc though. The story of DeSoc is still just now unfolding.

Farcaster Innovations

Early on, Farcaster and later Lens introduced the idea of on-chain identity linked to your crypto wallet or, in some cases, multiple wallets, which made access to all the applications running on the social graph permissionless. With that said, they’d both built barriers to immediate entry to prevent bot attacks and airdrop hunters from spamming their respective creations by requiring an invite in Farcaster’s case and by requiring a Lens handle NFT in Lens’ case. These defense mechanisms somewhat handicapped growth as the team’s encouraged organic content as they built. Nowadays that’s changing and with Farcaster V3, the team has already opened up their gates to any user who’d like to join their network without any palpable impact on the quality of their content, something they’d privately feared due to crypto users’ tendency to hunt airdrops with bot accounts. New users simply have to pay a 1-time fee of $7, plus the on-chain transaction fee and they can use any number of dapps built on the Farcaster network from Warpcast to Flink to JamFrens. With their opening up has come a rise in users with more than 6,807 having registered in a permissionless way compared to the 1,402 users who registered in a trusted way according to this Dune dashboard. That’s nearly a 4.85:1 ratio of trustless to trusted accounts from the small sample size which signifies what Farcaster’s core users are interested in.

Farcaster V3 also saw its leading client, Warpcast, implement a feature called ‘warps’ for their users to earn and share with one another on the Dapp. It’s specific to their application rather than available for all users on their social graph. Warps are ‘an easy way to perform onchain actions—from adding new Farcaster apps or minting certain NFTs—directly within the Warpcast app.’ Warps, unlike Lens’ open actions that we’ll dive into in the next segment, are specific to the Warpcast dapp and are centralized and offchain. Warps are akin to customer rewards for regulars at your favorite coffee shop whereby the more you use Warpcast, the more ‘warps’ you can earn. Users with warps can connect a Farcaster app, pay for a friend’s Farcaster onboarding fee, or gift 100 warps to another person once per day. Because of fluctuating gas fees though, the amount of warps needed for a given onchain action will vary based on the network’s gas fees; however, fees on Farcaster’s network, Optimism, are extremely low.

As of the time of this writing, total users of Farcaster network have jumped to over 46k.

Lens Innovations

Lens meanwhile has yet to open up their platform to everybody and remains accessible only to those who’ve purchased a Lens handle NFT or have received an invite from those who already have a handle. Stani, the founder of Lens Protocol, has signaled that Lens too will be opening up very soon though.

As of today, Lens has 125,964 profiles and Lens’ V2 has already been launched and pushed to all of their corresponding Dapps. Lens V2 is special because it introduced several innovations that improve upon the current paradigm for social media content creators, welcoming creators and developers alike to gamify social media with smart contract technology, a completely new paradigm in both blockchain and social media. Before V2, Lens broke in the concept of collecting posts on their social graph via a button on application layers like Hey. With more than 400k posts collected and users having minted more than 3.5M NFTs in total, this underscored a grand success for their DeSoc paradigm. Now, they’ve iterated upon and updated this functionality to ‘open actions’ whereby developers can build custom operations linked to a post or publication. They’re calling this new user action ‘publication actions’ and they are executed by Lens profiles. The innovation here is the chain of actions being linked to users and content alike instead of an anonymous tip that content creators can’t associate with their work or quantitatively assess.

Instead of nebulous anonymity, using a tipping publication action allows indexers to link the ERC-20 transfer to the Lens post where the action was executed. This permits creators like Lenny to track how many tips each of his publications has received or he can track which handles are his top tippers, and that’s just one utility. Publication actions can also accommodate rewards through a referral system whereby Lenny sets up the tipping action to compensate users that interact with or distribute his publications by giving them a percentage of the tip if they helped him get tipped. So, if Jeff quotes Lenny's post, and Jan ends up seeing Lenny’s publication because of Jeff’s quote, then when Jan tips Lenny, Jeff receives a cut of it as his commission. This not only applies to quotes, but other user actions that help to share a publication like mirrors and comments too. These innovations on Lens really help to bring the potential for the gamification of social media into clear focus. One other innovation worth mentioning was achieved by the Lens-based Dapp Orb which enabled shared sub-community wallets should they choose to create them.

Tako Protocol, seeing the writing on the wall for the DeSoc and SocialFi movements came out of the gate quite quickly in 2023, dubbing itself as the monetization layer for Web 3 Social. Tako’s stated purpose is to provide foundational smart contract capabilities for a variety of social applications regardless of their blockchain, social graph, or gamification needs because its interoperable and open sourced, so all developers can build upon it in a permissionless way. It’s modular and interoperable approach lends itself to use amongst a wide variety of social graphs and their client dapps. Tako’s also made a strategic investment in Jam, rebranded to JamFrens, launched on Lens Protocol, introduced tradable profile keys and plans to launch on Farcaster Network before year’s end to differentiate itself from the other client Dapps and showcase its interoperable gamification technology. After all, a decentralized social graph is nothing without the gamification that the blockchain can provide in tandem with social activities. Middleware like Tako is important because it allows developers on both the front-end and back-end to focus heavily on their specialty while integrating with Tako’s SDK or API only once their user base is ready for smart contract based gamification methodologies. To that end, Tako’s co-organized a capstone yearlong online Hackathon with Lens called the DeSoc Codex in 2024 to welcome developers from all parts of the world to build on their foundational DeSoc gamification technology with some of the biggest players in the space as mentors including Polygon Labs, Mask Network, Phaver and Consensys just to name a few.

SoFi So Good

These trends are necessary to get acquainted with because they pave the way for a more user-centric and democratic social media landscape that works in tandem with the blockchain’s tokenization and gamification abilities. It should be noted though that these proprietors of privacy and data sovereignty are still sleeping giants and far from the biggest winners in the crypto social media space that’s still everchanging and yet to reach a clear, decisive consensus on what the future holds. That leading pedestal is reserved for the less decentralized, but still blockchain based, Dapps that connect directly to legacy social media like Twitter, thus giving users with huge followings and audiences a new way to monetize their existing social media presence.

Specifically, I’m referring to applications like Friend Tech and Stars Arena among others who used Twitter’s API to connect to layer 2 blockchains like Base and Avalanche respectively.  Friend tech, specifically, was an overnight phenomenon and a hit with users and creators alike reaching hundreds of millions of dollars in Eth trading volume because creator keys or shares in a creator’s Twitter profile could be bought, sold and speculated upon for the first time. In fact, after launching on August 10th, 2023 Friend tech exploded and acquired over 250k unique traders who generated more than $9.76M in protocol fees in just over a month’s time for the platform. Both creators and fans were able to earn via friend tech’s unique bonding curve functionality, whereby 5% of the trading volume went directly to the creators’ keys that were being traded, and 5% went to the Friend Tech protocol. Anybody could be a creator and anybody could invest in a creator key early in this scenario, thus speculation upon Twitter accounts activating on Friend Tech reached climbed  to peaks very quickly and a whole economy of Ethereum from bots, speculators and real fans alike surrounded the new activations and the gamification methods used by creators whose keys were held.

Friend Tech inspired a newfound interest in a link between social media and the blockchain by quickly bringing crypto to the mainstream by turning the consumptive behavior of fans into investment behavior whereby creators could interact directly with their fans who were now key holders in a pay to play chat room. The other feature of Friend Tech that was unique was that it bypassed the Google play, and Apple App Store by creating an progressive web app (PWA) that they could iterate upon more quickly while cutting the middleman and gatekeepers out of their revenue streams, thus embodying the ethos of crypto. Many builders in the space noted the overnight success of Friend Tech and copycats emerged but ultimately Friend Tech remains the sole winner of this unique SocialFi market at present. Despite its success, its growth has seemingly come to a standstill partially because of the price of creator keys reaching their ceiling in Ethereum, thus creating a barrier to entry to newcomers to their platform.

This model of linking traditional social media platforms like Twitter via an API has shown promising results in another Dapp, an Arbitrum-based Twitter plug-in game called XPet The Dapp occupies a unique niche in the crypto space previously dominated by Base Chain-based FrenPets, the e-pets sector. Users just link their Twitter account to receive a pet directly on Twitter interface that roams the bottom left of your feed. Users enter a new window directly on Twitter to feed and care for your pet. The game’s site urges users to take good care of their pet and earn crypto profits.

Total revenue for XPet has climbed to nearly $13 million with 6,823 unique users having transacted more than 77 thousand times on their platform in just over a month’s time. This rolling snowball of XPet’s success strongly indicates that the lane for experimenting with existing social media platforms while giving users, creators, and curators novel actions to help them earn monetary rewards has untapped potential.

Our 2024 DeSoc Narratives To Watch

With that said, here are our primary narrative based predictions with regard to the SocialFi and DeSoc sectors for 2024:

Interoperability

The project teams that are most successful in breaking down the barriers between the largest existing crypto communities that currently exist on blockchain constricting silos will be the biggest winners here. From a user perspective, chain maxis miss out on emerging ecosystems and airdrops meant to bootstrap DeFi communities with liquidity and sticky user bases. It works the same from a project perspective and social media channels cannot exist in a silo. It’s a big reason why Lens Protocol and Tako Protocol’s chain agnostic approach makes a lot of sense.

Modularity

“Be flexible or die trying.” Modularity refers to a project's ability to fit snugly within the existing stack of another project with minimal development time or upstart costs and that’s where Tako Protocol, as a middleware that’s both chain and social graph agnostic wins the race. That’s not to say that un-modular projects won’t be successes, but it is to say that the more modular a project is, the more it embodies the Web 3 ethos which opposes monoliths and supports working together with other Web 3 players in harmony.

Censorship

Censorship has emerged as one of, if not the most prevalent problem in today’s traditional social media landscape. Platforms can nerf or otherwise demonetize creators at the drop of a hat and this generally sews distrust amongst influencer bases. The movement to platforms like Rumble is very real in the traditional landscape, so censorship resistant DeSoc platforms will eventually win over a good share of users if they prioritize the creation of a fair and transparent creator economy that effectively reduces censorship dramatically.

Security

Dapps and protocols will cease to exist or otherwise cease to obtain a substantive user base if they’re not secure from hackers or have single points of failure. DeSoc is particularly insulated from security risks because of its decentralized nature, but the same cannot be said for some SocialFi protocols like Stars Arena which have shown to be prone to exploits or otherwise corruption amongst its centralized leadership.

Being early to the greatest trends in the DeSoc and SocialFi space will bear the juiciest of fruits for users, no matter who you are. To date, not a single DeSoc or SocialFi project has dropped a token for its users though almost all have intimated or else created a point’s system for there platforms. In the simplest terms, that just means that it pays to be early!

Lastly, I’d like to thank Mask Network and Hashbrown Labs for helping make this article possible. A special shoutout to Tako Protocol too for shedding light on the importance of modularity too. That’s a wrap on 2023, so let’s put a bow on it! Happy New Year to all of our cherished readers!

Dissecting DeSoc in the Year 2023

One of the most prominent themes in the cryptocurrency market was the increasing adoption of decentralized social media or DeSoc as well as DeFi perps and leverage trading by both institutional and retail investors with the latter sparked by the implosion of FTX in 2022. In terms of market performance, 2023 witnessed a significant surge in the overall cryptocurrency market capitalization, primarily driven by the continued demand for Bitcoin and Ethereum, the two leading cryptocurrencies. Bitcoin experienced a substantial price appreciation from its January 2023 lows in the 16k-17k range to just over $42,000 now. Meanwhile Ethereum largely followed suit and rebounded from its January lows in the $1,200-1,300 range to over $2,200 now as it benefited from the growing interest in decentralized finance (DeFi) applications and layer 2 rollups built upon their Ethereum Mainnet settlement layer.

2023 Crypto Snapshot

The regulatory landscape for cryptocurrency evolved significantly in 2023. Governments and financial regulators around the world began implementing clearer guidelines for the industry. This increased regulatory certainty helped to improve investor confidence, leading to further institutional adoption of cryptocurrencies. More clarity was later provided via the punishments and fines issued to Sam Bankman Fried and CZ respectively with the former facing a maximum sentence of 115 years for fraud and co-mingling customer funds with the trading group Alameda Research and the latter paying a $4.3B fine and having to step down from Binance for failing to comply with know-your-customer (KYC) guidelines in addition to money laundering charges that stemmed from that failure.

Furthermore, the rise of central bank digital currencies (CBDCs) gained traction in a variety of governments in 2023. Several countries, including major economies, started exploring the development and implementation of their own digital currencies. This development added a new layer of competition to the cryptocurrency space but also provided an indirect endorsement of the underlying blockchain technology. The tail end of 2023 saw increasing interest in Bitcoin as buzz built about a BlackRock push for a Bitcoin ETF. Many analysts have predicted that such an ETF could see an approval from US regulators as early as Q1 of 2024 and speculation on the entire crypto market subsequently mounted with Ethereum seemingly the next asset that could later see ETF approval. All of this took place against the backdrop of a Federal Reserve that has halted interest rate hikes amidst a stagnant US economy after raising the rates earlier in the year in an effort to nerf inflation. Ultimately, the Fed has signaled that greater interest rate hikes are not forthcoming, and the market has responded with bullishness for volatile assets like cryptocurrency.

In terms of technological advancements, 2023 witnessed the continued innovation in blockchain technology, with the development of new protocols and decentralized applications. The introduction of Layer 2 scaling solutions came in two flavors, optimistic rollups like Arbitrum and Optimism and zero-knowledge proof based blockchains like ZK Sync and Polygon’s ZK EVM which aimed to address the scalability issues of existing blockchain networks like Ethereum, enabling faster and cheaper transactions. These novel breakthroughs meant that leveraged traders who’d previously used CEXs like FTX flocked to perp protocols like Perpetual, GMX and DYDX on chains like Arbitrum and Optimism. The end of 2022 and the beginning of 2023 saw innovations take place on the Bitcoin network including the inscription of the first Ordinal NFTs on Bitcoin blocks and the emergence of another new asset class in BRC-20’s, new tokens issued directly on the Bitcoin network. Controversy arose amongst Bitcoin developers who proclaimed that the Bitcoin network was not meant for such activities, but this only further sparked the movement to embrace the newly controversial digital assets. Overall, 2023 was a year of rapid growth and maturation for the cryptocurrency industry.  Increasing adoption, regulatory developments, and technological advancements all contributed to the continued expansion and mainstream acceptance of crypto.

Major DeSoc Trends

In 2023, the decentralized social media space witnessed several major trends that truly shook things up. One significant trend was the rise of blockchain-based social media platforms like Nostr, DeSo, Lens Protocol and Farcaster Network. These decentralized social graphs and their corresponding clients allowed users to have complete control over their data and identity, thanks to the distributed nature of blockchain technology. Users could securely interact, share content, and maintain ownership of their data without relying on centralized entities and data storage methods to facilitate such actions. This underscored a significant trend toward user privacy and data security that erupted amidst issues with concerns over censorship, demonetization and opaque algorithms in the traditional social media space. With growing concerns about data breaches and privacy violations, decentralized social media platforms took center stage by prioritizing user privacy on crypto’s open and transparent payment rails. They championed strong encryption protocols and offered enhanced security measures, ensuring user information remained private and protected so that the platforms themselves could not profit from selling user data to third parties.

Additionally, content moderation became a hot topic in the decentralized social media space in 2023. To address concerns of spreading misinformation and harmful content, these platforms adopted innovative approaches to content moderation such as community-driven moderation processes, allowing users to play an active role in flagging and reviewing content, and using NFT technology to prevent bots from attacking their users. Furthermore, the concept of decentralized governance gained traction in 2023. These platforms introduced transparent and inclusive decision-making processes through community governance models. Users were given the power to vote on platform policies, feature updates, and even the allocation of platform resources. This approach ensured that decision-making power was distributed among the users, rather than being concentrated in the hands of a centralized, unchecked authority. Overall, 2023 was a transformative year for decentralized social media. It witnessed the growth of blockchain-based platforms, increased focus on privacy and data security, innovative content moderation approaches, and the rise of decentralized governance models.

DeSoc Investment Briefing

From Aave-backed Lens Protocol raising $15M in their seed round in June of 2023 to Lens-based apps like Orb and Phaver raising $2.3M and $7M in their seed rounds in September and October respectively, 2023 saw no shortage of speculation on the crossroads of decentralized social media and crypto. Lenster and Lenstube both rebranded in October 2023 to ‘Hey’ and ‘Tape’ respectively. Such an action made it clear that the social graph didn’t have any general apps associated with it, meaning that all apps would build and compete on a shared social network. Tako Protocol, which brands itself as the social monetization layer of Web 3 social, raised $2M in a pre-seed round from big players like Mask Network and DWF Ventures in August of 2023. Tako then made a strategic investment in Jam, the 2nd largest client of Farcaster’s DeSoc graph, and similarly rebranded to JamFrens signaling their intent to grow with the wider space. CyberConnect even got their $CYBER token listed on Binance in August of 2023 on the heels of hype for social media applications that have significant crypto exposure. Indeed, these foundational projects and their communities are all building momentum in advance of what many anticipate to be a 2024 crypto bull run, but the competition is getting more fierce as both Farcaster Network V3 and Lens Protocol V2 arrive and onboard more users permissionlessly in an effort to keep their decentralized social graphs optimally positioned for network-effect driven growth. Let’s dive into some of the innovations of each of these stalwarts of the DeSoc space.

Lens Protocol & Farcaster Network

Delving into the DeSoc segment of SocialFi requires deeper examination of both Lens Protocol and Farcaster Network as they’re at the forefront of the creation of open and decentralized social graphs that any developers can build application layers upon. Essentially what that means is that a user can have one account for any number of decentralized applications. That means that they could log into new decentralized Youtubes, Twitters, Facebooks, Instagrams and even Pinterests from one wallet id. Their relationships and online interactions; however, would all be sent and stored in one social graph; however, that ensures data privacy and likely a decentralized autonomous organization that makes choices about moderation of the social graph while allowing dapps the freedom to experiment and build what they want on top of it without much restriction.

Lens, for instance has many different applications layers built on top of its social graph that prioritize different types of content. Phaver, for instance, is quite similar to Instagram but has a points system and staking function. JamFrens and Hey, meanwhile look more like decentralized versions of Twitter; however, JamFrens allows you to invest in your favorite Lens creators by trading their profile keys. Tape prioritizes the video format much like a Youtube or a Vimeo and there are many others built upon the Lens social graph to optimize anything from meming, making friends, or gathering crypto alpha. Warpcast and Flink, the two dapps used by this author that are built on the Farcaster network are more reminiscent of Reddit, but there’s really no limitation to what can be built here meaning that the account I used for Warpcast can be used for Flink and vice veras. Other Farcaster-based platforms will also allow me to login via the account I created for Flink.

Both Lens and Farcaster make ample use of NFT technology to ensure that you can take your account to any of these dapps and still interact with their social graphs seamlessly. In both ecosystems, your account’s linked to an NFT located within your crypto wallet, so using it on a new platform just means connecting that wallet to their front-end and signing a transaction, but once you send content and interact with users there, it’s all sent to the Farcaster Network or Lens Protocol social graph depending upon which one you’re using. That’s a major innovation because it means using one account in your crypto wallet for the new Youtubes, Reddits, Twitters, and Instagrams within Web 3 instead of constantly logging in, forgetting passwords, and resetting in your email.  That’s just one innovation of DeSoc though. The story of DeSoc is still just now unfolding.

Farcaster Innovations

Early on, Farcaster and later Lens introduced the idea of on-chain identity linked to your crypto wallet or, in some cases, multiple wallets, which made access to all the applications running on the social graph permissionless. With that said, they’d both built barriers to immediate entry to prevent bot attacks and airdrop hunters from spamming their respective creations by requiring an invite in Farcaster’s case and by requiring a Lens handle NFT in Lens’ case. These defense mechanisms somewhat handicapped growth as the team’s encouraged organic content as they built. Nowadays that’s changing and with Farcaster V3, the team has already opened up their gates to any user who’d like to join their network without any palpable impact on the quality of their content, something they’d privately feared due to crypto users’ tendency to hunt airdrops with bot accounts. New users simply have to pay a 1-time fee of $7, plus the on-chain transaction fee and they can use any number of dapps built on the Farcaster network from Warpcast to Flink to JamFrens. With their opening up has come a rise in users with more than 6,807 having registered in a permissionless way compared to the 1,402 users who registered in a trusted way according to this Dune dashboard. That’s nearly a 4.85:1 ratio of trustless to trusted accounts from the small sample size which signifies what Farcaster’s core users are interested in.

Farcaster V3 also saw its leading client, Warpcast, implement a feature called ‘warps’ for their users to earn and share with one another on the Dapp. It’s specific to their application rather than available for all users on their social graph. Warps are ‘an easy way to perform onchain actions—from adding new Farcaster apps or minting certain NFTs—directly within the Warpcast app.’ Warps, unlike Lens’ open actions that we’ll dive into in the next segment, are specific to the Warpcast dapp and are centralized and offchain. Warps are akin to customer rewards for regulars at your favorite coffee shop whereby the more you use Warpcast, the more ‘warps’ you can earn. Users with warps can connect a Farcaster app, pay for a friend’s Farcaster onboarding fee, or gift 100 warps to another person once per day. Because of fluctuating gas fees though, the amount of warps needed for a given onchain action will vary based on the network’s gas fees; however, fees on Farcaster’s network, Optimism, are extremely low.

As of the time of this writing, total users of Farcaster network have jumped to over 46k.

Lens Innovations

Lens meanwhile has yet to open up their platform to everybody and remains accessible only to those who’ve purchased a Lens handle NFT or have received an invite from those who already have a handle. Stani, the founder of Lens Protocol, has signaled that Lens too will be opening up very soon though.

As of today, Lens has 125,964 profiles and Lens’ V2 has already been launched and pushed to all of their corresponding Dapps. Lens V2 is special because it introduced several innovations that improve upon the current paradigm for social media content creators, welcoming creators and developers alike to gamify social media with smart contract technology, a completely new paradigm in both blockchain and social media. Before V2, Lens broke in the concept of collecting posts on their social graph via a button on application layers like Hey. With more than 400k posts collected and users having minted more than 3.5M NFTs in total, this underscored a grand success for their DeSoc paradigm. Now, they’ve iterated upon and updated this functionality to ‘open actions’ whereby developers can build custom operations linked to a post or publication. They’re calling this new user action ‘publication actions’ and they are executed by Lens profiles. The innovation here is the chain of actions being linked to users and content alike instead of an anonymous tip that content creators can’t associate with their work or quantitatively assess.

Instead of nebulous anonymity, using a tipping publication action allows indexers to link the ERC-20 transfer to the Lens post where the action was executed. This permits creators like Lenny to track how many tips each of his publications has received or he can track which handles are his top tippers, and that’s just one utility. Publication actions can also accommodate rewards through a referral system whereby Lenny sets up the tipping action to compensate users that interact with or distribute his publications by giving them a percentage of the tip if they helped him get tipped. So, if Jeff quotes Lenny's post, and Jan ends up seeing Lenny’s publication because of Jeff’s quote, then when Jan tips Lenny, Jeff receives a cut of it as his commission. This not only applies to quotes, but other user actions that help to share a publication like mirrors and comments too. These innovations on Lens really help to bring the potential for the gamification of social media into clear focus. One other innovation worth mentioning was achieved by the Lens-based Dapp Orb which enabled shared sub-community wallets should they choose to create them.

Tako Protocol, seeing the writing on the wall for the DeSoc and SocialFi movements came out of the gate quite quickly in 2023, dubbing itself as the monetization layer for Web 3 Social. Tako’s stated purpose is to provide foundational smart contract capabilities for a variety of social applications regardless of their blockchain, social graph, or gamification needs because its interoperable and open sourced, so all developers can build upon it in a permissionless way. It’s modular and interoperable approach lends itself to use amongst a wide variety of social graphs and their client dapps. Tako’s also made a strategic investment in Jam, rebranded to JamFrens, launched on Lens Protocol, introduced tradable profile keys and plans to launch on Farcaster Network before year’s end to differentiate itself from the other client Dapps and showcase its interoperable gamification technology. After all, a decentralized social graph is nothing without the gamification that the blockchain can provide in tandem with social activities. Middleware like Tako is important because it allows developers on both the front-end and back-end to focus heavily on their specialty while integrating with Tako’s SDK or API only once their user base is ready for smart contract based gamification methodologies. To that end, Tako’s co-organized a capstone yearlong online Hackathon with Lens called the DeSoc Codex in 2024 to welcome developers from all parts of the world to build on their foundational DeSoc gamification technology with some of the biggest players in the space as mentors including Polygon Labs, Mask Network, Phaver and Consensys just to name a few.

SoFi So Good

These trends are necessary to get acquainted with because they pave the way for a more user-centric and democratic social media landscape that works in tandem with the blockchain’s tokenization and gamification abilities. It should be noted though that these proprietors of privacy and data sovereignty are still sleeping giants and far from the biggest winners in the crypto social media space that’s still everchanging and yet to reach a clear, decisive consensus on what the future holds. That leading pedestal is reserved for the less decentralized, but still blockchain based, Dapps that connect directly to legacy social media like Twitter, thus giving users with huge followings and audiences a new way to monetize their existing social media presence.

Specifically, I’m referring to applications like Friend Tech and Stars Arena among others who used Twitter’s API to connect to layer 2 blockchains like Base and Avalanche respectively.  Friend tech, specifically, was an overnight phenomenon and a hit with users and creators alike reaching hundreds of millions of dollars in Eth trading volume because creator keys or shares in a creator’s Twitter profile could be bought, sold and speculated upon for the first time. In fact, after launching on August 10th, 2023 Friend tech exploded and acquired over 250k unique traders who generated more than $9.76M in protocol fees in just over a month’s time for the platform. Both creators and fans were able to earn via friend tech’s unique bonding curve functionality, whereby 5% of the trading volume went directly to the creators’ keys that were being traded, and 5% went to the Friend Tech protocol. Anybody could be a creator and anybody could invest in a creator key early in this scenario, thus speculation upon Twitter accounts activating on Friend Tech reached climbed  to peaks very quickly and a whole economy of Ethereum from bots, speculators and real fans alike surrounded the new activations and the gamification methods used by creators whose keys were held.

Friend Tech inspired a newfound interest in a link between social media and the blockchain by quickly bringing crypto to the mainstream by turning the consumptive behavior of fans into investment behavior whereby creators could interact directly with their fans who were now key holders in a pay to play chat room. The other feature of Friend Tech that was unique was that it bypassed the Google play, and Apple App Store by creating an progressive web app (PWA) that they could iterate upon more quickly while cutting the middleman and gatekeepers out of their revenue streams, thus embodying the ethos of crypto. Many builders in the space noted the overnight success of Friend Tech and copycats emerged but ultimately Friend Tech remains the sole winner of this unique SocialFi market at present. Despite its success, its growth has seemingly come to a standstill partially because of the price of creator keys reaching their ceiling in Ethereum, thus creating a barrier to entry to newcomers to their platform.

This model of linking traditional social media platforms like Twitter via an API has shown promising results in another Dapp, an Arbitrum-based Twitter plug-in game called XPet The Dapp occupies a unique niche in the crypto space previously dominated by Base Chain-based FrenPets, the e-pets sector. Users just link their Twitter account to receive a pet directly on Twitter interface that roams the bottom left of your feed. Users enter a new window directly on Twitter to feed and care for your pet. The game’s site urges users to take good care of their pet and earn crypto profits.

Total revenue for XPet has climbed to nearly $13 million with 6,823 unique users having transacted more than 77 thousand times on their platform in just over a month’s time. This rolling snowball of XPet’s success strongly indicates that the lane for experimenting with existing social media platforms while giving users, creators, and curators novel actions to help them earn monetary rewards has untapped potential.

Our 2024 DeSoc Narratives To Watch

With that said, here are our primary narrative based predictions with regard to the SocialFi and DeSoc sectors for 2024:

Interoperability

The project teams that are most successful in breaking down the barriers between the largest existing crypto communities that currently exist on blockchain constricting silos will be the biggest winners here. From a user perspective, chain maxis miss out on emerging ecosystems and airdrops meant to bootstrap DeFi communities with liquidity and sticky user bases. It works the same from a project perspective and social media channels cannot exist in a silo. It’s a big reason why Lens Protocol and Tako Protocol’s chain agnostic approach makes a lot of sense.

Modularity

“Be flexible or die trying.” Modularity refers to a project's ability to fit snugly within the existing stack of another project with minimal development time or upstart costs and that’s where Tako Protocol, as a middleware that’s both chain and social graph agnostic wins the race. That’s not to say that un-modular projects won’t be successes, but it is to say that the more modular a project is, the more it embodies the Web 3 ethos which opposes monoliths and supports working together with other Web 3 players in harmony.

Censorship

Censorship has emerged as one of, if not the most prevalent problem in today’s traditional social media landscape. Platforms can nerf or otherwise demonetize creators at the drop of a hat and this generally sews distrust amongst influencer bases. The movement to platforms like Rumble is very real in the traditional landscape, so censorship resistant DeSoc platforms will eventually win over a good share of users if they prioritize the creation of a fair and transparent creator economy that effectively reduces censorship dramatically.

Security

Dapps and protocols will cease to exist or otherwise cease to obtain a substantive user base if they’re not secure from hackers or have single points of failure. DeSoc is particularly insulated from security risks because of its decentralized nature, but the same cannot be said for some SocialFi protocols like Stars Arena which have shown to be prone to exploits or otherwise corruption amongst its centralized leadership.

Being early to the greatest trends in the DeSoc and SocialFi space will bear the juiciest of fruits for users, no matter who you are. To date, not a single DeSoc or SocialFi project has dropped a token for its users though almost all have intimated or else created a point’s system for there platforms. In the simplest terms, that just means that it pays to be early!

Lastly, I’d like to thank Mask Network and Hashbrown Labs for helping make this article possible. A special shoutout to Tako Protocol too for shedding light on the importance of modularity too. That’s a wrap on 2023, so let’s put a bow on it! Happy New Year to all of our cherished readers!