Foresight Ventures: How We Design Product Models for Web3 Social Platforms

Author: Alice, Foresight Ventures

TL;DR

1. The crypto world is eager to have its own decentralized social media and web3-native rules. Phaver provides such a platform where web3ers can use their real tokens to support their favorite content and creators, and all community builders can receive fair rewards.
2. After MVP product testing, we received positive feedback on user growth, content production, and community operations, but there are still some product design issues.
3. We have conducted two iterations of the product plan to maximize the balance between network effects, user privacy, and token abuse issues, and adopted the principle of minimal intervention to return data sovereignty and management rights to the community as much as possible.

1: Why Invest in Phaver?

The first time I came into contact with the Phaver team was in May 2022. I was immediately impressed by the aesthetics and smooth experience of their mobile product. I then connected with the two founders, Jonathan and Tomi, on Discord. During our first intro call, they sincerely described the web3 social landscape. In the early crypto industry, the Phaver team's community & product-oriented spirit, technical background, and speed of product iteration were refreshing.

The Phaver team has a diverse background in social advertising, fintech, and blockchain:

• Joonatan, Co-founder & CEO, was the 7th employee at Smartly.io (Global Sales Lead) and has also worked at Google.
• Tomi, Co-founder & CFO, is an advisor for multiple Finnish crypto projects and has previously worked at Alibaba Ventures, Goldman Sachs, and BCG.
• Tom, CIO, is a full-stack engineer with 5 years of experience and is the founder of Coinmotion, Finland's largest web3 payment service provider.
• By the time we invested, the team had already grown to over 10 members and was spread across the globe.

What impressed me the most was Phaver's innovative approach: content staking, allowing consumers to vote for their favorite content using the tokens they hold, disrupting the traditional centralized content distribution and filtering mechanisms.

Content staking has several interesting features:

• It allows more mid-tail and long-tail creators to gain traffic, no longer being monopolized by top accounts.
• It enables truly popular creators to earn revenue rather than being dominated by centralized platforms.

The crypto world longs for its own platform and a set of rules for decentralized social media. Phaver provides such a stage where web3ers can use their real tokens to support their favorite content and creators, and all community builders can receive fair rewards.

Once consensus and momentum are formed, we believe this will be a bottom-up revolution, a web3-native revolution. Therefore, we decided to invest in this project and join this large web3 social experiment, looking forward to starting a new journey.

2: MVP Testing: We Succeeded, but Not Completely

From May to September was the product testing period, during which we conducted MVP product testing, Lens whitelist distribution, joint marketing, AMAs, and more with Phaver. There were two major feature iterations during the product period.

• In terms of data, user growth, content operations, and community engagement received quite positive responses. By July, Phaver's content accounted for 55% of all posts published on Lens Protocol.
• The community is gradually being built, with weekly returning users approximately doubling every two weeks and continuing to grow, surpassing 20,000 users by September.
• We had no token incentives but rewarded participants in the form of points (which can later be exchanged for tokens). Even so, enthusiasm for participation remained very high. In September, over 400,000 posts were published, and nearly 2.5 million likes were given to their favorite posts.

During the testing phase, we also found Phaver's mechanism interesting. If the content created by a creator deteriorates, there will be others willing to repost or create better content to attract more value provided by the staking arbitrage platform. In other words, the market's automatic equilibrium adjustment can make content better and better.

Rome wasn't built in a day, and we realized that the MVP also highlighted some issues.

• The anti-cheating mechanism needs to be improved as soon as possible. Dishonest users may put high inflation pressure on tokens. In other words, we punish honest users by diluting token value. We also need to refine reward rules and market plans to allow everyone to participate better and more fairly.
• Tokens need to have more utility and circulation methods, allowing community members to create value through Phaver and retain that value within this ecosystem rather than taking it out of the system.

3: Product Design 1.0

In the first version, our product design approach was as follows:

To establish an interesting and sustainable ecosystem, Phaver will provide two systems to reward members for their contributions to social reputation, community participation, and capital investment.

System 1: SBT DID System

Each user will receive a unique SBT DID based on third-party ratings, in-app ratings, etc., corresponding to different levels and in-app benefits. This allows everyone to leverage their social reputation both inside and outside the ecosystem.

• SBT DID is a non-transferable NFT that aggregates all user attributes, including creation status, likes, comments, interactions, etc.
• Users can continuously upgrade their SBT level by completing tasks and contributing to the community.

System 2: NFT Pass

Phaver issues NFT Passes that unlock attractive premium benefits, including:

• Higher returns: NFT token holders receive up to 2.5 times the content staking rewards compared to non-token holders.
• Lucky draw: NFT holders in the top 50% of SBT levels are eligible to participate in weekly lucky draws.

1. Bronze NFT Pass - Each lucky draw winner receives $3,000 & 1.5 times staking reward.
2. Silver NFT Pass - Each lucky draw winner receives $4,000 & 2 times staking reward.
3. Gold NFT Pass - Each lucky draw winner receives $5,000 & 2.5 times staking reward.

• Premium benefits: Access to paid channels, NFT-gated communities, potential airdrops/whitelists, etc.
• Each NFT series has a limited issuance, and users can trade on Opensea.
• To ensure network effects and user experience, we hope that 30%-40% of users will hold NFTs, which requires reasonable pricing tests.

4: Existing Issues

After discussions with the team and the community, we believe the first version's design is not ideal and has many issues:

• Legal concerns: Many countries and regions do not allow products aimed at end-users to launch with gambling-like features, posing risks of asset securitization, and app store review processes are quite strict.
• The infrastructure is not yet mature, and overly complex NFT designs find it challenging to identify mature technical solutions, making product implementation a significant issue.
• The cheating issues mentioned above have not been resolved.

5: Product Design 2.0

For product design 2.0, after multiple considerations and discussions, we still retained the level system. At the same time, to maximize the balance between network effects, user privacy, and token abuse issues, we adopted the principle of minimal intervention and established a simple and understandable set of rules to measure levels and provide corresponding rights based on user behavior and contributions to the ecosystem.

• Level 1 users: Need to complete email verification to participate in community activities such as posting, liking, reposting, and reacting.
• Level 2 users: Need to complete identity verification (e.g., on-chain reputation/on-chain identity/NFT assets/token assets, any one of these) to unlock content staking features and can exchange points for tokens. This protection ensures that tokens are not exploited by fake accounts, preventing token inflation pressure. For regions with compliance requirements, if KYC is needed, we hope to adopt ZK technology solutions to protect privacy in the future.
• Level 3 users and above: NFT holders or governance token stakers will receive premium benefits, such as posting content in premium channels, increased exposure, revenue sharing, and random higher staking rewards. We won't disclose too much here; specific details will be available in the Phaver 2.0 white paper.

6: Our Thoughts

Specifically, we found that the main issues with existing web3 social platforms are:

• In token design, many products simply incentivize actions like posting/liking/reposting/commenting/checking in, leading to severe currency inflation, and token holders tend to mine and sell, creating significant selling pressure.

Solution: Differentiated rewards. Phaver allows different users to have varying mining efficiencies through the level system, NFT pass cards, etc., and the mining efficiency also differs between first to vote and last to vote, forming a gamified social experience. This satisfies everyone's social and sharing needs, while the returns from social interactions are also unpredictable. People can only receive high returns by contributing to community building, rather than simple token farming.

• Creators lack motivation to continuously produce quality content.

Solution: Use dapp revenue to reward quality content creators, uniquely rewarding top creators through content staking, and allowing most consumers to pay for this (this behavior model is akin to tipping in web2).

• A large volume of content is difficult to effectively filter and distribute.

Solution: Phaver allows users to vote with tokens through content staking, helping the community filter out the highest quality content streams and optimizing the reading experience through algorithmic recommendations.

In attempting to solve these issues and design a more scientific and effective tokenomics, we have also gained some insights:

• Tokens can be a great way to GTM and launch projects, but we need to carefully adjust incentives to achieve a balance between ecosystem inclusivity and abuse prevention.
• Principle of minimal intervention. Listen to the community's voice, and the team participates only as a support and guidance role, much like the Ethereum Foundation does for Ethereum. The team provides the most basic access principles, allowing everyone to create in a fair environment and ensuring that high-value contributors receive their deserved rewards.

Entrepreneurship is not just theoretical; it is a combination of theory, art, and practice. Successful entrepreneurs must keep their feet on the ground while gazing at the stars, planning products in the most practical way, and conducting agile testing through the smallest viable products. Phaver still has a long way to go, but with a strong team and community, we are confident we can build the most interesting and native web3 social media.