Analysis of the Web3 Social Landscape: Origins, Reshaping, Challenges

Author: DAOctor @DAOrayaki.org

In the coming years, consumer social applications utilizing crypto-native rails will rise. Every major wave of technology has spawned a series of new social applications. Web3 social promises a decentralized, open model where users own their identities, data, and the content they create for applications and protocols. So, what will this new model look like? Join DAOrayaki in interpreting the historical origins, ongoing transformations, and challenges facing web3 social.

Historical Origins of Web3 Social

As Andrew Chen explains in his excellent book "The Cold Start Problem," new technologies enable new consumer behaviors. He cites the transition from desktop applications (like Microsoft Office) to web-based products (like Google Suite, Notion, Airtable), dating sites (like Match) to mobile applications (like Tinder), and photo-sharing websites (like Flickr) to photo-sharing applications (like Instagram).

This pattern can also be seen throughout the social media landscape.

Desktop Native Experience (Late 1990s to 21st Century) By the early 21st century, most American adults were using the internet, and home broadband availability was rapidly increasing. The adoption by an increasingly diverse group of people helped spawn the first wave of social networks, including Friendster (2002), Myspace (2003), and Facebook (2004). Friendster leveraged the power of the internet to connect strangers. However, the site failed to keep up with user demands, leading dissatisfied users to turn to competitor Myspace. Myspace was an early proponent of virtual identities, allowing users to create customized public profiles. However, the company struggled due to poor marketing and tacky advertisements. Facebook seized the opportunity, benefiting from the ideas validation and decline of early players. Facebook achieved growth, providing a simple, verified experience for connecting with friends.

Facebook's homepage in 2004

Mobile-First Experience (2010s) Advancements in mobile technology enabled people to share real-time, instantaneous experiences. The social photo-sharing application Instagram launched on iOS in 2010, just months after the iPhone 4 provided consumers with an improved camera. As a default public, it facilitated the rise of brands, memes, and influencers. Snapchat (2011) benefited from advanced camera features, powering disappearing photos and videos that captured real, imperfect moments. TikTok (2016) leveraged larger screen sizes and resolutions to utilize a full-screen UI. Additionally, the app's built-in recording and editing features made uploading content easy, while its algorithm prioritized content, allowing creators to spread quickly without a large following. BeReal (2020) utilized the dual-camera feature first introduced in the iPhone 7 Plus in 2016 to establish more intimate and authentic social connections.

A more casual version of Instagram by BeReal (Source: WWD)

Blockchain-Driven Experience (Next 3-5 Years) In addition to AI, immersive technologies, and computer-controlled interactions, blockchain technology is likely to transform the next wave of social applications. Web2 social platforms restricted user data, preventing users from carrying their social profiles across the internet, and third-party developers were unable to build applications on them. Web3 social networks are expected to change this model, offering an open social graph that provides freedom for users and developers. Early participants are focused on developing APIs and SDKs to encourage developers to build applications on decentralized social graphs (like Lens Protocol, Orbis, CyberConnect) or launch open protocols (like Farcaster).

Perl, an application emerging from Farcaster

Unlocking New Behaviors Through Blockchain-Supported Social Experiences So far, the transformation of Web3 has not been novel for end users. If I have already built an influential following, why would I want to start from scratch? Or, if the algorithm has already curated the content I most want to see, why would I migrate to a new platform? For success, the new social graph will need to spawn a new killer application.

This is not unlike the playbook created by the successes of previous social media.

(1) Capturing small, dense communities with novel experiences; and

(2) Leveraging the initial social graph's network to scale.

Alternatively, future social applications may still consist of small communities connected by an open protocol. As Packy McCormick wrote in "No Different Than Magic": "By igniting the magic of small communities and allowing founders to decide who can enter their communities based on what’s in their wallets, these small social applications, when combined, could siphon time and attention away from Twitter, a once-magic product that seems deeply entrenched and hard to beat alone."

So, what new behaviors can Web3 social applications form around? Let's dive deeper.

Digital Assets In Web2, ownership is best described by status (e.g., votes on Reddit, elite ratings on Yelp, followers on TikTok). Crypto wallets and their contents expand the types of ownership that can be displayed on the internet. For example, ERC-721 tokens have verifiable uniqueness and market pricing. So far, we have mainly seen this in PFPs (like Moonbirds, Bored Ape Yacht Club). However, as NFT ownership grows, our digital identities are likely to expand into other verticals—art, music, fashion, gaming, and virtual worlds, etc. For instance, an NFT-focused social network (Gallery) could provide a connection platform based on our emerging digital assets.

Gallery focuses on NFT news feeds

Digital Activities Content creation (e.g., videos, photos, posts) and management (e.g., likes, favorites, lists) support Web2 platforms like Instagram, TikTok, and YouTube. Blockchain and smart contract technologies expand the possible activities that can serve as the foundation for social connections. For example, the permanence of blockchain records has spawned on-chain reputation startups (like POAP, Rabbithole, Noox). Additionally, the ability of blockchain to eliminate friction in investment and fundraising has led to the emergence of social finance platforms (like Syndicate Protocol, Prysm).

Rabbithole's application can turn skills into credentials

Digital Affiliation So far, Telegram and Discord have become major hubs for NFT and DAO communities. However, they were not designed for Web3 use cases and are rife with scams and bots. I am optimistic about the development of alternative platforms with secure chat features suitable for Web3 (e.g., wallet-to-wallet messaging, identity verification, token-gating). Many players are seizing this opportunity—from one-on-one messaging (e.g., XMTP, Console, Tribes, Dialect, Lines, Comm) to community infrastructure (e.g., GM.xyz, Geneva, Bonfire, Backdrop).

These connections could also form the foundation of a powerful social graph, powering other social applications—just as Facebook's trust-verified relationships served as the foundation for its platform social graph.

Web3 music community on GM.xyz

Challenges Facing Web3 Social Platforms

While I am excited about the new capabilities that blockchain unlocks for social experiences, there are also limitations. If Web3 social applications are to reach beyond the approximately 30 million MetaMask users to the roughly 4.5 billion global social media users, they will need to set new standards for privacy, security, and user experience.

Privacy Sharing personal information on a public ledger is unsettling. Therefore, I expect privacy to become an important area of innovation with the rise of Web3 social. Proof protocols (like Sismo Protocol, Big Whale Labs) use ZK technology for decentralized identity verification. Additionally, access control and encryption solutions (like Lit Protocol) play a key role in enabling private and portable messaging and social networking.

Lit Protocol's encryption products (Source: developer.litprotocol.com)

Security Scams, spam, and bots currently plague the crypto ecosystem. To onboard the next billion users to Web3, this space needs to become foolproof. Startups are exploring ways to protect consumers' wallets from these risks (e.g., Stelo Labs, Harpie). In the NFT space, fraud detection startups (like Yakoa) index NFT data to flag over a third of NFT fraud.

Yakoa's NFT fraud solution

User Experience Web3 is notoriously cumbersome and unintuitive for newcomers. Startups are seizing the opportunity to make dapps and decentralized wallets more consumer-friendly (e.g., Magic, Slide). Social applications also need to balance decentralization considerations with usability. For example, Farcaster's naming registry is on-chain, but the rest of the messaging protocol is off-chain to improve user experience and scalability. Additionally, many Web3 applications are desktop-first or desktop-only. This limits user adoption, as mobile devices account for over half of all internet usage, while emerging technologies like AR and VR are on the rise.

Through DAOs, research organizations and media can break geographical barriers to fund and produce content in a community-driven manner. DAOrayaki will build a public media system in the form of a DAO that meets people's needs, achieving true decentralization through democratic governance that everyone can benefit from.