This year has been a year in which the new wave of cryptocurrency social media apps has made great strides. Because some have opened up access and others have gained significant traction.
There are broadly two categories of these apps, with some overlap. The first is called “decentralized social,” which includes social media apps that operate over a decentralized network in an effort to give users more control over their applications and prevent any significant centralized entity from taking charge. do.
The second category is known as “social finance,” where applications embed cryptocurrency functionality in a very direct way, bringing monetization to the core of the app. FriendTech has pioneered this type of app.
Decentralized social app launch
Because decentralized social apps rely on complex infrastructure that is still under development, these apps have typically been limited to new users. But as these platforms become more confident, they are starting to open up to a wider audience.
For example, Farcaster, the decentralized social media app where Ethereum co-founder Vitalik Buterin spends most of his time, became completely permissionless last October, allowing anyone to use the platform.
“This year will see us transition from a (decentralized social) alpha phase to a beta phase where both Lens and Farcaster will move toward a more open and scalable phase, making 2024 the year we will see what real user demand is based on Lens. “Whitelists and strict quotas,” said Joonatan Lintala, CEO of Phaver, an established social media platform.
“What’s bad in some ways is that it took this long to get there. But the timing might actually be good, because bear markets are meant to build. Now, it’s up to Phaver and others to figure out how to graph these.” “It depends on the user tier app. If done well, it can really add value to users, including those outside the cryptocurrency bubble,” he added.
Lens isn’t fully open, but it’s made significant progress this year. In April, we launched Momoka, allowing us to move large chunks of data storage across the Polygon blockchain it runs on. This was a measure to enhance scalability. Last July, we released a second version of the protocol with more features.
Despite these improvements, Lens lags behind Farcaster in terms of adoption, as Farcaster’s door is completely open. According to a research report by The Block Pro last November, Lens has 126,000 profiles and Farcaster has 196,000 registration IDs.
Farcaster’s number of daily users has increased dramatically. Image: Block Pro/Dune Analytics.
“Farcaster is widely known for appealing to users who want quality discourse and a community-oriented environment. In contrast, Lens currently offers less interactive engagement despite its rich feature set for creators,” said Brad Kay, researcher at The Block Pro.
Social finance exploded onto the scene, but then disappeared just as quickly.
While decentralized social platforms continue to slowly expand, social finance platforms have emerged and achieved great success.
FriendTech was the first app to use a specific mix of financial engineering. It provides a space for users to purchase keys that give them access to influencers’ private group chats. The key price is on the bond curve. That means the more you buy, the more expensive it becomes. And the kicker? For each transaction, a 10% commission is split between the platform creator and influencer.
This financial incentive model has sparked much speculation. Since its launch in August, 843,000 users have spent a total of $267 million in Ethereum in 12 million transactions, according to the Dune dashboard created by a data analyst known as Crypto Koryo. According to DefiLlama, this resulted in $59 million in fees, half of which were distributed to the user base. Although activity has decreased over the past few months, the platform still has $35 million worth of smart contracts.
“The huge growth we saw from the September peak was spectacular. Again, with no new retail stores and even in a bear market, in a short period of time, FriendTech was able to generate more revenue than the biggest DeFi protocols like Uniswap, Lido, and even the Ethereum chain itself. Yes,” said Crypto Koryo.
This activity was conducted under two themes. First, users were trying to make a quick buck by buying keys and selling them at a higher price. The bonding chain mechanism meant that prices could get expensive quickly, potentially offering high returns, and running the risk of losing money due to bad transactions and high fees. One user known as Vombatus made nearly $2 million by accumulating his keys and eventually dumping them all out on people who bought his keys.
The second was the assumption that the platform would do an airdrop at some point depending on activity. The concept was supported by the platform’s points system, which awards points based on a user’s activity, which many users speculated would be used to determine potential airdrop eligibility. So far nothing has happened.
“It’s been interesting to observe the behavior of various groups since FriendTech went ‘mainstream’ – mostly OnlyFans members, musicians (including Pussy Riot), sports figures and even Web2 media companies after the emergence of ‘crypto Twitter’. We are starting to see non-crypto native cohorts joining,” Crypto Koryo added. “Because monetization is a problem for content creators in Web2 and Web3.”
Following the success of FriendTech, other platforms offering similar products have emerged. The Avalanche-based Stars Arena was one of the favorites, but struggled to regain momentum after a $2.9 million exploit and internal team rifts. Other apps like A new Bitcoin city based on Bitcoin Layer 2 NOS Although it offered far more features than FriendTech, no other product had a similar user base. While these apps now have far fewer daily transactions, FriendTech maintains its lead.
At its peak, StarsArena had more transactions than FriendTech per day, but that didn’t last. Image: Dune Analytics/Crypto Koryo.
looking ahead
Bringing decentralization and cryptocurrencies to social media has been challenging, both technically and in terms of creating sustainable financial mechanisms, but it seems like there is a potential audience.
“Having blockchain as a payment rail means Web3 social networks can reward users globally without the platform leveraging user data or running ads,” said Saurabh Deshpande, researcher at cryptocurrency newsletter Decentralised.co. .” he said. famous At X.
Deshpande added that the social network’s core concept of rewarding users for the content they post is valuable.
“We are not there yet, but we will gradually get there by leveraging features such as ownership, composability, unauthorized access, and censorship resistance,” he said.
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