Industry Experts Weigh In on the Rise of Decentralized Social Platforms
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Web3 social platforms have raised large amounts of funding over the past year.
Onboarding new users to decentralized social platforms remain a challenge for founders in the space.
Elon Musk’s Twitter takeover underscored a preexisting need for decentralized social platforms.
In recent years, there has been a growing interest in decentralized social platforms, which offer an alternative to traditional social media networks that rely on centralized servers and data storage.
One of the biggest issues web2 social media network users face is the misuse and manipulation of their personal data. For instance, Facebook has been repeatedly criticized for its handling of user data. The social media network has been known to collect and use vast amounts of personal information for targeted advertising purposes. It has been involved in high-profile data scandals, such as the Cambridge Analytica scandal, which lifted the lid on the unauthorized collection of data from millions of Facebook users for political purposes.
Additionally, Elon Musk’s buyout of Twitter in November sparked a mass exodus as he reportedly fired hundreds of Twitter employees and started charging $7.99 per month for the verified blue tick, a service that was previously only available to public figures and influencers with a large following and was supposed to denominate authoritative people.
These platforms have been criticized for their opaque and often arbitrary content moderation policies, which can result in the removal of content and the suspension or banning of users without clear explanations or avenues for appeal. TikTok told its moderators not to promote posts made by disabled and LGBT+ people as well as users with “ugly facial looks” or “abnormal body shape.” Per Tiktok’s guidelines, such posts were suppressed so that people avoid bullying; however, no one was informed that such a policy was in place until the guidelines were leaked.
As concerns about the centralized control of social media platforms continue to grow, decentralized social platforms are fueling the next wave of innovation in the world of web3. Thanks to blockchain technology, decentralized social platforms use a more distributed system of data storage and content sharing, providing users with greater control and ownership of their data and privacy.
VCs pour capital into decentralized social media platforms
A sure sign of the growing interest in decentralized social is the large amount of capital that various platforms, blockchains, and protocols focusing on this niche have secured from venture capital firms. As investors seek to capitalize on this next wave of emerging technology, web3 social graph Lens Protocol, web3 social platform Plai Labs, web3 social marketplace Calaxy, web3 social data portal Porte3, decentralized social blockchain DeSo, and blockchain-based social sharing platform DSCVR, are just some of the platforms to have raised millions of dollars in funding over the past two years.
Commenting on this phenomenon, Rusty Matveev, Chief Strategy Officer at Calaxy said: “The decentralization of social platforms feels like an organic pairing and the natural evolution of the industry. There are many startups in pursuit of the plethora of versions of what “Web3 Social” may potentially bring to the market. One thing we can rely on is that venture investors will continue to fuel innovation by supporting a wide range of models that take advantage of the unique advantages Web3 can provide across the “social platform” landscape.”
While the utility of any given platform differs, some offer the potential for greater transparency and community-driven governance, as well as the ability to avoid censorship and content moderation issues. Others present creators and users with opportunities to monetize their content and interactions along with integrating DeFi, paving the way for an emerging economy called ‘SocialFi.’
“Currently, monetization on web2 social media through ads and partnerships is only accessible to creators with high follower counts. In contrast, the very fabric of web3-powered SocialFi incorporates financialization, enabling peer-to-peer interactions through the purchasing of creator coins or micro tipping,” Ken Timsit, Head of Cronos Labs, tells Metaverse Post.
Social blockchain DeSo claims that third-party apps in its ecosystem, like Diamond and Desofy, have earned creators over $20 million in their early days off of novel monetization primitives like social tipping, social NFTs, and social tokens.
Tools like OpenProsper, a social block explorer, give users insight into the ecosystem, while other novel apps like a web3 Instagram Pearl and a social Kickstarter-like fundraising tool DAODAO are launching.
The benefits of decentralized social
Besides the obvious benefits like transparency, monetization, and user ownership of data and content, web3 social platforms can also “unlock a future where people can seamlessly jump around between apps and take their whole social history with them,” according to Zaven Nahapetyan, co-founder at Niche, a decentralized social media platform that launched in beta last week.
Echoing this sentiment, Timsit says: “SocialFi offers portable social networks and self-sovereign identities. Portable social networks allow users to transfer friends and followers from one platform to another, providing total ownership of contacts and content.”
He adds that portable social networks will mitigate risks of de-platforming and censorship issues that traditional social media platforms face. With self-sovereign identities, users will be able to select the data they choose to share depending on the context in which the data is required. Both of these features will help prevent the monopolistic tendencies seen on traditional social media platforms while granting power back to users and creators, Timsit explains.
The challenges of onboarding web2 social users to web3 social platforms
The nascent category of “decentralized social” or “SocialFi” is showing early signs of growth. In November, DeSo claimed it hit 120% month-over-month growth, following 160% growth the previous month.
“We’re seeing a flywheel start to form,” DeSo founder Naser Al-Naji said in a press release. “Now that we have a seed of users and content, developers are building apps like never before, which grows usage and content even more in a virtuous cycle.”
However, onboarding new users to web3 social platforms remains a challenge as the process can be intimidating for non-crypto natives.
“The primary challenge we are facing with native web2 users is that they are not familiar with most things that currently exist in the web3 ecosystem, including certain terminology, let alone the challenges of managing wallets and crypto assets. Our solution to creating low-friction onboarding and overall experience is through a familiar UX journey,” Matveev says.
Similarly, Timsit cites complex onboarding processes and unintuitive user interfaces of web3 social platforms as barriers for web2 social users. During the early days of Musk’s Twitter takeover, users began looking for alternatives, such as the decentralized microblogging platform Mastodon. However, one Twitter user noted Mastodon is “not simple, but not impossible.”
Nahapetyan also stressed the UI aspect of these platforms, saying:
Most people don’t care if an app is web2 or web3: They just want something that’s easy to use and cool. This is something a lot of web3 builders get wrong; they’re so focused on the tech that they forget to make something usable.”
Explaining what it would take to reach mass adoption, Timsit says: “Being a decentralized platform is not enough to drive mass adoption. Various factors, such as accessibility, security, and community engagement, will serve as the foundation of SocialFi’s future. Until a high number of influential creators transition to SocialFi and begin building strong communities, the everyday user has no incentive to switch from traditional mainstream platforms. This is especially true when the new iterations of social media are not as easy to use.”
Did Elon Musk spark the call for SocialFi?
Following Musk’s $44 billion Twitter buyout, Mastodon saw its number of active users surge from 300,000 to over 2.5 million between October and November. However, active users on the platform had declined to 1.8 million by December, according to The Guardian.
In the same month, Twitter temporarily suspended the @joinmastodon account after it shared a link to the newly registered Mastodon account of @ElonJet, which broadcasts public flight path data of Elon Musk’s private jet, Mastodon founder Eugene Rochko wrote in a statement.
“This is a stark reminder that centralized platforms can impose arbitrary and unfair limits on what you can and can’t say while holding your social graph hostage,” Rochko added.
Twitter accounts of multiple journalists from major publications like CNN, The New York Times, and The Washington Post, as well as various independent journalists, were also reportedly suspended for talking about Mastodon’s suspension from Twitter.
On the same note, Matveev says that Elon Musk’s purchasing of Twitter is more indicative of a preexisting need to decentralize social media platforms and that an earlier sign of the same need was Facebook’s transition to Meta and its commitment to bringing traditional social media to the Metaverse.
Timsit agrees, saying that Elon Musk’s Twitter takeover underscored the importance of decentralized social media networks, which are not controlled by a single entity.
“We will continue seeing the current large players in the web2 social space moving towards web3 to maintain their place in the market. The traditional social media platforms combined with billions of dollars being invested into web3 social startups will help drive disruption that should theoretically benefit all,” Matveev predicts.
“That being said, in order for web3 social media to gain significant momentum, they need to offer a polished user experience and attractive economics for creators,” Timsit concludes.
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