Decentralized Social Network Service 101
A Comprehensive Overview of the Future of Social Media"
TL;DR
DeSoc offers a potential solution to persistent challenges in Web 2.0 social services, such as 1) centralized control and censorship by institutions and companies, 2) data sovereignty transfer, and 3) privacy concerns.
Its promising prospects stem from 1) the relative ease of development, 2) development and back-end environment that can relatively easily transition from Web 2.0 social services, and 3) a large total addressable market by competing with the $500bn digital advertising industry, which is on par with the gaming industry.
Services using NFT-based multi-login and Social Graph, such as the Polygon-based Lens Protocol, are rapidly emerging and driving the market forward..
Introduction
Decentralized Social (DeSoc) refers to services aimed at creating social media platforms without centralized entities. It was mentioned as one of the most promising areas in the "Crypto Theses for 2023" report published by Messari. Furthermore, Ryan Selkis, the founder of Messari, highlighted DeSoc as a "Top Investment Theme" on his personal Twitter account.
As mentioned in more detail below, Selkis argues that DeSoc is promising due to 1) ease of development and progress, 2) concentration of value in the back-end, and 3) ad revenues comparable to the gaming industry.
One critical question is, "What benefits can decentralization bring?" DeSoc has a clear advantage in addressing the “censorship and control” issue that currently plagues social media services. Furthermore, it can attempt a transition to a creator compensation system through data sovereignty transfer, moving away from systems where centralized entities like Instagram or TikTok exploit most of the profits. This potential makes DeSoc's development worth anticipating.
Centralized SNSs face a number of challenges,
There are several reasons for the emergence of DeSoc. The most significant reason is "censorship." Centralized social media services, like Facebook and Twitter, are vulnerable to censorship as they are owned by single companies and subject to constant control. Additionally, in some countries, services must cooperate with the government's "information censorship" (South Korea - KakaoTalk, China - all SNS services), preventing them from serving as genuine communication channels. In China, WeChat users have developed secret phrases, code words, or euphemisms to discuss sensitive topics or circumvent censorship by the Chinese government.
The second reason is "data sovereignty." In centralized social media, users' content is stored on the service provider's servers, leaving them without control or guarantees over their data's ownership and sovereignty. Users also cannot control how their data is being used.
Lastly, there is the issue of "privacy protection." Centralized services can collect user data for tracking and targeting advertisements or even sell the data to third parties. These services also require users to enter their personal information to register, which raises vulnerability concerns.
Then, What is DeSoc ?
To address the issues mentioned earlier, DeSoc uses blockchain technology instead of a central server controlled by a single company. Coinbase Ventures divides DeSoc into four layers: Hosting, Social Primitives, Profile, and Applications. Each layer has an organic relationship with the others and consists of essential elements required to operate a social media service.
Using Facebook as an example of a DeSoc Application, users log in with a wallet corresponding to the Profile layer, while their followers/following relationships are stored in the Social Graph Protocol under the Social Primitives layer. User-generated content is stored in the decentralized Storage under the Hosting layer, and the service operates on Layer 1 (L1) and Layer 2 (L2) networks.
Although all of these layers together are generally referred to as DeSoc, the term is often used to describe the Social Graph Protocol. This protocol ensures the interoperability of social networks, representing followers/following relationships in social media. Currently, there is a limitation in applying a social network from one service to another. However, by using the Social Graph Protocol, different applications can share existing followers and following relationships, achieving an effect similar to converting Instagram followers into YouTube subscribers.
Lens Protocol
Lens Protocol is a Polygon-based Social Graph Protocol released in 2022, accessible only to users holding a Lens Profile NFT. Users can log in to multiple services based on Lens Protocol using their wallet's Lens Profile NFT, leverage the Social Graph connected to that NFT, and even import posts from other services.
New services launching with a Social Graph Protocol like Lens Protocol can take advantage of the existing social graphs built on the same protocol. In simpler terms, new services can seamlessly import existing followers and following relationships, which is a significant advantage in easily building an initial user network. In essence, this enables the service to benefit from a network effect.
Source : SocialFiStation (@SocialFi_ss)
Currently, many services are developed on top of Lens Protocol, including some major social media platforms. Each service has its unique features, with the most famous one, Lenster, resembling Twitter. However, most of these services still compete with existing platforms. Services launched without any distinct functional differences, other than "decentralization," are merely an "inconvenient alternative." Consequently, they are not expected to attract enough active users. This lack of active users could lead to an insufficient complementary network effect among the services.
According to Lens Analytics data, the number of posts uploaded using Lens Protocol currently stands at 3.5 million, with 1.5 million comments. This is still a relatively small figure compared to Instagram's daily post count of 95 million. Additionally, the top 10 users in terms of follower count are all affiliated with Lens Protocol, and there are no native influencers born within the service yet. However, considering that the service was launched in 2022 and is still in its early stages, the performance of Lens Protocol can be considered impressive. It is also encouraging to see many services utilizing Lens Protocol.
What can we expect from DeSoc ?
Despite being in its early stages, the DeSoc market, including Lens Protocol, is expected to grow continuously. In the Messari Report's "Crypto Theses for 2023," the reasons for the optimistic outlook on DeSoc are: 1) ease of development progress through trial and error, 2) value concentrating on the backend due to the nature of social platforms, and 3) advertising revenue alone being comparable to the size of the gaming industry.
Firstly, social media services have lower costs for trial and error in development compared to other services. They have room for continuous improvement and can easily be refined. Therefore, it is likely that the current DeSoc market's services, which lack functional differentiation, will quickly be improved upon.
Secondly, the value of social platforms lies more in content (data) and following/follower relationships (social graphs) than in front-end operations. Therefore, the value tends to concentrate on the backend. This means that they can better reflect the characteristics of blockchain technology, which is closer to the backend, and create greater value.
Lastly, the size of the social media industry is estimated to be around $500 billion per year in advertising revenue alone, which is almost equivalent to the gaming industry. This provides enough reason for many players to enter the market.
Conclusion
The current DeSoc market is not receiving as much attention as other blockchain services, such as the Web 3 gaming market or Real World Asset (RWA) STOs. However, it is essential to keep an eye on the DeSoc market as it has the potential to be as significant as the gaming industry. Firstly, it is meaningful in that it can replace the advertising revenue market.
In particular, the price of Lens Protocol Profile NFTs has been steadily rising since the airdrop rumors, which indicates the growing interest among users. As more services emerge in the DeSoc market, continuous observation and analysis of the market will be necessary.