Introduction

Let’s analyze what social media is based on first principles. Users choose a username. Then they start following other social media accounts to populate their feed with the posts of friends, family, and creators. Overtime, users interact with these posts by liking, commenting, and resharing. And, finally, users make posts of their own that might just be plain text, but could also contain rich media like photos, videos, and other documents.

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The key thing to understand about Web2 social media is that all of this user-generated content is stored on the social media company’s centralized database. And feeds are controlled by the company’s proprietary algorithms, and moderated by the company’s terms of service. Let’s dig deeper into why this might be a problem.

Web2 Social Media Problems

First, there is a problem of authoritarian control over who gets to use a social media platform, what content is allowed on the platform, and what content is able to be discovered and/or monetized.

Social media companies have the power to refuse service to any user, and delete or demonetize any type of content. Think of the implications of a user getting deleted, or even temporarily banned from a platform. Users lose access to sometimes years worth of their posts, and their entire network of friends. Getting banned from social media is an infringement on free speech.

Social media companies don’t have to outright ban users to exert influence. They control the algorithms that dictate what content users see. And these algorithms are opaque as to how they rank content. These algorithms might be biased and could favor serving content related to a specific political agenda for example.

Finally, social media companies have unilateral power to decide what content can be shown, but this also means they are the sole party responsible for moderating spam content and preventing fake accounts. This determines the quality of the social media experience, as users, for the most part, only want to interact with other users, and not bots. And there is evidence social media companies do a poor job of this. One source estimates that around 80% of Twitter accounts are bots used to inflate follower counts, or make spam posts.

Second, social media companies have a monopoly on user data. They sell user data to advertisers, and users must accept this infringement on their data privacy in order to use the platforms in the first place. And adding insult to injury users are subjected to targeted advertisements while using these platforms.

If a user gets banned, or if they just decide to get up and move to another platform, all of their social media content, including their social network, is locked in the company’s central, proprietary database. Thus switching costs are high, which effectively locks users into a few social media platforms. This creates monopoly-like dynamics where everyone is forced to abide by the terms of service of these few companies in order to have a public voice, and access the networks all of their friends and family are already on.

This also means that content creators, if they hope to reach large audiences on the order of hundreds of millions, or billions, must accept sub-optimal terms and conditions when it comes to monetization. Indeed, social media companies control how much of a cut they take from creator revenues. Thus, content creators capture little of the value they generate for these social media companies from engagement and traffic. End-users capture no value as they give their attention away for free while using the platforms.

Protocols

Web3 social media changes all of this. Lets take a look at some of the benefits of decentralized social media, then at some specific protocols.

First, Web3 social media is hosted on a permissionless, censorship resistant blockchain. This means that anyone can access social media services, without the permission of a company like Facebook, and post whatever they like. Content and users cannot be censored by the network.

Second, users remain in full control of their social media content. This goes for direct messages, posts, likes, reshares, and perhaps, most important, their social graph of friends and family. This data is either stored on a blockchain, or in a personal data store that the user has full control over. Juxtapose this to the content stored in the centralized servers of Web2 social media companies today. If a user wanted to, he could port his social data over to any other social media platform, which prevents him from having to build all his content up from scratch.

Third, there is more market competition when it comes to Web3 social media. Web2 enjoys monopoly like motes because data is not portable, and users are forced to use the platform that their friends and family are already on in order to interact with them. This narrows the Web2 social media market down to a few key players, and startups have extreme difficulty unseating these incumbents because of the power of network effects. In Web3, users will port their data between a variety of frontends and social media feeds. If a frontend doesn’t provide the features they need, or if they feel the quality is dropping on their social feeds (e.g. too many ads), then they can pick up and move elsewhere.

Finally, creators can directly monetize their content with their fans. Web3 social media cuts out the middleman, and the exploitative ad revenue model. Instead, Web3 creators can launch NFT sales, and social tokens on newage platforms. The result is easier monetization and business models for creators. Crypto tipping is also built in.

Let’s take a look at some specific Web3 social media protocols.

DeSo

Social media apps demand relatively fast transaction processing. It’s one of the most demanding types of applications to put on-chain. For example, Twitter’s 300M user base generates 6,000 posts per second, which doesn’t even cover likes and replies. 

DeSo is a Layer 1 blockchain purpose built to meet these high transaction processing demands as all content will be stored on-chain such as usernames & profiles, posts & comments, private messages, likes & follows, links to rich media, and token activity (social tokens, on-chain NFT auctions).

Social tokens are native on DeSo. Anyone can mint creator coins for a specific DeSo portfolio, which represents a new monetization channel for creators, and sparks a new creator-fan relationship. One that is financially aligned.

Initially zero creator coins exist when a new DeSo profile is created. Fans, and the creator himself, can mint creator coins based on a bonding curve with the price set by the bonding curve above. The price increases as more creator coins are minted into existence, thus rewarding early-movers. Creator coins can be automatically sold back to the profile, which drives its price down.

Creators can profit off of this in a number of ways. At the time of profile creation, users set their “creator rewards” that stipulates the percentage cut they get of each creator coin sale. If the creator reward is set to 10%, and a fan purchases $100 of a creator coin, then the creator gets $10 of his creator coin, and the fan receives $90. High creator rewards might disincentivize fans from buying, so another strategy is for the creator to bulk purchase some of his own creator coins early on, taking advantage of the relatively low prices.

By default, creator coins are based on a creator’s reputation, and the price driven by speculation. In theory, if Elon lands on the moon, the price of his coin would increase. And if he makes a racial slur on a podcast, then his coin price would decrease. 

Creator coins are programmable and can be imbued with all sorts of other properties that drive value for fans. For example, creators can share a portion of their NFT revenues with those who hold their creator coin. This would make creator coins a cash-flowing instrument for fans. Other potential creator coin utilities include:

• Token-gated commenting on a creator’s posts
• Token-gated DMs to creator
• Token-gated premium content
• Pay creators to reshare your post (i.e. paid advertising)
• Token-gated access to other things like early NFT drops

Creators can now identify their superfans. Superfans could be those who hold the most of a creator coin or those who purchase the creator coin first. Exclusive accesses can be granted to these superfans, and creators might filter their DMs based on these superfans.

DeSo also has built-in tipping. Users can react to posts with diamonds, which equate to $DESO micropayments. This is a new way to engage with social media content and might represent a more honest signal for high-quality content than “likes”, which are given at no cost to the user. Algorithms will be able to take posts’ monetary value into account when deciding which content to promote.

Creator coins are not the only native digital assets. Any DeSo post can be minted, and sold, as an NFT. And unlike popular NFT marketplaces like Rarible and OpenSea, DeSo NFT auctions are fully on-chain. This builds NFT marketplaces directly into social feeds. NFT-integration into social media is inevitable. Instagram and Facebook users can now post “digital collectibles” (i.e. Ethereum or Polygon NFTs) on their profiles.

Remember, all DeSo data is on-chain, and thus publicly available. Developers can access the full flood of incoming and historical social data either by running a DeSo node, or via an HTTP API. Thus, DeSo applications will be built on top of DeSo nodes, and these nodes have control over which content and usernames to index, and make discoverable. This also gives DeSo nodes the freedom to apply content algorithms of their choosing. Anyone can run a node, which creates an open-market of curated feeds. This could be country-specific feeds, topical feeds (e.g. political, sports), and NSFW feeds.

Users will be able to choose from a variety of DeSo feeds based on which feeds serve them the best content, and which feeds have content moderation policies most aligned with their values. Also, there will be a variety of frontends built on top of DeSo so users will be able to choose from different UIs based on their required features and/or stylistic preferences. Nodes can also apply different business models than one another. Some nodes may continue using the free-to-access ad model, while others may charge a subscription fee.

This ecosystem is already being built out on DeSo. This ecosystem includes web apps for end-users, but could also include DeSo analytics tooling, and NFT exchanges. A full list of DeSo projects can be found here.

Lens Protocol

Lens Protocol is another major decentralized social media project, but it has a different architecture than DeSo. Lens is a series of smart contracts deployed on Polygon.

It all centers around Lens Hub, which is a smart contract that mints user profiles as ERC-721 NFTs. The code above shows how the smart contract is called to create a profile by supplying a handle and image URI, among other things.

Lens Hub is also responsible for storing user publications such as posts, comments, and shares, by calling post(), comment(), and mirror() functions, respectively. Publications contain a contentURI, which is typically an IPFS CID that points to the publication’s actual content. Thus, a profile, and all its associated publications, can be queried with a profileID on LensHub. This makes it so that users “own” their social content.

Now let’s talk about the other smart contracts that compose Lens Protocol. Every Lens profile has a “Follow” smart contract associated with it. This issues others a follow NFT. This makes it so that users own their social graph – they own an NFT for each profile they follow. Additionally, every publication on Lens has both a “Collect” and “Reference” smart contract associated with it. These smart contracts allow others to collect (i.e. “Collect), or comment and share (i.e. “Reference”) a given publication.

This gets into the topic of community-driven growth, and the extensibility of Lens Protocol. Anyone can deploy Follow, Collect, and Reference smart contracts – these are called modules. For example, there are a variety of Follow smart contracts – some make it so the user is free to follow, others might require a $5 monthly subscription fee. The same goes for collecting publications. How many publications are available to collect, and for how much? Finally, who is able to comment and share a given publication. You may open this up to the public, or you may make it so that only those following you can comment on your posts. Golden Circle and SuperFluid are examples of Follow modules. Lens Auction is an example of a Collect module.

Decentralized social media apps are being built on top of Lens Protocol. Some highlights include Lenster (a web app), Orb (a business-focused mobile app), Iris (twitter-like) and LensFrens and Sepana Search (focused on discovery).

Bluesky

BlueSky is slightly different from DeSo and Lens Protocol. Bluesky does not store any social data on a blockchain. Instead, all of a user’s content (posts, comments, likes, media blobs, and follows) is stored in a data repo on his personal data store (PDS); however, this data is still fully under the control of the user. Data repos can only be modified with signed commits from a DID’s private key. This describes the interaction between a BlueSky client and the user’s server (i.e. PDS).

You can think of BlueSky as a network of client-to-server and server-to-server communications. In the latter case, users can direct message each other, or send other user-to-user interactions like mentions and replies. BlueSky considers this “small-world” networking.

“Big-world” networking is required for social media feeds, discovery sections, and search interfaces. This is accomplished by indexers who crawl the BlueSky network in order to index users and their content. 

These indexers have control over which content and users they index, and will curate their feeds according to their content policies and algorithms; however, users have the freedom to choose amongst a variety of Bluesky clients, and which indexers they plug into for their social feeds. This gives users the power to customize their social media experience, as opposed to being forced to abide by Twitter’s terms of service, advertising business model, frontend features, and backend feed algorithms.

All network communications are enabled by BlueSky’s Authenticated Transfer Protocol (ATP), where messages are sent between servers via HTTPS (get and post) and XRPC, where XRPC is a semantic layer so that different clients and PDS implementations can understand each other.

Despite its different architecture, BlueSky still offers the same benefits characteristic of decentralized social media platforms such as user-controlled, portable data and censorship resistant communications. It’s unlikely that users will run their own PDS servers, so hosted options will be ubiquitous, offered by the likes of Google and Amazon; however, these do not pose centralization risk because the user controls his DID keys, and can grant and revoke write access from a PDS provider at anytime.

Also, BlueSky plans to store user data locally on the user’s client, so if a PDS goes down, or denies service to the user, then the user can revoke access to that PDS provider, and migrate to another PDS provider by rotating its singing key, and granting the new PDS prodiver access to this new signing key.

The idea of a PDS, or cloud agent, for storing user-controlled data is similar in concept to Ceramic Network. Ceramic Network accomplishes this user-controlled storage with a decentralized network of IPFS nodes, as opposed to a single cloud server for each user. 

Orbis is a decentralized social media SDK built on top of Ceramic Network. It allows developers to integrate storage, and retrieval, of social media data including follows, posts, comments, and direct messages. This data is all interoperable, so all applications that implement Orbis are able to retrieve this information and provide a persistent social media experience across Web3. Finally, there are other emerging Web3 social media projects such as gm.xyz, Farcaster, and Project Liberty. 

Messaging and File Sharing

Direct messaging is an important component of social media today. Some of the protocols above have already implemented native direct messaging like DeSo, which encrypts DMs and stores them all on-chain; however, some question whether or not DMs should be stored on-chain given storage and transaction processing costs.

Chat apps are similar in function to social media DMs. Chat apps are some of the most used apps in the world as they give friends and family the ability to send threaded messages to each other over the internet. However, there are privacy concerns surrounding some of these apps like WhatsApp, Signal, Telegram, and Discord. Central actors probably have access to the encryption keys, and thus have visibility into everyone’s messaging who uses their platforms.

XMTP is a decentralized node network that supports user-to-user chat (i.e. P2P encrypted messaging), app-to-user messages (i.e. push notifications), and user-to-community communication (i.e. group chat).

Developers can use XMTP SDK to integrate Web3 chat into their applications. This builds native chat capability into dApps so that users can message other users, or the app can send push notifications to users. It’s not hard to imagine that XMTP integrated into clients of some of the decentralized social media protocols discussed above.

First time users of XMTP connect their wallet to an XMTP client and sign a message, generating an XMTP key pair, which is separate from their crypto wallet’s key pair. This key pair is encrypted and stored on the XMTP network linked to the wallet’s address. 

When the user signs in again, the network looks up the wallet address, locates the encrypted key pair so that the wallet’s private key can decrypt this XMTP key pair. Once the XMTP key pair has been decrypted then the user has started a messaging session.

All messages are stored on the XMTP network, so a wallet can sign into any XMTP client and access their message history like a portable inbox. Messages can be sent to wallet addresses, or other identifiers like ENS (.eth) or Lens Protocol (.lens) handles.

Many applications will be built on these messaging rails. First, cryptonetworks have a new tool for messaging their community of users. This is an example of wallet-to-group messaging. Second, as I said before dApps can send notifications directly to wallets now. An example of this would be MakerDAO warning you if you’re close to getting liquidated. An XMTP client would receive this, and send a push notification on your device. Third, advertisers have a new channel for outbound messaging; however, we can connect all sorts of interesting information with a wallet address, such as NFT ownership, DAO membership, dApp usage, and crypto networth. This opens new possibilities for ad and sales targeting.

This last one might scare you. You might think of constantly receiving spam messages; however, on-chain data also enables advanced spam filtering mechanisms. First, advertisers may have to attach crypto payments to each message in order to show up in your inbox. This means they have to limit who they send messages to, and you get paid for taking your time to at least open their message. 

Second, you can make it so that you only see messages from dApps you whitelist, or wallets with a certain amount of crypto. You could get even more granular and only see messages from wallets who you follow on Lens. These filtering strategies will actually cut down the amount of spam that users are exposed to.

Right now XMTP supports EVM wallets, but the goal is to support the entire Web3 ecosystem with cross-chain messaging. Others messagin protocols include xMS (Solana / Ethereum), WalletConnect Chat API (cross-chain), Sumi Notes (Substrate), and Pravica Messenger (Stacks/Bitcoin). Finally, there are other interesting projects working on P2P video chat and file sharing (Keet, Huddle0, Fyber Network), and decentralized email/productivity suite (i.e. Skiff and Weavemail).

Decentralized Autonomous Organizations

A DAO is essentially a group of friends (i.e. social) with a shared bank account (i.e. crypto) who coordinate with each other online (i.e. chat) in pursuit of a shared goal. These are digital collectives that form around DAO tokens. There are two major types of DAOs: creator DAOs and community DAOs.

Creator DAO

We have already talked about Creator DAOs. Creator DAOs naturally form around DeSo’s creator coins. Fans purchase creator coins to support their favorite creators but also to unlock special privileges like access to exclusive content, token-gated messaging channels, token-gated IRL events (e.g. concerts), and more. Also, it’s possible to turn creator coins into a cash-flowing asset for fans. Creators can release an NFT collection on DeSo and choose to stream a portion of the revenue to those holding their creator coins.

You can see how this is a brand new form of patronage that aligns fan and creator incentives. Now fans are financially incentivized to grow the popularity of the creators whose coins or cryptomedia they own. Fans might even begin to market, promote and curate for creators. This is known as the “buy and retweet” phenomenon. If a creator goes from relatively unknown to super famous then the value of his cryptomedia and creator coins will sky rocket, thus benefiting the fan.

In summary, the purpose of Creator DAOs is to align creators and fans, and coordinate people around the consumption and growth of the creator’s works. DeSo is not the only platform for launching a Creator DAO. Social tokens can be launched on Mirror, Rally, Coinvise, and Calaxy.

Community DAOs

A DAO can form around any initiative, and its members make collective decisions about what should be done. This is called decentralized governance. An organizer issues a DAO token and somehow distributes it to others. Holding the DAO’s token signals membership to the DAO, and thus grants privileges such as submitting governance proposals, voting on proposals, access to private communication channels (i.e. token-gated Discord), and more. In many cases, DAO members contribute their unique skill sets and complete projects together, so you can also think of Community DAOs as coordinating freelancers.

The DAO itself can reserve a portion of the token supply, which constitutes a treasury for funding its various initiatives. Treasury funds can be spent on any number of things like rewarding members for completing tasks, funding external projects like a grants program, or making acquisitions like purchasing NFTs. Of course, what the DAO spends its treasury on depends on its unique mission. We’ll review several categories of DAOs in the sections below.

The general governance process looks as follows. When a DAO member has an idea for a project he creates an informal proposal and posts it in the DAOs forum. This allows other DAO members to comment on it and provide feedback. The proposal might need to go through some revision, but the proposal can be moved to formal vote once sentiment is strong. Voting takes place either on-chain or off-chain (e.g. Snapshot), and voting power is usually proportional to the amount of DAO tokens you hold, although it doesn’t have to be (e.g. quadratic voting).

Ecosystem Development with Protocol DAOs and Grants DAOs

Members govern the development of a protocol, product, or ecosystem overtime. Any protocol updates must pass through governance and, if passed, code changes are executed on-chain. Protocol DAOs are at the center of many blockchain ecosystems (e.g. Polkadot, Cardano). 

They are also used to govern major protocols within the ecosystem, most commonly DeFi Protocols (.e.g. MakerDAO, Aave, Uniswap, Compound). In Grants DAOs members vote on which projects to provide seed funding in order to grow the ecosystem as a whole. ProtocolDAOs usually have a grants element to them. Gitcoin funds projects in the greater Web3 ecosystem.

Investor communities with Investor DAOs and Venture DAOs

Members make investment decisions together. There is usually a crowdfunding element to this where members contribute money to the treasury upon joining, and vote to decide what to buy with it. FlamingoDAO and PleasrDAO invest in blue-chip NFTs. ConstitutionDAO raised over $40M in an attempt to purchase a copy of the US Constitution. VentureDAOs, like MetaCartel Ventures BessemerDAO, and BitDAO, invest in early-stage startups in the Web3 space.

Future of content with Media DAOs and Entertainment DAOs

The development of media and entertainment is community-led. Members tend to contribute as content-creators, help make creative decisions on community-owned projects, or provide technical/promotional support. ForeFront and Bankless DAO collect media contributions, like blog posts and podcasts, from their member bases. ApeCoin DAO members get to steer the development and promotion of the DAO’s metaverse and media empire, Otherside.

Creative projects with Creator DAOs and Service DAOs

Members collectively build products or offer services. Raid Guild is a good example. It employs designers, developers and marketers to build and promote Web3 products for its clients. Raid Guild’s clients pay its treasury, which is used to fund projects. MetaFactory and Friends with Benefits are some other examples.

DAOs as the Future of Work

You can also think of DAOs as a collection of freelancers, with varied skill sets, that contribute their labor to create value. Some believe DAOs are the future of work, and may eventually replace centralized corporate structures due to efficiency gains and extending worker freedoms.

DAOs certainly take a novel approach to things. For example, some DAOs have novel payment mechanisms for rewarding project contributors in a meritocratic way. A project budget is set ahead of time, and once the project is completed, the workers assign reputation scores to their peers using tools like Coordinape and SourceCred. This is an attempt to measure each individual’s contribution to the success of the project. The project’s budget then gets distributed according to the outcome of this reputation scoring.

Also, hiring for a DAO will look different than the traditional hiring process we experience today. An applicant will be identified by his wallet address with all of its associated on-chain data. This brings us to the idea of “your wallet = your resume”. Hiring managers will be able to verify things like past employment, reputation points earned in previous projects, credentials/certificates (e.g. RabitHole), and proposals you submitted in other DAOs. On-chain identity will continue growing, and provide richer pictures of the individuals behind the wallet, if they so choose.

So, how will we achieve this future of decentralized work? Let’s talk about the emerging ecosystem of DAO tooling that supports use-cases like launching a DAO, submitting and voting on proposals, managing the DAOs treasury and handling payroll, and more.

DAO Tooling

DAO Operating Systems allow organizers to launch and manage a DAO. This involves naming the DAO, naming and distributing the DAO’s token, and setting governance parameters. These DAO launching platforms implement and deploy the DAO token and governance structure as a smart contract on the backend. Governance parameters includes things like who can submit proposals, how are tokens weighted for voting purposes, and length of the voting period, among others.

Colony, Aragon, and DauHaus are general DAO launching platforms because organizers can choose from a variety of template structures such as Organization (DAO token represents ownership), Membership (non-transferrable NFT represents membership), and Reputation (non-transferrable reputation tokens). Syndicate and Juicebox are specialized for crowdfunded Investor DAOs. PartyBid is a specialized crowdfunding platform to win NFT auctions. Finally, DeSo, Rally, Coinvise, and Calaxy allow creators to deploy social tokens.

Most of the DAO platforms discussed above have in-built token voting (e.g. Aragon Voice). Snapshot is the most popular off-chain voting platform. Llama helps DAOs with protocol engineering and implementing on-chain proposals.

DAOs typically implement their forums with Discourse, handle messaging on token-gated Discord or Telegram channels. Surely XMTP will become increasingly involved in the DAO community messaging space, instead of using token-gates built on top of Web2 chat applications.

Some DAO treasuries are worth billions. To improve on security usually treasuries are managed with multi-sig safes like Gnosis or Parcel. These are essentially crypto wallets that require more than one signature in order to properly sign a transaction to move funds. We already covered Coordinape and SourceCred, which help to determine compensation for individual contributors involved in a DAO project. Sablier Finance and SuperFluid are crypto streaming protocols. Users can see their wallet balance increasing in real-time.
Then there are aggregator products. Boardroom and Tally aggregate DAO governance across many Web3 DAOs. DeepDAO is like a DAO search-engine, and they also list DAO tooling.