Variant Partner: Web3 social networks will succeed by adopting asset-first approach

Web3 social networks will succeed by focusing on assets.

Written by: Li Jin, Variant partner. Translated by: Luffy, Foresight News.

There are two main approaches to building a Web3 social network: asset-first and ideology-first.

The core of the asset-first approach is that users are profit-driven, with money being prominently placed on the platform through unlocking digital ownership. Financialized features will allow users to consume and profit within the network.

BitClout is a typical asset-first Web3 social network, where users can bet on the potential of well-known figures by trading creator tokens, creating a speculative social game in the network. Lens is another example of an asset-first Web3 social network, where users’ posts are instantiated as NFTs that can be collected and purchased, with top creators earning tens of thousands of dollars from collecting posts. The PFP NFT community can also be considered an asset-first social network: they are interest groups composed of collections of collectibles. In all of these cases, the motivation for user engagement in social networks is not purely intrinsic, but involves potential economic interests to some extent, just like collecting stamps or baseball cards: it may bring economic benefits in addition to pleasure.

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In contrast, the ideology-first approach requires alignment with users’ values and ideals. This means emphasizing the characteristics brought by blockchain technology, such as censorship resistance, data privacy, social graph, and content portability. The actual user experience of this type of Web3 social product may be very similar to that of Web2 products, with the difference being that the underlying architecture involves storing some data on the chain.

My view is that Web3 social networks will be successful by adopting an asset-first approach, that is, creating profit opportunities that attract users. In other words, these networks are not purely social networks, but socio-economic networks. This approach also creates a more obvious differentiation in user experience, which theoretically should generate broader appeal (income is a universal need, while ideals may be too abstract for many). This also reflects the path adopted by cryptocurrencies in other fields, including NFTs, DeFi, and even L1: the desire for economic benefits guides the creation of new networks and applications, and plays a critical role in the adoption process.

It should be noted that adopting an asset-first approach does not mean catering only to speculators and creating financial games that are easy to manipulate. Social networks are easy to be contaminated by spam and disruptors, leading to negative network effects. Unlike DeFi lending protocols, where all liquidity is valuable, even if it comes from users with financial incentives, the quality of content and users is important. Simply rewarding the creation or use of all content is too rigid an incentive mechanism, which may lead to a network full of spam, useless content, and even harmful content.

Successful financial games centered around a Web3 social network should combine intrinsic and extrinsic motivation. Stealcam is a content sharing platform that allows fans to profit by selling the NFTs they own, a mechanism that attracts both profit-driven speculators and genuine fans.

Adopting an asset-first approach will also allow the network to build novel social graphs. Social networks are built around different social graphs, which form the basis of their network effects: Facebook started by leveraging your real-world friend/university campus graph; LinkedIn lists your professional relationships; TikTok builds social graphs based on your interest behaviors within the app. An asset-first social network can pioneer and popularize ownership graphs, with users connected through shared on-chain ownership. The PFP community is the primitive version of this idea that we have already seen. As user ownership on-chain data grows, ownership graphs can reflect user interests richly.

In summary, now is a rare opportunity window to build Web3 social networks. Existing Web2 social companies like Twitter and TikTok are facing upheavals. Our vision for Web3 social networks is rooted in leveraging the unique incentive features of cryptocurrency to provide a differentiated user experience.

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