The Block: Reviewing the Web3 Social Landscape in 2023
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The Block: Reviewing the Web3 Social Landscape in 2023
Social finance emerged out of nowhere, but quickly faded away.
Navigating Web3 tides with focused insightsBy Tim Copeland, THE BLOCK
Translated by Elvin, Chaincatcher
Summary:
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Decentralized crypto social media apps made positive progress this year, focusing on scalability and opening access to more users
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Social finance platforms saw a significant surge in attention but failed to retain users
This year marked a major step forward for a new wave of crypto-powered social media applications, with some opening up access while others gained substantial traction.
These applications fall roughly into two categories, with some overlap. The first is so-called "decentralized social," which includes social media apps running on decentralized networks designed to give users greater control over the platform and avoid reliance on a single centralized entity.
The second category is known as "social finance," where apps directly embed cryptocurrency functionality, bringing monetization into the core of the application. FriendTech led the development of this type of app.
Decentralized social apps open up
Due to their reliance on complex infrastructure still under development, decentralized social apps have typically restricted access for new users. However, as these platforms grow more confident, they are beginning to open their doors to broader audiences.
For example, Ethereum co-founder Vitalik Buterin has spent much of his time on the decentralized social app Farcaster, which became fully permissionless in October—meaning anyone can now use the platform.
"This year, decentralized social moved from alpha to beta, with both Lens and Farcaster entering a more open and scalable phase. This will make 2024 a year to understand what users actually want, as we move beyond whitelists and strict quotas," said Joonatan Lintala, CEO of Phaver, a social media platform built on Lens.
"In a way, it's unfortunate it took this long to get here, but bear markets are for building, so the timing should actually be good. Now it's up to Phaver and other application-layer projects to figure out how to put these tools to good use and truly add value for users—including those outside the crypto bubble," he added.
While Lens has not yet fully opened its doors, it made significant strides this year. In April, it launched Momoka, enabling it to offload large amounts of data storage from the Polygon blockchain on which it operates. This move aimed to enhance scalability. In July, it launched version two of the protocol, offering expanded functionality.
Despite these improvements, Lens still lags behind Farcaster in adoption, partly because Farcaster opened completely. According to a November report from The Block Pro, Lens has 126,000 profiles compared to Farcaster’s 196,000 registered IDs.
Daily user count on Farcaster increases rapidly. Image: Block Pro/Dune Analytics.
"Farcaster is known for attracting users seeking high-quality discourse and community-oriented environments. In contrast, despite Lens offering rich features for creators, current interaction and engagement levels remain relatively low," noted The Block Pro researcher Brad Kay.
Social finance rises swiftly, then fades
While decentralized social platforms expanded gradually, social finance platforms emerged and surged rapidly.
FriendTech was the original app blending financial engineering with social interaction. It offered a space where users could buy keys granting access to private chat groups hosted by influencers. Key prices sit on a bonding curve, meaning the more keys are bought, the higher the price climbs. And who benefits? A 10% fee is charged on every transaction, shared between the platform founders and the influencers.
This financial incentive model sparked massive speculation. According to a Dune dashboard created by data analyst Crypto Koryo, since launching in August, 843,000 users have spent a total of $267 million in ETH across 12 million transactions. DefiLlama reports this has generated $59 million in fees, half of which has been distributed among its user base. Although activity has declined over recent months, $35 million in value remains locked within the platform’s smart contracts.
"The sheer scale of growth we saw at the September peak was astonishing. Likewise, without any new retail inflows and during a bear market, FriendTech managed to generate more revenue in a short period than even top DeFi protocols like Uniswap and Lido—or even the Ethereum chain itself," noted Crypto Koryo.
The activity was driven by two main themes. First, users hoped to quickly profit by buying keys and selling them at higher prices. The bonding curve mechanism meant prices could rise rapidly, offering potentially high returns—but also carrying risks of losses due to poor trades and high fees. One user named Vombatus earned nearly $2 million by accumulating his own keys and then dumping them all at once on users who had purchased shares of his key.
The second assumption was that the platform would eventually conduct an airdrop based on user activity. This idea was supported by the platform’s points system, which awarded points based on user actions, leading many to speculate these would determine eligibility for a potential airdrop. So far, no such airdrop has occurred.
"Once FriendTech went 'mainstream,' it was interesting to observe behavior across different groups. After most of 'crypto Twitter' joined, we started seeing non-crypto-native users come in—such as OnlyFans creators, musicians (including Pussy Riot), sports stars, and even Web2 media companies," added Crypto Koryo. "This reflects that monetization remains a challenge for content creators in both Web2 and Web3."
Following FriendTech’s success, other platforms emerged offering similar products. Stars Arena, based on Avalanche, was one of the most popular contenders, but struggled to regain momentum after suffering a $2.9 million exploit and internal team disputes. Other apps—like New Bitcoin City, built on the Bitcoin Layer 2 NOS—offered far more features than FriendTech, yet none managed to attract a comparable user base. These platforms now see significantly lower daily trading volumes, while FriendTech maintains its lead.
StarsArena briefly surpassed FriendTech in daily trading volume at its peak, but the trend didn’t last. Image: Dune Analytics/Crypto Koryo.
Looking ahead
Although integrating decentralization and cryptocurrency into social media has proven challenging—both technically and in creating sustainable financial models—it appears there is indeed a potential audience for such approaches.
Saurabh Deshpande, a researcher at crypto newsletter Decentralized.co, pointed out on X: "Blockchains as payment rails mean Web3 social networks can reward users globally without relying on user data exploitation or advertising."
Deshpande added that the core concept of social networks compensating users for their content does hold real value.
"We haven't achieved that goal yet, but we'll gradually get there by leveraging features like ownership, composability, permissionless access, and resistance to censorship," he said.
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