Zero to One
Scaling Web3 Social Networks
We have been discussing Web3 social networks internally. A few applications are beginning to see traction. In today’s piece, we won’t go into the specifics of why it matters. We covered the key differences and a thesis for a new internet in the past here. What I want to focus on today is how Web3 native social networks can go from zero to one.
On October 11, Farcaster opened the platform to everyone. Developers could use the platform to build applications, and users could sign up without anyone’s approval. I wanted to try out what an application built on Farcaster would feel like. I downloaded Warpcast, a microblogging application like X (formerly Twitter).
The first thing is it asks you for an upfront $1 per month payment, which is used for gas. My first reaction was that this step creates friction for an average user. After all, how many paid users does X have? ~640,000 out of 330 million active users is ~0.2%. But the fee is 1/8th of X and can be considered a feature, as it helps fight bots and keep things real. The good thing about this payment is you don’t need crypto. You can pay in your local currency through the app store.
Once you get past the fee barrier, the experience is similar to Web2 counterparts (more on this later). I wanted to see how the metrics changed after Farcaster went permissionless, so I looked at the number of ID registrations and casts.
The number of users registering on Farcaster shot up after October 11, and they contributed to ~20% of the new casts (posts) on the network. Farcaster has ~191k IDs registered compared to ~125k profiles on Lens. Note that Lens is not yet permissionless, although they are soon to be releasing a new version which will be. You can see how opening access to the app has impacted daily casts on the protocol in the chart below.
A few questions stood out to me while using the app:
Why do users keep going back to X?
Why did Threads fail to retain users in the initial weeks?
Why would anyone move from X to Warpcast?
Or What can Web3 social networks do to onboard more users?
The following is a breakdown of how I believe social networks in Web3 will first imitate and then redesign incentive mechanisms on the Web.
X’s moats are network effects and incentives for creators. Network effects are straightforward. I go to X every day because the content is interesting to me. The content is interesting because the people I want to hear from are active there. The people I want to hear from are there because their incentives are aligned.
Two kinds of incentives exist for creators:
Direct, where X recently started sharing revenues with creators. In September, X paid out $20 million to its creator community.
Indirectly, as a creator, your audience is on X. When you try to move to a different application, it’s unlikely that all your audience will move there unless there’s a strong reason. It is because creators to audiences is a many-to-many relationship, not one-to-many. That is, you are not the only creator for your audience. So, your move doesn’t guarantee that your audience will move.
When Meta launched Threads, users were excited about it for one weekend. After a few days of headlines around the demise of X (then Twitter), eventually, the migration tapered off. According to Similar Web, after its launch, the DAUs plummeted from ~49 million on July 7 to 10 million on August 7. A new application fights for users’ attention with the incumbents.
It offers novelty as a hook for users. As Chris Dixon once said, come for the tool, stay for the network. Threads could not bring out one character or feature over X (and Instagram) that resonated with users and, as a result, failed to take over X in terms of the number of users.
Threads wasn’t the only competition for X. Mastodon, a decentralised social network built in 2016, started gaining traction in 2022 when Elon Musk bought Twitter. But the Mastodon UX wasn’t intuitive. The growth spurt had been a flash in the pan. When a user joins the network, they have to join a server, which is an interest-based community. Managing and growing a user’s social graph on the server is cumbersome.
When something feels like work without incentives, it is unlikely to attract a critical mass. The cost of switching from Twitter to Mastodon was too high for little gain.
Besides UX, Mastodon had an incentive problem. Servers usually have volunteer moderators who struggle to scale server capabilities due to the growth spurt. The non-profit nature of Mastodon meant that moderators had to ask for user donations. Although users foot the maintenance bill, server maintenance and moderation require time and energy, resources that are difficult to obtain for free.
Although user growth on Farcaster and other Web3 social ecosystems has been sluggish, Friend.tech (FT) offers clues for user onboarding. In over three months, FT has gained more than 800K unique subjects (users). Granted, the category differs from what platforms like Warpcast and Lenster try to achieve, but the drivers of success overlap.
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