The Rise of Web 3.0 Social Platforms: Transforming Connections and Empowering Users
Social media platforms have become integral parts of people’s lives, facilitating communication, content creation, and community building. Currently, social media is used by over 4.65 billion individuals globally, accounting for approximately 58.7% of the total global population according to WeAreSocial (1). Web2 social media companies offer a convenient platform for individuals to connect with their loved ones and tap into a vast user network, resulting in substantial profitability. As an illustration, Meta, a prominent player in the social media landscape, boasts an extensive user base of nearly 30 billion and achieved a net income of US$39.3 billion in 2021, with a net profit margin of approximately 33.38% (2).
With the emergence of Web 3.0 technologies such as decentralized networks, smart contracts, and blockchain, a new era of social media is unfolding. Web 3.0 aims to provide users with greater control over their data, enhanced privacy, and decentralized governance.
The emergence of blockchain technology and its integration with social media platforms is poised to revolutionize the way we engage, share, and connect online. In this article, we delve into the exciting potential of blockchain implementation in social media and explore how it can fundamentally transform the landscape of social interactions.
Synergies and Opportunities
Decentralized Social Media Platforms:
Blockchain-based social media platforms offer a decentralized alternative to traditional models, where users have greater control over their data, privacy, and digital identities. These platforms utilize the transparency and immutability of blockchain to create trust and empower users. Projects like Steemit and Minds are pioneering this space, enabling users to earn rewards for their contributions and participate in community-driven governance. Venture capital firms have an opportunity to invest in these platforms, supporting their growth and promoting a more inclusive and user-centric social media ecosystem.
Tokenized Social Platforms:
Blockchain integration opens up avenues for tokenized social platforms, where users can monetize their content, creations, and influence. By leveraging blockchain’s ability to tokenize assets and transactions, platforms like Brave and BitClout are reshaping the way content creators and influencers monetize their work. Users can receive tokens or digital assets as rewards, enabling them to interact directly with their audience and bypass intermediaries. Venture capital firms can seize investment opportunities in these platforms, fostering a sustainable economy built on the exchange of value and providing creators with fair compensation.
Enhanced Privacy and Security:
Privacy and security concerns have plagued traditional social media platforms. Blockchain implementation addresses these issues by offering enhanced privacy features and secure data storage. Through cryptographic algorithms, blockchain ensures the encryption and verification of user data, minimizing the risks of data breaches and identity theft. Projects like Persona and uPort are exploring decentralized identity solutions, allowing users to have greater control over their personal information. Venture capital firms can invest in these projects, contributing to the development of robust privacy and security infrastructure for the future of social media.
Web 3.0 Infrastructure for Social Media:
Investment opportunities also lie in supporting the development of Web 3.0 infrastructure for social media. Interoperability protocols like Polkadot and Cosmos facilitate seamless communication between different blockchain networks, enabling data and value transfer across platforms. Additionally, decentralized storage solutions such as IPFS and Sia provide secure and censorship-resistant storage for user-generated content. By investing in these infrastructure projects, venture capital firms contribute to the foundation of a decentralized social media ecosystem and promote interoperability between various blockchain implementations.
Considerations and Challenges
Regulatory Landscape:
In the context of blockchain implementation in social media, venture capital firms need to consider the regulatory landscape surrounding cryptocurrencies and blockchain technology. For example, projects that issue tokens or facilitate tokenized social media platforms may fall under securities regulations in certain jurisdictions. It is important for venture capital firms to work closely with legal experts to navigate these regulations, ensure compliance, and mitigate any legal risks associated with their investments. Staying informed about the evolving regulatory environment is crucial to make informed investment decisions.
An example of this is the U.S. Securities and Exchange Commission’s (SEC) scrutiny of initial coin offerings (ICOs) and token sales. The SEC has been actively enforcing securities laws in the crypto space and has issued guidelines to determine whether a token qualifies as a security. Venture capital firms investing in blockchain-based social media projects need to carefully assess compliance with these regulations to avoid potential legal implications.
b. User Adoption and Network Effects:
One of the key factors for success in social media and Web 3.0 ventures is user adoption and the creation of network effects. Investors should look for projects that have a clear strategy for attracting and retaining users on their platforms. This could include innovative features, user-friendly interfaces, and incentives for active participation. The value of a social media platform grows exponentially as more users join and engage with the network, creating a network effect that attracts even more users.
For instance, platforms like Steemit and Minds have implemented mechanisms to incentivize user adoption and engagement. Steemit rewards users with its native cryptocurrency, STEEM, for creating and curating content, while Minds provides rewards to users who engage with the platform, such as liking and sharing posts. These incentives help drive user adoption and promote the growth of the platforms.
c. Technical Challenges:
Investing in blockchain-based social media projects also involves considering the technical challenges associated with blockchain scalability, user experience, and interoperability. Scalability is a critical factor as social media platforms need to handle a large number of users and transactions. Investors should evaluate projects that have robust technical teams and scalable solutions to ensure the platform can handle increased demand and provide a seamless user experience.
Interoperability is another challenge in the blockchain space. Investing in projects that prioritize interoperability with other blockchain networks can enable seamless integration and data sharing between different social media platforms. This allows users to access and interact with content across multiple platforms, expanding the reach and impact of blockchain-based social media initiatives.
Use Cases of our Ceras Portfolio
Investing in projects that prioritize technical excellence and address these challenges can help ensure the successful implementation of blockchain technology in social media and drive the adoption of Web 3.0 principles.
Phaver:
Phaver’s unique model uses blockchain and cryptocurrency tokens and aims to reward active curators both with actual ownership in the platform so getting in early and helping Phaver grow is truly worth it. “Many are right now looking for alternatives for Twitter, and it’s a great opportunity to shift to more ethical Web3 options, but onboarding is still very restricted. Phaver helps with that by providing a “Web2.5” starting point where anyone can access and follow the Lens content and be waitlisted for their very own profile NFT.” – Joonatan Lintala, CEO, Phaver.
Use Case: Content Monetization
Phaver enables content creators to monetize their work directly through the platform. By leveraging blockchain-based tokens, such as non-fungible tokens (NFTs) or social tokens, creators can sell their digital art, music, or other forms of content to their audience. Phaver’s smart contract infrastructure ensures transparent and secure transactions, eliminating the need for intermediaries and enabling creators to receive fair compensation for their work.
Torum:
Torum is a DeFi and NFT-infused social media platform that is specially designed for cryptocurrency users. In short, Torum connects worldwide crypto addicts and enthusiasts and provides a one-stop crypto services in a scalable ecosystem.
Use Case: Social Token Economy
Once you become a member of Torum, you unlock the Mission System, which enables you to earn $XTM, Torum’s native token. By actively participating on the platform, you can complete exciting missions and earn XTM rewards. Whether you’re creating posts, gaining followers, or engaging in discussions, Torum provides a SocialFi playground for cryptocurrency enthusiasts. Invite your friends and join the platform today to embark on your “Learn to Earn” journey in the world of cryptocurrency.
Pop:
Pop Social is our latest portfolio project and AI-powered Social Gateway to Web3. The platform will play a fundamental role in the future of creativity, bridging the gap between traditional social media and the Web3 shared social experience. The Pop ecosystem will be a platform that aggregates content, entertainment, intellectual property, social media, in order to create a community-run ecosystem where users and creators can participate in a cohesive web3 social hub. In addition, it aims to decentralize the world’s creativity the same way Ethereum has decentralized the internet. Pop will redefine how we interact with one another by bringing a new approach to social media and elevate the global push towards social decentralization.
Use Case: Content Creator Ownerhip
Pop aims to change this by offering creators rewards and fast-track earning potential from day one, regardless of their audience size and maturity. With Pop tokens, creators can make from the moment they post content and develop new types of engagement with followers, such as NFT launches. More importantly, Pop is committed to offering support and rewards to the people who drive its success — the creators. The platform’s algorithms promote interesting content from small creators, ensuring that influencers with substantial follower counts don’t dominate. Creators maintain control over their content, while users can participate in the platform’s success.
Conclusion
Blockchain implementation in social media holds tremendous potential for transforming the way we interact and engage online. Through decentralized platforms, tokenization, enhanced privacy and security, and robust Web 3.0 infrastructure, blockchain technology empowers users, rewards content creators, and fosters a more transparent and user-centric social media landscape. We believe that investors have a unique opportunity to support and shape this revolution by investing in projects at the forefront of blockchain implementation in social media, driving innovation and paving the way for a decentralized, secure, and empowering future of online interactions.
The integration of social media, Web 3.0, and crypto presents a wealth of investment opportunities for venture capital firms. By investing in innovative projects that embrace user privacy, decentralization, and tokenization, venture capital firms can participate in shaping the future of social media while capitalizing on the potential of blockchain technology. Strategic investments in infrastructure, tokenized social platforms, and social token economies can unlock significant value in this evolving ecosystem, providing long-term growth potential for forward-thinking investors.
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