The Future Development of Web3 Social: Token Incentives and the Construction of Digital Economic Ecosystem

When discussing the challenges faced by decentralized social networks, we need to focus on three key issues: how to attract users from scratch, how to handle users' personal information, and how to solve the revenue problem. This article will focus on the third issue, namely how to use the Token economic model and incentive mechanisms to address the revenue problem.

Create "Killer Applications"

For Web3 social to succeed, the key lies in whether it can produce a "killer app" similar to TikTok or Instagram, providing a brand-new social experience to attract a large number of users. While it is difficult to accurately predict what the next blockbuster app will look like, we can explore two strategies: one is to add Web3 features to existing social platforms, and the other is to create a brand-new social community centered around Web3.

Enhance Existing Social Experience through Tokenization

Adding Web3 functionalities to mainstream social platforms is a relatively simple method, with the most common form being the introduction of tokenization mechanisms, such as X-to-Earn projects.

The Moons program on Reddit is a typical case. Launched in May 2020, it provides content creation and management rewards for users of the r/CryptoCurrency subreddit. Moons are ERC-20 Tokens issued on Arbitrum Nova, with the issuance volume linked to the "reputation" users earn on Reddit. Users can participate in community governance through Moons, deciding the future distribution and development direction of the Tokens.

The token economic model of Moons is also well-received. The monthly issuance decreases by 2.5%, bringing the annual inflation rate close to 1%. This means that in the long run, it will gradually become more difficult for users to obtain Moons, which is expected to increase the value of the token.

Reddit may be the most decentralized and community-governed among all mainstream social platforms, thanks to its unique "subreddit" structure. These designs make Reddit an ideal platform for experimenting with Web3 mechanisms. In addition to Moons, Reddit has also launched a community points program that allows subreddits to issue their own ERC-20 Tokens.

However, whether the simple "post to earn" mechanism can succeed in the long term remains questionable. Data shows that the income most users earn through Moons is minimal. This reveals a fundamental issue with the X-to-Earn model: actual earnings are often far lower than advertised, and heavily skewed towards a minority of users. In the long run, users may become disappointed with the meager returns, ultimately leading to the decline of the project.

Therefore, Web3 social projects should not overly emphasize the concept of "making money", but rather focus on creating novel social models that users are willing to pay for. The friend.tech project on the Base network is an interesting attempt. This project is essentially a "stock market for social media profiles", where users can buy and sell "stocks" of influencers to gain more access. This innovative social experience has generated huge trading volume in a short period of time, demonstrating the potential of tokenizing personal influence.

Although friend.tech still has shortcomings in its privacy policy, data collection practices, and other aspects, it remains an interesting experiment that transforms tokenization into a new social experience.

Build Web3 Native Social Community

Another way to create a "killer social application" for Web3 is to build from scratch, based on a unique crypto-native community and culture.

Phaver is a representative of this "Web3 native" social community. It is built on decentralized social graphs such as Lens, attracting users by integrating NFT communities, soul-bound Tokens, and other Web3 identity technologies. Phaver adopts a dual-Token model consisting of "reputation" and "points," allowing users to earn platform rewards and privileges through upgrades.

The user's "reputation" represents their credibility on the platform and can be enhanced by linking soul-bound tokens or NFTs and through daily interactions. Users earn "points" rewards based on the quality of their posts and the level of interaction, which can ultimately be exchanged for Phaver tokens. The higher the reputation, the greater the potential to earn points.

This mechanism provides an effective way to distinguish between real users and bots, and can almost be regarded as a "proof of social identity". Phaver suggests that project parties can use its "reputation system" to prevent airdrop bots and ensure that users are real humans.

However, like many Web3-native social applications, Phaver faces the main challenge of how to attract ordinary users who have no Web3 experience. Although Phaver claims to adopt a "web2.5" model that allows users to register without a Lens profile, its core experience still heavily relies on Web3 concepts, which may become a barrier to widespread adoption.

POAP is another project worth paying attention to, originating from the unique "conference culture" in the crypto space. POAP is essentially an ERC-721 Token used to digitally record proof of a user's participation in events. Since 2021, POAP has issued over 6 million NFTs and collaborated with several well-known brands. The most interesting aspect of POAP is that it can serve as a social primitive, helping users find like-minded individuals.

Events and meetings are concepts that ordinary people can understand, and it is easy to imagine various communities adopting mechanisms similar to POAP. The key lies in how to maintain the practicality of these digital proofs, whether through loyalty programs, trading opportunities, or exclusive events, ultimately achieving the launch of new types of social communities.

Conclusion

To create a "killer application" for Web3 social, the key lies in building a brand new social experience, rather than simply transferring Web2 mechanisms onto the blockchain. This new experience should be rooted in Web3 culture, such as NFT communities, asset tokenization, or crypto conference culture.

At the same time, to attract a broader user base, applications must have easily understandable use cases rather than being filled with Web3 terminology. Web3 social needs to draw on the distribution and abstraction techniques of traditional social media to achieve rapid growth.

Ultimately, a successful Web3 social platform should provide users with ample creative space. Just as TikTok cannot predict which trends will emerge on its platform, Web3 social should also unleash users' creativity rather than overly focusing on financialization and on-chain replication. Only by embracing this open design philosophy can Web3 social truly evolve into a new paradigm of mainstream social interaction.