Opinion: Anurag Arjun, co-founder of Away
On paper, SocialFi is easy. We promise to change the balance of social media’s power. People have control over how content and personal data are used and monetized. It provides users with over $20 billion in investment in the social media advertising market. This is a pie that is now almost completely devoured by giants like Meta.
Still, the SocialFi platform feels more like a digital ghost town than the bustling hub of Web2. Welcome as a breakout star in 2023, Friend.tech peaked to just 80,000 active users every day, falling below 10,000. What keeps SocialFi down? Why does it seem that Friend.tech is fading to ambiguity rather than comparable to Facebook’s advantage?
The harsh reality is that despite genuine enthusiasm from the Web3 community, decentralized social networks have largely failed to attract and maintain mainstream users. The fundamental promises of user ownership, data portability, and monetization remain compelling, but are deep structural issues of bottleneck adoption.
Technical hurdles
The blockchain infrastructure was not designed for the high-throughput, low latency demands of social networking. Social media users expect immediate results when they post photos, like comments, or when they follow a new account. This is an action that generates hundreds of millions of transactions every day across platforms such as Instagram, Tiktok, X.
Consider this: Ethereum only handles 15-20 transactions per second (TPS). Even Solana was often advertised as a high-performance chain, but it lacks around 5,000 TPS. Compare it with Tiktok’s daily 25 million video uploads or X’s daily 500 million posts. If users face a 30-second check delay and comment on posts or unstable gas prices between 10 cents and $50 during network congestion, they will become unavailable.
A hard-to-granted lesson on Web2
Meta spends $35 billion a year on research and development to improve the simplicity of the platform’s addictiveness. Tiktok’s algorithms are honeeded through a billion hours of daily user engagement, providing content that is so frictionless that 47% of users open the app as soon as they wake up. result? An interface where technology disappears behind the experience.
In contrast, most SocialFi platforms face new users with wallet pop-ups, cipher slang, and variable fees. For mainstream users, it can be confusing and intimidating. A 2023 Dappradar survey found that 92% of SocialFi users abandoned the platform within 30 days. Recruitment remains limited to crypto natives until the SocialFi application matches the frictionless experience of its Web2 counterparts, while offering its own benefits.
The problem of fragmentation
Multichain World on Web3 has split SocialFi into silos. Lens Protocol social graphs are not integrated with Farcasters. Friend.Tech’s monetization tools will not be ported to Deso. result? A fracture experience with no network effects.
Recently: Avara’s lens secures $31 million for the L2 blockchain focused on SocialFi
Consider whether a Gmail user had to pay to send an email to someone in Outlook. That is the reality of social fierce today.
To solve this, distributed identity systems like ENS and emerging standards like EAS need to send portable, configurable social graphs over the power supply. User content, followers, and reputation should benefit not only one app, but the broader ecosystem.
Dedicated infrastructure
The solution to the challenges of SocialFi adoption is not a progressive improvement on existing models, but a dedicated infrastructure explicitly designed for social applications. Just as horizontal scaling revolutionized the Web2 infrastructure, modular blockchain architectures that separate concerns such as data availability, execution, and payments create the foundation for social applications that can scale to billions of users.
The shift is already in progress. Farcaster moved from Ethereum Mainnet to Optimism’s Layer 2 Stack, prioritizing low-cost social interactions. The Lens Protocol is migrating to ZKSYNC, which uses zero knowledge proofs to scale while maintaining user privacy. CyberConnect has launched its own L1 chain, optimized for social applications. This now supports faster and cheaper interactions with embedded social graphs.
These dedicated stacks reflect how Web2 scales – separating data, execution, and storage to handle exponential growth. The Web3 version is a modular architecture. Performance rollups, distributed media storage, and identity layers such as ENS and LIT protocols.
User-centric social networking
When built on the right foundation, SocialFi can ultimately fulfill its central promise. It brings users back to the heart of a social networking experience. This means true ownership of identity and content, portable social graphs that work across the application, and fair value distributions to those who create and curate content.
This opportunity goes far beyond fixing broken things on Web2 social media. True ownership allows creators to maintain and port control audiences across the platform. With programmable money, Tiktok-esque virus trends can include instant revenue splits. Imagine the challenge of dancing where 10% of advertising revenues auto-splitting among creators.
Combining programmable money with social connections enables new interaction models. From seamless tips of quality content to automated revenue sharing for co-creation.
Early iterations of SocialFi did not provide meaningful traction beyond cryptic enthusiasts. Finally, addressing basic technical and user experience barriers, Web3 Social can provide disproportionate benefits over established platforms that Web3 alone can offer.
Opinion: Anurag Arjun, co-founder of Away.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
