The Future of Social Media: The Rise of Decentralization Platforms

The global social media market is experiencing significant expansion, with an expected market value of $251.45 billion in 2024, a 14.8% increase compared to 2023. Approximately 62.3% of the global population uses social media, with an average daily usage time of over two hours.

Decentralization social media ( DeSoc ) offers a new perspective through innovative content monetization and online relationship management methods. It promises to improve privacy, security, and most importantly, empower creators with complete control over their data and its monetization.

Despite the fact that decentralization in social media is not a new concept, it only gained significant attention in 2023 with the development of Web3 technology. An emerging decentralized blockchain social network platform aims to tap into this market. The platform distinguishes itself from others by addressing common issues in centralized networks, such as corporate ownership of user data, limited privacy options, and the risk of content censorship.

In 2023, this platform not only achieved significant growth, but its revenue also rivaled some top protocols, providing creators the freedom to monetize their work on their own terms.

This article will delve into the platform, analyze its controversial token issuance, compare it with competitors, and assess its potential and associated risks for 2024.

Project Overview

This is a decentralized social platform built on a certain Layer2 network. It is closely integrated with a certain social platform to obtain users' Web2 identities, allowing users to potentially profit based on this identity. On this platform, each user can be tokenized, and their influence can be directly priced by the market.

It is one of the most successful Web3 dApps in SocialFi, achieving the highest income to net deposit ratio ever, with over $2 million in revenue in the first month and net deposits of $33 million.

The core of this project is based on the concept of fan economy. Users need an invitation code and to deposit a small amount of ETH to start using it, which is the main currency for in-app purchases of shares from other users. These shares represent a portion of the user's influence. After purchasing shares, buyers can start one-on-one chats with the investment targets. This setup allows users to connect directly and personally with their favorite influencers. In addition, these "keys" or "shares" that represent chat privileges can be traded, giving users the opportunity to profit from the growing popularity of content creators.

For KOLs, they can earn a 5% fee every time someone buys or sells their shares, which provides a financial incentive. To increase revenue, KOLs need to enhance their Key trading activities. An additional 5% belongs to the platform, making a total fee of 10% charged for each related transaction.

Decentralization social media protocols garnered significant attention last year but have recently experienced a decline. On-chain data shows that daily activity on the platform has significantly decreased since peaking on September 13, when 539,810 transactions were recorded. Since then, interest in the platform has noticeably diminished.

However, despite the decline and some criticism, there is still lively discussion among users about a potential revival. This excitement stems from the anticipation of an upcoming airdrop, the announcement that users will have complete control over their tokens, and the forthcoming new version, all of which have been positively received by the community.

Comparison of Old and New Versions

The old version is an innovative decentralized social platform that connects crypto influencers with their followers. By creating their own keys, users can potentially earn profits through buying and selling KOL's "keys," which has gained widespread attention for the platform. This model has been particularly popular during the bear market, helping the platform achieve significant growth in users and activities. The platform generated approximately $13 million in fees from a high trading volume of $130 million and paid users about $6 million in revenue.

However, this model has drawbacks, mainly due to the high fees involved. Since both buying and selling shares incur a 10% fee, it is difficult to make a profit unless users sell at a price significantly higher than the purchase price. This high turnover demand for profit leads to inconsistent user experiences and ultimately becomes a barrier for new users to join the platform.

The new version introduces several new features and changes. Notably, users can now earn tokens, marking an important update. However, this release has been criticized for the lack of clear information and guidance, especially regarding the use of new elements such as "Club".

Club is a major new addition in the latest version, serving as a group space owned and managed by Key holders. The club has its own governance, including voting to elect a president to manage the club and appoint moderators. All transactions within the club use a new token, with a 1.5% fee generated for each transaction. This allows for the introduction of referral fees and more flexible transaction terms among club members.

However, the implementation process and user experience are not smooth enough. Users are confused about how to claim airdrops, join clubs, or find established clubs, as the platform does not provide clear instructions or interface prompts.

Overall, the old version focused on achieving rapid growth and revenue through high fees, while the new version aims to enhance user governance and interaction through the club, but faces challenges in execution and clarity, which may affect its long-term viability.

Team Background and Investment Situation

The project was developed in August 2023 by two anonymous individuals with a controversial history in the crypto community. Community members pointed out that these developers were also involved in an unsuccessful NFT project. Further investigation revealed that one of the developers deleted several links to social media posts regarding this NFT project and had previously held an official position in a certain Discord. These findings raised concerns about their reliability and the possibility of similar issues related to the current project.

In August 2023, the project received seed funding from a well-known venture capital firm, although the amount was not disclosed, and collaborated with this venture capital company to create an online social interaction tool.

Online rumors also indicate that the project has completed its Series A financing, with a valuation of $50 million. This round of financing includes token certification, suggesting the possibility of eventually issuing their own tokens, which has indeed happened.

Controversies and Challenges

The project originated from a developer's initial practice in a certain decentralized social media project. The platform allows users to publish posts from a shared account by holding specific NFTs. Although the project achieved viral success in its early stages, it eventually faded away, leading to the closure of its main social media accounts and website.

Subsequently, the developers launched a Web3 platform with a partner, where users could mint and purchase images as NFTs, which remained hidden before purchase. However, due to the difficulties in maintaining profitability for creators, the developers eventually renamed and repositioned the project. The new project was launched in May 2023, aimed at attracting Web3 influencers and creators seeking more effective monetization of content, adopting a supply and demand-driven economic model.

However, the project initially sparked controversy due to its vague privacy and data security issues. The platform requires users to download an application without an easily accessible privacy policy. This lack of transparency raised concerns among users about how their personal data was handled, but this has since been partially addressed.

In addition, the sustainability of the platform has also faced severe criticism. Initially, the project grew rapidly due to its influencer-centric strategy, but as the initial excitement faded, doubts about its long-term viability deepened. Critics pointed out that the platform's excessive reliance on influencers is a key vulnerability. Without the active participation of key figures, the value of the platform may decline.

This is why the new version is undergoing a strategic shift, from a KOL-centric model to one that focuses more on a broader community model. Nevertheless, questions remain regarding the level of engagement of influential users and the actual value they bring when they are inactive.

The project strives to differentiate itself and retain users amid competition with multiple competitors.

On the positive side, the project now has its own token, which opens up opportunities for trading and speculation. The project has over 160,000 followers on a certain social platform and is actively promoted by some influential figures who encourage others to try the application. This promotion clearly has economic benefits for them, but it also indicates that the project has potential upside.

Currently, the project's market capitalization is $184 million, with a fully diluted valuation that matches. Compared to some other DeFi protocols or meme coins with higher valuations, the token is seen as an attractive risk-return investment by many on-chain traders, considering its profitability at a fundamental level. The involvement of well-known investors further enhances the project's credibility.

Comparison with Competitors

The project began to gain strong support by charging high fees and offering special club features, initially achieving great success. However, its popularity has declined, raising concerns about how to maintain long-term user interest. In contrast, a certain competitor does not have its own token and uses another token that is accepted by many in its ecosystem. This approach has helped the competitor build a loyal community similar to traditional internet forums, resulting in a steady increase in user numbers and daily activities.

In summary, although the project made a lot of money in its early stages, the fluctuating user numbers make its future uncertain. Competitors focusing on building a strong community with a certain token seem to be more likely to achieve lasting success. This is because it has loyal users and multiple use cases within the ecosystem. As the two platforms continue to evolve and respond to user needs, their success in the competitive SocialFi market will depend on their adaptability.

Token Economics

The token of this project is the core of the new version, serving not only as currency but also as a key to attract community participation. Its current market capitalization and fully diluted valuation is $185.26 million. A total of 92.63 million tokens were fully allocated to the community during the token generation event.

Token economics aims to encourage participation; users can earn tokens by interacting with the platform—by following ten people, they can earn 10%, while the remaining 90% requires joining a club. This ensures that token distribution supports active ecosystem participation.

Tokens can only be traded within the project's own system, which uses a local exchange feature with a 1.5% fee. This promotes liquidity and ensures that the platform benefits from fee income, but it also requires users to trust the platform's stability.

The club function is similar to a mini-government, allowing users to manage and customize their clubs, from setting names to economic parameters. This structure supports Decentralization governance, with club leaders and moderators elected by key holders, reflecting a DAO-like transparency.

Although it retains a user interface similar to the old version, the introduction of tokens and clubs adds a new level of engagement and monetization. A 1.5% fee is charged on transactions within the club, which is distributed between liquidity providers and the platform, helping to maintain the financial health of the ecosystem and reward active participants.

Bullish Factors

• After the recent airdrop and new version upgrade, there has been a surge in user adoption and activity.
• Despite having a lower market cap, especially when compared to other projects and meme coins that generate less revenue, the tokens of this project hold potential.