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Key Metrics for Analyzing Decentralized Social Media - Part 2
Growth, Performance & Reputation: A Detailed Examination of Friend.Tech, Farcaster, and Lens Protocol's Strategies
Hi! My name is Kevin Wang. During the day, I devote my time and energy to my role as a product manager. However, when night falls, I am the mastermind behind tulsk.io. My mission is to assist you in delving into the world of startups, with a special emphasis on user experience, product management, and personal growth strategies that can elevate your upcoming business. My goal is to provide insights and guidance to entrepreneurs as they traverse the early stages of their business journeys.
Growth and User Engagement:
Friend.Tech demonstrated solid growth within a relatively short period, making it worth closely monitoring.
Share mechanisms reflect an awareness of the importance of creating quality interactions.
Quality Focus and Balancing Performance:
Farcaster's approach reflects a lesson in prioritizing quality growth over mere scale.
Combination of on-chain and off-chain systems demonstrates a smart strategy to balance performance and consistency
Community Building and Reputation:
Lens Protocol, despite stable transaction rates post-V2, remains positively received within its user community.
The positive vibes around Lens Protocol underline how essential it is to build and sustain a strong community reputation, regardless of transaction growth.
We're moving from a world where people mainly consume content to one where they're making it too! This change is all about the overflow of information and everyone's hunger for attention and interaction.
"The new scarce resource is not stuff, it's not desire, it's engagement." - Paul Saffo
Goldman Sachs Research predicts the creator economy could approach half a trillion dollars by 2027
Think about this: social media and other platforms persistently compete for our attention, urging us to invest more time in them. They profit from the "attention economy" - the theory whereby increased time spent equates to higher earnings.
But, there are hitches:
Clever algorithms focus more on keeping us glued than on fostering authentic connections.
Creators who generate engaging content don't receive additional compensation, even though they boost the platform's popularity.
We don't exactly "own" our social networks online - it feels like we're just leaseholders under the tech magnates.
Why Decentralized Social Media Matters?
As we journey through the Web3 cosmos, it becomes apparent that digital wallets are morphing into pillars of identity.
They offer a safe haven for managing data, engaging with communities, and fortifying trust across a multitude of blockchains.
Even though we're still in the early stages, dealing with challenges in user adoption and competition with established networks, the potential is immense.
Decentralized social media presents itself as a territory rich with opportunities, nurturing unique linkages and cementing trust between businesses and users.
Here is how it can address user needs.:
Autonomy: Users enjoy more control on decentralized social media.
Transparency: Decentralized platforms use blockchain for enhanced trust and transparency.
Tokenize Engagement: Tokenizing engagement on decentralized platforms adds value to business interactions.
Content Ownership: Full content ownership and monetization control are features of decentralized platforms.
Product and Business Metrics
We're about to explore some fascinating decentralized social media platforms one should keep tabs on. For every platform, I will offer:
a brief introduction
explain how it operates
present critical business metrics
Now, let's get to the specifics:
Friend.Tech - Innovative Fan Economy Frontier
Friend.Tech is a decentralized social media platform aiming to transform content engagement and interaction with influencers. It attracts crypto enthusiasts and stands out for its transparency, recording every transaction on the blockchain.
Unlike the similar but less transparent BitClout, Friend.Tech is a paradigm shift, aggregating high-quality information. A mysterious individual named Racer, known for leveraging advanced technologies, is believed to be the mastermind behind it.
How does Friend.Tech work?
Individual share prices act as a barometer, reflecting each user's value based on contribution quality.
More shares lead to a higher price per share in ETH, calculated using the formula: (number of shares)² / 16000.
Examples as below:
So, if there are 200 shares of someone (like Cobie for example), the price of each share, according to the equation given, would be calculated as follows:
We would insert the number of shares into the formula, so it would look like this: (200²) / 16,000. That means we take 200 and multiply it by itself (which equals 40,000), and then divide that result by 16,000. When you do that, the price per share comes out to be 2.5 ETH.
Now, let's take another example where number of shares are 500. Plugging in 500 into the formula gives us (500²) / 16,000, which simplifies to (250,000 / 16,000). This results in a price per share of 15.625 ETH.
In both examples, as the number of shares increased, the price of each share also increased, which is in line with the mechanisms by which Friend.Tech operates.
Friend.Tech has quickly attracted around 240,000 unique subjects, showing a steady increase with some daily variations. The platform's growing engagement highlights its rising popularity.
With purchases approximating nearly 95,333 ETH (around $156.5 million USD) and sales close to 71,466 ETH (roughly $117.6 million USD), Friend.Tech demonstrates a robust market with a diverse user base actively engaged in buying and selling.
The platform also boasts robust trading activity, with nearly 240,000 unique buyers and over 134,000 sellers.
2. Transaction Volume
Friend.Tech has earned around $13.8 million in protocol fees, showcasing its activity. With over 7 million transactions, it indicates significant user engagement. A substantial inflow of approximately $270.5 million further underscores the platform's financial strength and the high volume of assets it handles.
Friend.Tech exhibits varied daily transaction activity, averaging around 160,000 transactions, and ranging from about 18,000 to a high of 540,000. The notable standard deviation of approximately 156,000 underscores the platform's dynamic user engagement and diverse transaction patterns.
3. Protocol Value
The platform has around $38.75 million Total Value Locked and has generated fees of roughly $1.23 million in the last 24 hours, contributing to an estimated annualized fee generation of about $252.69 million. Its recent revenue stands at nearly $613,000 in the past day, with an estimated annualized figure of around $126.35 million.
Farcaster — Sufficiently Decentralized Protocol
Built on Ethereum, Farcaster offers a sufficiently decentralized social network, a concept introduced by its team, ensuring users can communicate freely. Although it registers IDs on Ethereum, the bulk of the content is hosted on Hubs, keeping everything in sync and light by trimming down the messages.
Onchain contracts on Ethereum manage accounts and essential elements, ensuring consistency and decentralization, while offchain systems address frequent actions, prioritizing performance. Messages are stored and propagated quickly on a network of Farcaster hubs, accepting a trade-off in consistency.
Registry contracts on Optimism Mainnet include:
Id Registry, which creates fids for new accounts,
Storage Registry, which monitors each account's storage, and
Key Registry, allowing accounts to register message signers.
Farcaster aims to foster app competition, expecting superior apps to emerge from its architecture. It allows a new app to potentially gain market share by leveraging the protocol's user distribution, much like Clubhouse could have used Twitter/Instagram user bases.
Currently, Farcaster has 1.2 million total casts and 20,000 users, with 14,000 addresses connected. Every week, around 2,800 users are actively casting, and in a month, that number goes up to 5,500.
Lens — Take Ownership of Your Digital Roots
Lens Protocol, built by Aave’s team on Polygon, records key social interactions on-chain and represents profiles by NFTs. The platform, designed for modularity and competition at the app layer, stores content off-chain to save on costs, similar to Farcaster's approach.
How does Lens Protocol work?
On July 17th, 2023, Lens Protocol announced V2, featuring the following enhancements:
Open Actions: Users can perform external actions directly on Lens publications, extending the functionality and enabling the integration of different protocols and experiences.
Collective Value Share: Lens aims to improve the value sharing of artifacts traded on the platform, creating a feedback loop where everyone shares and benefits from the content and algorithms.
Upgraded Profiles: Lens has updated the profile architecture, introducing open namespaces and separating profiles from handles. This allows users to have multiple handles per profile and opens up possibilities for programmability and innovation.
New Follow Architecture: Follow relationships are now established between profiles, and tokenization is still available for preserving economic rights.
Profile Manager: Users can create a profile manager and grant different rights to different addresses and profiles, enabling better control over social actions such as posting and mirroring.
With approximately 370,000 users and close to 23 million transactions, Lens Protocol demonstrates its widespread acceptance and vibrant user engagement.
2. Transaction Volume
The activity in Lens Protocol can skyrocket to 493,060 transactions and 15,549 users in a day. Cumulatively, we're looking at a massive 22.8 million transactions
Lens Protocol also showcases varied transaction activity, with a daily average of around 46,000, a range from about 16 to nearly 493,000, and a substantial variability, marked by a standard deviation of roughly 51,000.
Friend.Tech has shown remarkable growth in a short timeframe, signifying its strong market traction.
Farcaster, with a focused approach to qualitative growth, promises long-term potential.
Lens Protocol continues to thrive with a positive community ambiance, despite not exhibiting a notable increase in transaction growth after the V2 release.
Success in the decentralized social media space is a harmonious blend of various factors – innovation, quality, growth rates, and community reputation, each narrating a unique story of their journey.
Sources & Additional Reading
@sixdegree/ Lens Protocol Ecosystem Analysis
Product Research: Web3 Social Media
Part 2: Key Metrics for Analyzing Decentralized Social Media (this post)
Part 3: Economic, Financial, and Community Growth Metrics and Conclusion 📈
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