News from Coin World:
In the context of the soaring chaos value, it is crucial to have a clearer perception of the cyclicity and discover future narrative trends. As innovative narrative catchers, investment institutions have always been relatively advanced in terms of their insights. In view of this, OKX has specially planned a column “Crypto Evolution” to invite mainstream global crypto investment institutions to systematically output the cyclicity of the current market, the direction of the new round of narratives, and the development of segmented hot tracks, throwing a brick to attract jade.
The following is the content of the fifth issue, jointly discussed by OKX Ventures, LongHash Ventures, and ANAGRAM, about the future development of the Web3 social and consumer tracks. We hope their insights and thoughts will inspire you.
About OKX Ventures:
OKX Ventures is the investment division of OKX, a leading cryptocurrency asset trading platform and Web3 technology company, with an initial capital commitment of $100 million. It focuses on exploring the best blockchain projects worldwide, supporting cutting-edge blockchain technology innovation, promoting the healthy development of the global blockchain industry, and investing in long-term structural value. Through its commitment to entrepreneurs supporting the development of the blockchain industry, OKX Ventures helps build innovative companies and brings global resources and historical experience to blockchain projects.
About LongHash Ventures:
LongHash Ventures is a native crypto venture capital firm based in Singapore and Silicon Valley, founded in 2017. We work closely with founders to establish their Web3 models and tap into the immense potential in Asia. We invest in and work alongside visionary founders who are pioneering the next phase of open economies.
About ANAGRAM:
We are an institution focused on technological innovation. We are committed to helping innovators bring ownership economics to the public through human and financial capital.
1. How does the current development of SocialFi differ from the previous one?
OKX Ventures Researcher:
This round of SocialFi focuses on Memecoin trading and the development of casual games based on high distribution protocols (such as TON), paying more attention to consumer and creator tools than the previous NFT cycle. Many major brands (such as LVMH, Nike, etc.) have tried to test relevant narratives in the crypto field but ultimately failed to adapt to the hyper-financial culture of the crypto community. In the success of Memecoin trading and dApps like Polymarket, which is similar to a “gambling-type dApp,” we see that these crypto dApps that cater to hyper-financial applications can indeed achieve positive results. Other trends include:
1. From content monetization to social monetization
Early social projects, such as Steemit and Mirror, relied on incentivizing content production, but it was difficult to control the quality, resulting in the proliferation of low-quality content. In this round, friend.tech has brought new experiments – monetizing social relationships, making each user a “Key” asset and building a new form of asset through social identity, making everyone a potential investment target. Pump.fun continues Friend.tech’s innovative thinking in liquidity, further promoting the narrative of low-liquidity AMM models, and effectively connecting the liquidity conversion path between DEX and CEX for on-chain assets. Compared to Friend.tech, Pump.fun focuses more on combining liquidity models with social interactions, deeply integrating asset liquidity with social activities. The innovative model of UXLINK is through its Link to Earn model – users contribute their social network data to earn rewards, solving the shortcomings of relying solely on content production, emphasizing the value transformation of social relationships, and avoiding the drawbacks of short-term financial incentives.
2. Balancing decentralization and financialization
Projects are more flexible in terms of decentralization. Social platforms like Farcaster, while emphasizing users’ digital ownership of social relationships and content control, are not completely decentralized. Its highlight lies in allowing users to control their social data and reserving experimental space for future on-chain operations, with a focus on community-driven and community culture-driven innovations. TON+Telegram, on the other hand, focuses on a more practical Web2.5 approach, providing users with convenient access through embedded programs such as mini-games, integrating financial operations into daily social interactions, and enhancing the financial attributes of social identities; gradually introducing on-chain activities, reducing the transition costs to Web3 while leveraging the existing platform to enhance user trust and experience.
In addition, there is a trend of transferring intellectual property (IP) to the blockchain. The increasing amount of user-generated content (UGC) and AI-generated content is the driving force behind this trend.
LongHash Ventures (Emma Cui):
In this cycle, the infrastructure is ready to support mass adoption.
First, scalability: Rollups, Alt L1s, and data availability layers have reduced the cost of on-chain activities to a few cents or even lower. More innovative rollups (such as zkSync) further optimize the cost through state differences and aggregate data.
Second, interoperability: Chain abstractions and intent-based protocols allow on-chain assets and credentials to be easily identified or used on any chain. For example, to send a tip on SocialFi, Particle Network can seamlessly aggregate assets across multiple chains and send them in one step.
Third, account user experience: Account abstractions, MPC, passwords, and social logins allow users to interact with Web3 without managing private keys and gas fees. Today, the Safe protocol protects billions of dollars in assets, with a peak value of $120 billion, equivalent to traditional banks. With account abstractions, users can log into SocialFi applications using session keys and authorize multiple on-chain interactions without logging in to their wallets every time.
ANAGRAM (David Shuttleworth):
The SocialFi field has undergone significant changes compared to the previous cycle, especially in terms of the number of original experiments and new mechanism designs. In the previous cycle, builders usually focused on replacing existing legacy systems, such as the launch of Lens as a decentralized version of X, and Farcaster followed a similar path. However, in this cycle, many projects (such as Lens and Farcaster) not only stop at replacing existing structures but also start implementing more attractive features, such as Farcaster’s Frames.
This is largely due to the progress in underlying blockchain technology. Lens leverages ZKsync to launch the Lens network, enhancing its ability to change the operation of social networks. Rollups on Ethereum allow the network and its built protocols to scale more efficiently, handling millions of transactions. This technology was almost unavailable in the previous cycle and is now being fully explored. In addition, features like Farcaster Frames allow users to seamlessly interact with multiple applications running on the Farcaster source and enable developers to distribute applications in a “one-click” manner. These innovations and user experiences did not exist in the previous cycle.
To expand the scope of applications, Solana recently launched Actions and Blinks, connecting Solana to the entire internet, allowing users to perform various actions (such as swaps and payments) on any website or application (such as X and Reddit). These new primitives transform on-chain operations into shareable links, opening up more design space than in the previous cycle.
Another interesting area of innovation is the fusion of social and speculation. Friend.tech and Fantasy.top are two major examples that combine social elements with user interaction, allowing users to speculate on various parameters, such as the popularity of posts on X. Friend.tech allows users to profit from the community and trade “keys” that unlock different features within the app, while Fantasy.top allows users to collect and trade NFTs related to certain crypto personalities on X. Although many well-known projects are struggling to maintain user activity, these new experiments that did not appear in the previous cycle provide useful guidance for future development.
2. What is the current development status of Consumer Apps? Where is the convergence point with social?
OKX Ventures Researcher:
The market is transitioning from a traditional model centered on “trust” to a smart contract model centered on “contract execution.” The application track is no longer just a playground for whales but is tilting towards a broader user base. Users not only want platforms for “quick money-making” but also expect consumer applications that meet their daily needs. The complexity of past blockchain operations and difficult user interfaces are being simplified, and developers realize that users do not need to understand blockchain technology but only need a smooth user experience.
Progressive Web Apps (PWA) are becoming a new distribution method for crypto applications, providing a seamless experience similar to Web2 and avoiding the 30% transaction fees of traditional app stores. In terms of payments, the crypto payment experience is gradually becoming mainstream, such as the collaboration between Venmo, PayPal, and ENS, EtherFi launching its own credit card and being compatible with Apple Pay, etc. The development of native Web3 devices, such as Saga on Solana and the launch of Seeker, further improves the user experience with convenient features like double-clicking for crypto payments and built-in seed libraries, making them mobile wallets and enhancing user experience through built-in distribution. The combination of hardware, payments, and distribution solves the complexity of operations and accelerates user participation in the network and the transition of crypto applications to the mainstream market.
Both entertainment and financial applications will eventually enter the financialization track. Once ownership (such as NFTs or tokens) is introduced, the financial attributes of the application immediately become apparent. Entertainment-oriented financialized applications like mini-games and memecoins attract mass participation through speculation, while serious DeFi applications focusing on investment and wealth management are concerned with asset appreciation and preservation.
The convergence of consumer and social is not just about “buying and selling crypto assets on social platforms.” Many crypto applications are centered around social elements, as exemplified by Polymarket and Pump.fun, showing the power of communities and social interactions. Social elements can bind users to the platform because people naturally enjoy interaction and sharing, expressing their thoughts on specific events.
Imagine that memecoins are no longer just speculative assets but can be the news itself, representing social elements and social dynamics. People can bet or interact with memes around specific events or topics, which is also crucial in DeFi. In the past, many DeFi applications relied on the trading volume of whales to attract users. Now, applications with social features are relying on user interactions and the power of communities to drive liquidity and engagement.
Successful applications must incorporate social elements, not just social media platforms, but also capture user interactions through the frontend to build network effects. The reason is simple: you need users to enter your frontend to generate revenue. Without a frontend, competitors of Uniswap can directly take away users by utilizing their protocols. User familiarity, interaction habits, and dependencies are the moat of applications. The user network of the frontend is the core that drives everything – just as financial liquidity is crucial for launching protocols, user liquidity is equally important for launching applications.
The composability of crypto means that smart contracts can be invoked from anywhere, making protocols scalable and interoperable. This flexibility allows embedded applications to interact directly with on-chain features, such as prediction markets appearing directly where people discuss news; SocialFi mini-apps allowing users to stake tokens, follow trades, or purchase fan tokens; and governance mini-apps allowing members to brainstorm, collaborate, and vote – all of which are made possible by the underlying “proxy frontend.” On-chain financial transactions can be integrated into familiar social structures, making them interesting and interactive – sending messages to other traders on DEX, competing with friends’ portfolios, and so on.
The adoption path of consumer applications mainly has two approaches: optimizing existing products and creating new demands. The first approach improves the user experience to make the product better than other choices in the market, involving utilizing underlying technology for marginal improvements and changing community behavior and experience through tokens. The latter focuses on discovering unmet user needs and opening up new market spaces, which is the direction chosen by many Web2 products, such as Twitter redefining the social media space from the beginning. Although the latter has higher Alpha potential, the former is equally essential. If users today have to go through long waits and tedious processes when using an app, such an environment cannot give birth to applications with new demands like Twitter.
On the other hand, mortgage and lending products can develop based on existing needs.
(Note: This translation is provided for reference only. The original news article is in Chinese.)
