Friend.Tech’s continued growth has drawn more and more Web3ers’ attention to the SocialFi. So, what are the pain points that SocialFi products exist to address? What are the pain points in SocialFi? What might the future of Web3 SocialFi products look like?
In this sixth conversation, we are delighted to have DeBox’s COO, FangKuai.eth, share insights about Web3 from the SocialFi perspective.
Q: It’s often said that blockchain faces an impossible triangle (decentralization, security, efficiency – these three cannot coexist). Does SocialFi have its own impossible triangle? If so, what are the three points, and how should they be resolved? If not, what is its most significant pain point currently?
A: We haven’t delved deeply into the issue of an impossible triangle in the Social domain, but there are indeed some well-known pain points in this area.
First and foremost, the most common concern is whether the SocialFi (I don’t particularly favor this term and prefer to call it D Social or the Social track) is a valid proposition given the presence of high-quality Web2 social products like Twitter, Telegram, and WeChat. So, I believe this might be a more critical challenge (or pain point) – convince people, or at least ourselves, that Social based on Web3 and Crypto is valuable and highly necessary.
Of course, I don’t think it’s an invalid proposition. Everyone’s circles are diverse; you might be a Twitter influencer, a blogger on Xiaohongshu, and someone entirely different on WeChat. Your identity is multifaceted, and you can construct a different version of yourself on each social platform – this is called identity traits. We also believe that in Web3, it’s possible to build a new kind of social relationship that’s connected to the real world, based on cryptographic principles or consensus. For example, in your circle of friends, everyone believes in blockchain and crypto, but this social relationship might not overlap with the people on your WeChat. It’s possible to create a completely new social relationship based on cryptographic ideas.
The second pain point is the difficulty of migrating social relationships. This is a common issue, and even many VCs have the same question – why should people transfer their social relationships to another platform if they’re already on Twitter or WeChat? Regarding this, I believe the recent success of Friend.Tech has provided some insights or answers to this question.
Apart from that, let’s talk specifically about why I’m very optimistic about the intersection of social and finance. Leaving aside some inherent issues in blockchain, such as efficiency and transaction fees, the combination of social and finance is very close and necessary. We are currently at a crucial juncture.
If we look back at Web2, WeChat Pay managed to achieve in one Spring Festival what Alipay took eight years to achieve in terms of adoption. The same phenomenon may very well repeat itself in Web3 because social applications are high-frequency (as StepN, for example, now labels itself as a social game, emphasizing its high-frequency nature). In contrast, DeFi is low-frequency. I consider myself a deep DeFi user, and even I check my portfolio at most once or twice a day. I might not even make transactions for a couple of weeks or a month. But with social, you’re likely to check it multiple times a day and spend a lot of time on it.
We have a substantial number of engaged users, some of whom spend seven to eight hours immersed in the app every day. As long as we have user time and attention as a resource, incorporating financial features (such as swaps, staking, and payments) into the app is sure to attract users, as it operates in a high-frequency context. According to the traditional internet adoption model, out of 1,000 users, 50 to 100 will use it, which is a completely different concept from traditional DeFi on the web. Traditional DeFi is low-frequency and high-dimensional because it emphasizes security and TVL, while social-based finance is high-frequency, with users engaging multiple times a day (e.g., sending token red packets, even if the amounts are small but the frequency is high). The Social track could bring about a different financial scenario, which is one of the reasons why we believe it will undoubtedly succeed.”
Q: How do you view the recent phenomenon of Friend.Tech, and what adjustments and plans do you think Friend.Tech needs to make for long-term survival?
A: First, I think this is a fantastic question, and I believe that we, including NFTGo, are all excellent projects. We share mutual respect as creators, and I genuinely hope that Friend.Tech can succeed. However, it’s challenging to provide a specific suggestion or response to this question because, to be honest, it’s a very tough question. I don’t know when Friend.Tech will succeed or under what circumstances it might fail. But I can share some areas where we think Friend.Tech has done well and where there are lessons to be learned.
First, I believe Friend.Tech has broken a common misconception known as Mass Adoption. We often hear the term Mass Adoption. How well is your product reaching the masses? How do you attract a broader audience? Friend.Tech has taken a different approach by narrowing down its user base.
In reality, Friend.Tech has a very specific user profile. First, you must be a Twitter user; without Twitter, you can’t even register. Second, you must be a Crypto user, which immediately shrinks the potential user pool by 99%. You need to understand cryptocurrency to use Friend.Tech.
Third, you need to be a user of the Base chain, which has a smaller user base compared to other chains. Therefore, in terms of user demographics, it has exponentially decreased the potential audience. This shows that it stands in complete contrast to the idea of Mass Adoption and aims to serve a very small, elite group of users.
What are the characteristics of social products? They typically involve users inviting one another. Friend.Tech, along with DeBox, is likely one of the very few products on the market right now with truly active users. This suggests that revolutionary social products might not experience explosive growth like Web2 did but could initially gain popularity within a niche group of geeks before extending outward.
However, regarding how to expand and whether this expansion will be successful, I believe Racer thinks about it every day, but it’s challenging to provide a short-term answer. Why? Let’s look at how Clubhouse became popular. Initially, it had a very exclusive circle with people like Elon Musk. But later on, many ordinary individuals joined Clubhouse, and the content started to deviate. Channels for learning to bark like a dog or mimic frog sounds began to appear, and many people felt that Clubhouse had turned into a trashy platform, resulting in a loss of users.
I think Friend.Tech has some valuable demonstrations. Firstly, it didn’t follow the Mass Adoption path but instead took a unique approach. Secondly, it debunked another misconception – previously, people might have been reluctant to mention making money, but Friend.Tech immediately introduced a feature where users could buy and sell, and there’s a substantial 10% transaction fee. This is quite rare. It highlights one of the most significant advantages of Crypto – not just efficiency but its proximity to finance and assets. Friend.Tech maximizes the benefits of trading, allowing users to start trading as soon as they enter the platform, something that WeChat or Twitter cannot do. This is the most significant advantage of Web3 native social products – we are very close to the asset side.
So, I believe that Friend.Tech has done well in these two aspects, making it a extraordinary product. However, what lies ahead is challenging to predict, but I genuinely hope it succeeds.
Q: What were the pain points that DeBox aimed to address when it was initially launched? What is the future development plan and vision for DeBox?
A: First, let’s talk about why we created DeBox. It revolves around two core aspects within the crypto community. The first is information aggregation, much like Uniswap aggregates liquidity; we aggregate information, providing a space for information aggregation.
Currently, there are numerous decentralized token communities, such as Mfers (which is also my avatar). Some of these communities may not even have an official project team, or the project team may have abandoned it, and these communities are entirely self-organized, even down to the level of WeChat groups. This means that these user groups are highly dispersed. For instance, I knew a holder who bought Mfers and asked me where the official group was. I had to tell him there was no official group; instead, there were WeChat groups. This left him puzzled – such a fantastic IP, why are the users so scattered?
This story highlights the fact that information in the crypto world is very fragmented. What we hope to do is, much like UniSwap, pool all these tokens into one place. We call it aggregating social liquidity. This means that you no longer need to search through various channels to find different communities. If you’re a holder, you can join this group; if you sell, you may leave. This is very user-friendly for new project teams because operating a Discord or other community can be costly. You have to hire a lot of moderators to manage channels and handle tickets. In our DeBox groups, moderators are elected by the users themselves. Even if you’re an independent artist, you might choose DeBox because it’s very lightweight and user-friendly, similar to WeChat, and moderators can be elected by the community itself. This virtually eliminates the cost for independent artists or startups. This is what I mean by aggregating social liquidity.
The second aspect is providing a trading environment, combining information with transactions. What does trading mean? For instance, if I discover a token, typically, I’d first come across this information in a WeChat or Twitter group, then I’d have to search for its contract, copy and paste it, or buy/sell. In DeBox, since transactions can be sent to groups, if I buy a token like “Potato Token,” I can directly forward this transaction to the group or post it in my activity feed for others to see. People can click and buy directly, and this action comes with a fee-sharing mechanism (this is what we call the concept of Social Rebate). If someone buys 1,000 U of a token through your shared link, you might receive a 50% fee-sharing. This incentivizes users to share high-quality transactions or early-stage Alpha information.
This is similar to the logic behind exchange rebates, with the only difference being that we are decentralized. Exchanges are often opaque about how they share rebates, but every 50% rebate on DeBox is executed through a smart contract on the blockchain. Even if DeBox were to disappear, this Social Rebating contract would continue to function. We hope that more innovative collections will leverage this concept to create exciting developments in the future.
Q: How does BitPastor view the next stage of the NFT market, how long it might take for the next bull market to arrive, and what factors are necessary for its emergence?
A: This is actually a topic I’ve been closely following, and it’s something that DeBox, among others, is eagerly anticipating – the arrival of the next NFT bull market. Based on our own predictions, we believe that the next NFT bull market is likely to have some differences in structure compared to the previous one.
The last bull market, essentially, was ushered in by YugaLabs, and it lasted for an extended period of two and a half years. YugaLabs is characterized by being a large institution that secured substantial funding from various venture capitalists, investing in collections such as Doodles and Azuki. In essence, the previous bull market revolved around a specific centralized entity. Conversely, independent artists and niche communities that launched collections without institutional IP backing were largely overlooked and struggled to gain attention or traction.
However, we believe that the next NFT bull market is likely to be centered around independent artists or very small-scale project teams. These project teams might consist of only two or three individuals and won’t be as massive as YugaLabs.
This prediction is based on past trends in ICOs and IEOs. What were the characteristics of those trends? In both cases, institutions were involved in coin launches. At the time, well-known figures like ‘Mars Colonists’ and ‘Xue Manzi’ first assembled a team before launching an ICO. However, since the emergence of UniSwap, this pattern has largely disappeared. Trends change rapidly. For instance, if there’s a trend today, like ‘iphone15,’ someone in a community might quickly start a project to create an ‘iphone15’ token and list it on UniSwap, then promote it on Twitter.
This situation is similar to what occurred in 2021, following the smaller bull market after the ‘People’ incident. At that time, there was a surge in collections and tokens created by independent, small teams. This is quite distinct from the ICO trend of 2017, where you had to create a whitepaper and an official website. Nowadays, these elements are no longer necessary. We believe that in the next NFT bull market, many community members will embark on entrepreneurial projects using various Launchpad platforms, even though only a minority of them will prove as valuable as ‘People.’
In summary, we believe that it’s less likely that institutions will dominate the market in the next bull market, as there may be a sense of fatigue regarding institutionalized IP. Furthermore, these institutions have already performed quite well, and it will be challenging to outperform them. What lies ahead is more about harnessing the power of the masses, with a combination of substantial numbers, entertainment value, and wealth-building opportunities.
Q: The emergence of ChatGPT has had a significant impact on the way people retrieve information. How do you think ChatGPT will influence Web3 and people’s ‘social ways’?
A: I believe this is a particularly profound question, and I’ve actually been working on a research report in this area. We think that it’s not just limited to ChatGPT but this kind of generative language model, and it is likely to be most beneficial for the AI and Web3 communities. We believe that at its core, it’s a language or translation issue. To give an example, you may be familiar with the story of the Tower of Babel, which tells of how God, to prevent people from uniting to achieve a common goal, scattered them and gave them different languages, making it impossible to build the Tower of Babel. Just like today, if you go to Japan, you need to learn Japanese, and if you go to Thailand, you need to learn Thai. English is a more universal language. This means that many entrepreneurial teams are confined by their geographical settings.
There’s a joke that if you raise $3 million in North America, you might spend it in six months, but in China, it might last for two years, and in Southeast Asia, five years. We believe that generative language models could potentially change this pattern, bridging the language barrier between people. Of course, this also depends on the improvement in GPU computing power because everything might require real-time translation. You wouldn’t need to learn a new language; this means that entrepreneurs in North America or in Southeast Asia and the mainland may find themselves starting from the same line. It may no longer be about the origins of the entrepreneurial teams but more about the product, and you wouldn’t have to worry about where your user base is from. Because the content you produce can be customized based on the user, unlike now when, for example, a Chinese-speaking team targeting overseas markets may still encounter language barriers.
Therefore, I think this is a significant advantage for Web3 entrepreneurial teams and user communities.
Q: Lastly, a question that many are concerned about. Do you believe there are opportunities for bargain hunting in the current market? Are there any promising niches worth investing in?
A: Actually, I’ve always been cautious about making predictions regarding bargain hunting, but I’d like to offer some insights from a peripheral perspective. First, NFTs have only been through one bull-bear cycle, so we can’t rely on historical trends to determine which NFTs have the potential to withstand market fluctuations. However, there is a relatively strong consensus on the Token track. For instance, Bitcoin is unlikely to die because its demise would essentially mean the end of the entire cryptocurrency space. Ethereum is also unlikely to fade away because its downfall could impact the entire public blockchain sector.
Regarding niches worth investing in, I’m still very bullish on the NFT and Social tracks, particularly the synergy between these two tracks, or the fact that they are inherently complementary. First, we can observe that very few individuals have achieved enormous wealth through NFTs, like Bored Ape Yacht Club and CryptoPunks, but people continue to be enthused by these because they have found a like-minded community through common NFT ownership. They share similar aesthetics and industry perspectives, and NFTs have enabled them to find a circle of like-minded individuals.
The same principle applies to social platforms because social interaction is about building relationships.
Epilogue
A big thank you to FangKuai.eth , and we hope that every Web3er can showcase their uniqueness in the Web3 SocialFi field.
We look forward to seeing what’s next for them and how their plans unfold in the years ahead. Stay tuned for our next engaging conversation with another prominent Web3 leader.