4. Token FAV: Background

First, let’s look at the most common problems among Web 2.0 content providers.

Excessive advertising

Increasing profits as platforms gradually increase the number of ads that the average user encounters. For example, since 2021 Youtube has introduced the practice of adding advertisements in videos whose authors do not even participate in the affiliate program of the service. This is a highly evident example: the service has not only increased the advertising load, but also automatically involved content creators in this activity. In addition to increasing advertising revenue, this reform attracts users to buy a YouTube Premium subscription.

Abuse of personal data collection and misuse of personal data

Over time, companies have started collecting more user data and exploiting it to the detriment of those they make money from. Two developments have led to this:

• Improving personal data collection techniques

• The rise in the value of personal data and its importance in marketing strategies;

The Cambridge Analytica scandal regarding the use of Facebook users’ data has revealed its activities to the public, but it has had hardly any consequences on the platform.

WhatsApp, the Facebook-owned messenger service, was fined $270 million in September 2021 for EU data personal data violations. Earlier, Google and YouTube were forced to pay $200 million for the illegal use of children’s personal data.

Low wages for content creators

Most content creators on the previous generation of social platforms earn next to nothing.

Opportunities for monetization are open only to those who have already invested significant time and money in content creation. For example, in order to enter YouTube’s affiliate program, the creator of a channel must acquire 1,000 subscribers and have 4,000 hours of views in the previous year.

On average, for every 1,000 views, a video creator gets $3 to $5. Thus, content creators on YouTube are in an unfavorable position — the platform wins — and the creators receive around a third of all revenue from the AdSense system.

1% of influencers receive a significant income, while the majority are destined for the role of content consumers who sacrifice their time and efforts for a platform that doesn't care about them.

Thus, on Web2.0 platforms, the user is likely to lose out. They provide their personal data, help the platform and a small circle of professionals earn money while having almost no chance to enter this circle.

Censorship of centralized platforms: accounts snatched away and search results skewed

Web2.0 platforms, pursuing their economic interests, are willing to violate the rights of users up to the termination of their accounts that brought income and popularity.

For example, five days after Facebook rebranded to Meta, an Instagram account using the name “Metaverse” was blocked without any notification of wrongdoing. The Australian artist had been posting her work there for 10 years.

Only after the scandal was raised with the New York Times did the platform apologize for the incident, admitting that the account had been mistakenly deleted because its owner was allegedly “impersonating someone else” — Instagram disabled artist’s @metaverse handle after Facebook rebranded to Meta Facebook also periodically removes publications related to political confrontations in Kashmir, Hong Kong, and Kurdistan, providing its viewers with a one-sided account of reality.

Google’s censorship led some search results to become ungoogleable in some languages as early as 2013, prompting harsh criticism from the platform.

Answering for the Web 3.0 era: How platforms learn to share with users

The Web 3.0 model, rising from unfair and destructive patterns for creatives, bridges play-to-earn and decentralized social media concepts to overhaul the existing conditions. The popularity of nonfungible tokens (NFTs) as transparent, decentralized and freely transferable certificates of ownership also plays an important role.

Gamification

The need for improved user experience is a central goal of new applications and services in Web 3.0. Gamification provides a different approach to content, rewards and user retention.

Social media in the Web 3.0 age: From karma monetization to utility tokens

Social networks tend to be decentralized in nature. Unlike, for example, news sites, blogging platforms and exchanges, their users interact more with each other than with the platform itself.

At the same time, the potential of decentralized monetization and user motivation mechanisms has yet to be fully realized by any mainstream service.

Cryptocurrency experiments of social platforms of the past

The most technically advanced integration with the cryptocurrency system is being developed by the legendary American platform Reddit. Since July 2021, the team has been testing its own solution to turn Karma (the platform’s score) into cryptocurrency tokens based on Arbitrum, an advanced layer-two (L2) solution for scaling the Ethereum network.

Since the beginning of November 2021, subscriber points, or Karma, of two subreddits, r/cryptocurrency and r/FortNiteBR, have already been released as Rinkeby testnet tokens. In addition, Reddit is preparing to launch its own NFT platform, claiming to be ready to create the largest “creator economic system” in the industry.

Finally, Reddit is not limiting itself to Ethereum and Ethereum-based solutions: its founder, Alexis Ohanian, together with Solana Ventures, launched a $100 million fund to support decentralized social media networks on the Solana blockchain.

The microblogging service Twitter, whose founder Jack Dorsey is a consistent follower of cryptocurrencies and blockchain, took a somewhat different path. Twitter began integrating the tip function into a variety of payment systems, including Bitcoin. The tips pass through the Strike service via the Lightning Network, the most well-known solution for scaling the Bitcoin network based on payment channels. This makes transfers inexpensive and fast, which is especially important for microtransactions. Later, he became a board director of a web3 Twitter project called The BlueSky Social which is in closed beta now.

Rethinking social media: The ideology and practice of Web 3.0

In 2022-2023, among a wave of interest in DeFi protocols and NFTs, many sites revisited the idea of a fully decentralized social network. One of the most prominent examples is the Decentralized Social (DeSo) project from the creator of the odious BitClout platform, Nadir Al Naji.

DeSo and its DESO token are a specialized blockchain for various services in one way or another related to social networks. The DeSo ecosystem will include an NFT marketplace with “social” tokens and voice chat service Clubrooms, among others. The project managed to raise $200 million from key investors in the cryptocurrency sphere such as Andreessen Horowitz (a16z), Sequoia, Social Capital and dozens of others.

Nader Al-Hadji himself also invests in similar projects. For example, the social network Yup implements mechanisms to reward users for searching and recommending content from the platforms Twitter, Youtube, Opensea and Mirror. Since its launch, Yup has already paid out over $1.6 million to its users, has raised $3.5 million from Distributed Global and many notable angel investors.

Services with deep integration of NFTs (DoinGud, RCRDSHP, Olyseum) and play-to-earn services (NETVRK, Minds, Solcial, DeFi Land) are of particular interest to users and investors.