On The Other Side ep 74 - Monetizing web3 social w/ Nir Kabessa
Primer: What is the Web3 social landscape like today? Will network effects lead to one protocol dominating the space? What about monetization opportunities in Web3 social? Let’s find out from Nir Kabessa, the Co-Founder of Yup, in this episode of On The Other Side.
Background
Learned about Bitcoin in 2014
In 2016, he discovered ethereum while at Columbia University’s campus
Became president of Columbia’s student lab focusing on blockchain tech
Did his undergraduate thesis on decentralized social networks
Have been involved with various DAOs and projects
Definition Of Web3 Social
Social that is not controlled by a centralized entity and it follows some open standards in its various forms
Bluesky is a good example of a non-crypto, Web3 social product
His definition has changed to encompass other players that are more distributed social than Web3 in particular
The Web3 Social Landscape
It’s exciting because of the amount of experimentation in the space
It’s also unfortunate because it limits the user experience
Social media is something that is network effects heavy — too much competition fragments the communities
Need to realize that Twitter is our core competitor rather than other Web3 socials
Will Network Effects Lead To One Protocol Dominating?
Sees it more at the L1 level than the social protocols being built
The EVM as a whole seems to be the kind of thing that can compete with the network effects of Web2 social
Web3 Socials are learning that there is an enormous advantage in adopting each other’s standards (e.g. Farcaster and Lens are trending towards an ENS direction)
Web3 social aggregators, such as Yup, aggregates these protocols and makes people’s experiences feel more uniform
Might see a one-winner-take-all, but it would be an error to assume it would be something like Facebook. It would be more like the EVM or ERC standards that are the core
Yup
A Web3 social aggregator
It gets a set of feeds that aggregates content from protocols like Lens, Farcaster, Mirror, Bluesky, etc.
It provides the ability to post and cross-post to these platforms and engages with comments across these platforms
Interface Development For Web3 Social
Buffer is a B2B SaaS tool that allows social media managers to cross-post to multiple platforms at once
Buffer is very limited in its integrations when compared to Web3
In the Web3 Social paradigm, protocols want clients to be built on top of them
Both Lens and Bluesky have open-sourced their apps. They are making it easy for new developers to start building clients on top of it
Yup’s main focus is not necessarily to aggregate a lot of platforms, but to allow users to have direct contact and communication with their friends and audiences
Monetization At The Protocol And Interface Layer
Monetization at the protocol layer is more tricky than at the interface layer
There’s a famous meme about value accruing at the protocol level
Thinks that there is a much stronger moat and opportunity to monetize at the consumer level
Ads don’t make a lot of sense
Fees in various forms would be scalable
Thinks that fees are fine and protocols that have moats should charge fees
A great example is ENS charging fees to prevent people from squatting on domains
If you give consumers a great experience and provide them with ease and convenience, they would be fine with paying a small fee
For example, people would rather pay slightly more fees swapping on MetaMask directly rather than going to Uniswap or Matcha
Monetizing Off Micro-Transactions?
The most under-appreciated Web3 use case is micro-transactions
“Web3 is a completely new paradigm where I could charge you half a cent and be profitable over hundreds of millions of transactions.”
- Nir Kabessa
The hardest pain point for crypto is that everything costs money
People who are actively voting on Nouns DAO spent $3 just to vote
When Snapshot first came out, he was excited to see how people vote using on-chain data without having to vote on-chain
ENS subdomains are one way for people to align as a community. However, it is not scalable as gas is expensive
Bluesky is experimenting with subdomains — linking your account without paying gas, creating 1000 subdomains, etc.
Think that subscription models would emerge
Expects to see a substantial amount of the passion economy — people tipping and supporting things without expecting a return
People want status within the community. Giving them status is considered a valuable thing you can offer them. Don’t think that this will become a multibillion-dollar business model
People gift each other NFTs, as a form of tipping or as an acknowledgment
Serve Huge Markets Or Niche Communities?
People assume that just because there is a lot of value to create within Web3 social, that value is going to accrue to the business
His belief is that people are the new platform — value will accrue at the individual level rather than the platform/protocol
Thinks it is acceptable that these businesses are a bit smaller, but the value is created
Even if protocols change their mind and turn from a nonprofit to implementing fees, it is still acceptable
Interfaces And Distribution
The interfaces decide what gets shown/not shown
Depending on their creativity and innovation, interfaces could provide their users with a sub-audience view without necessarily creating a new account
Distribution will be very important if you want to reach people outside your sub-community without doing extra work
Identities Across Platforms
People should have a lot of identities
Yup uses a customizable and modular approach
At scale, people will be able to seamlessly move between accounts
It is up to the user how they want to connect their different ETH addresses together
On Privacy
Excited about Sismo and Disco
Sismo enables privacy preservation — could have a public ETH address that you are okay with being doxxed that is associated with another ETH address that you own
Disco uses off-chain verified credentials that could be either public or private
Think that it will scale to publicly provable private information
“And now I'm shitposting, with you knowing that I'm a VP at Google somewhere, right? Without me identifying myself I think it will make for really cool consumer experiences.”
- Nir Kabessa
Visualization Of On-Chain Data
They think a lot about a rich social context
On Yup, when you click on an NFT, you will see all of your friends who own that NFT as well
It serves as a security use case — this is a safe contract to interact with
It also shows a social use case — participate in something your friends are doing and feel a sense of belonging
Want to show on Yup that content will look like a traditional social avatar, human-readable username, actions that are understandable to the average person, etc.
Thinks that block explorers will become more friendly and social than they are currently today
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