Sector Analysis :: Decentralized Social — Part 1

Understanding the Social layer of web 2.0, Challenges & its transitioning into Web 3.0

6 min readMay 6, 2024

As per a Kepios research published by DataPortal, by July 2023, over 60% of the global population, which translates to approximately 4.88 billion individuals, have registered and have active profiles on at least one social media platform.

To add to this, the annual growth rate of social media users is 7.5%, which is much higher than the growth rate of internet (4.1%) and mobile users (1.7%). In another research from GWI, global internet users spend an average of 6 hours and 53 minutes a day online.

Needless to say, socialization will continue to be in demand throughout the era of Web 2.0 as well as Web 3.0.

In this 3-blog series of our Sector Analysis, we take-on a multi-faceted discussion on the world of Decentralized Social space or as it is called in many ways — DeSo / DeSoc / SocialFi..

Let’s dive in..

Evolution of Social Media

Let’s start from the very beginning to understand why socialization is gradually shifting towards the era of Web 3.0. Since its inception, social media has undergone significant evolution, shaping how we connect and share online. From early platforms like Six Degrees to the dominance of Facebook and the rise of mobile-centric apps like Instagram, social media has constantly adapted to technological advancements and user preferences. Now, with the emergence of Web 3.0 marked by decentralized networks and new technologies, the landscape of socialization is poised for further transformation.

The primary catalyst for the evolution of social products lies in the advancement of network infrastructure and mobile communication technologies. Progressing from PCs to smartphones and from 3G to 5G, social features have swiftly transitioned from basic instant messaging to personalized content creation and commercial monetization. Consequently, social networking has increasingly absorbed various business functionalities over time.

Let us try and lay this out in context of the progress & evolution of the internet eras we term as web 1.0, web 2.0 and web 3.0. Social media’s evolution mirrors the internet’s journey through Web 1.0 to Web 3.0, marking significant shifts in interaction and functionality.

Where do we stand now?

The crowd below says it all. We are smothered by a plethora of social media applications, platforms. All platforms controlled by the “few”, managed by the desirable, centralized — All our data!

The Pitfalls of Current Social Media

Social media platforms are not just platforms for social interaction; they are profit-generating machines that can significantly influence our perceptions, worldview, and well-being. The methodologies employed to generate revenue can lead to the dissemination of propaganda, exacerbate social divisions, and encourage addictive behaviors, all of which can negatively impact mental well-being and societal cohesion.

Web 2.0 Vs Web 3.0 Social — Key Differences

The following table succinctly contrasts Web 2.0 Social with Web 3.0 SocialFi, showcasing how the latter offers decentralized ownership, enhanced privacy, and monetization avenues, reshaping social media and finance.

The Age of Web 3.0 — SocialFi, DeSoc, and the Social Graph

The transition from Web2 to Web3 is still in its nascent stages, but the emergence of SocialFi, an intersection of social media and decentralized finance, signals the advent of a Web3-powered social media landscape.

SocialFi and DeSoc

SocialFi focuses on monetizing and tokenizing social aspects, while DeSoc aims to decentralize content, relationships, and interactions in Web3 social media networks.
This framework enables full interoperability and user control over content creation, revenue, and data across different applications.

Empowering Users with Control

SocialFi seeks to enhance user control over social graphs, which map relationships and interactions on social media platforms.
In legacy platforms, social graphs are valuable assets used to sell views to advertisers.
Web3 revolutionizes this by granting users complete autonomy and control over their social graphs, including data, followers, content, and interactions.
Interoperability between Web3 social apps allows for easy transfer of social graphs across platforms, ensuring user autonomy and portability.

Transparency and Privacy

Web3 social platforms promote transparency through publicly audited smart contracts underlying social graphs.
Users’ privacy is protected, as they can choose the most secure app without losing data or connections.
This ecosystem fosters competition among social apps, encouraging them to prioritize user needs and treat users as stakeholders.

The transition to Web3-based social platforms promises greater user autonomy, transparency, and privacy, ushering in a new era of decentralized and user-centric social media experiences.

Differentiating SocialFi & DeSoc

SocialFi and DeSoc represent distinct approaches within the Web3 social media landscape, each with its own focus and objectives. While both aim to decentralize aspects of social media, they differ in their primary emphases and functionalities.

SocialFi emphasizes monetization of social interactions through decentralized finance principles.
DeSoc focuses on decentralizing ownership and control of social media platforms, prioritizing user autonomy and transparency.

Blockchains, Social Protocols & Apps

Web3 technology is revolutionizing the way we interact on social media platforms by addressing the challenges of Web2 social media. Web3 social media platforms are built on decentralized technologies like blockchain and smart contracts, enabling users to have more control over their online presence and the content they engage with. Here are some ways in which Web3 is the answer to the challenges of Web2 social media.

By addressing these challenges, Web3 social media platforms are paving the way for a more decentralized, transparent, and user-centric online environment, revolutionizing the way we socialize and interact on the internet.

Further ahead..

Our analysis of the decentralized social sector will continue as we delve into the technology behind the Web 3.0 socials with some examples thrown in. Further down the line, we analyze the markets future of DeSo and deal flows in the sector.

Exciting times ahead for sure…keep reading!

About Pivot

Pivot is a global venture accelerator firm dedicated to the Web 3.0 industry, created by founders, for founders. Pivot’s selected startups are focused on milestones & are not bound to periodic curriculum-based programs. Founded by Anshul Dhir, a 3x founder in the Web 3.0 space, and mentor and investor in over 50 companies in Web3, we are uniquely positioned to lead the new wave of startups in the Web 3.0 space. Pivot is being supported by some great founders & Angels in this industry including Polygon, Delphi Digital, Blockchain Founders Group, Liminal, Biconomy, BitsCrunch, Tegro, Router, QuickSwap & more. We are also supported by Tier 1 ecosystems such as BNB Chain, Polygon, Arbitrum, ICP, Manta Network, Mantle apart from many VCs, launchpads, Exchanges & many more.