Ad-driven models are parasitic. They monetize attention by selling user data to third parties, creating misaligned incentives between platforms, advertisers, and users. This leads to the enshittification cycle described by Cory Doctorow, where platforms degrade to extract maximum rent.
the-creator-economy-web2-vs-web3
Blog
Why Web3's Direct Patronage Models Will Outlast Ad-Driven Chaos
A technical analysis of how Web3's programmable value transfer creates sustainable creator economies, contrasting with the extractive, volatile nature of Web2's ad-driven platforms.
introduction
THE ECONOMIC REALIGNMENT
Introduction
Web3's direct patronage models create sustainable value by aligning incentives, a structural advantage over the extractive chaos of ad-driven platforms.
Direct patronage is symbiotic. Protocols like Farcaster with paid storage or Nouns DAO with its perpetual funding model create closed economic loops. Value flows directly from users to creators and infrastructure providers, aligning all stakeholders on network health.
The evidence is in retention. Platforms with direct economic stakes, like Friend.tech (despite its flaws), demonstrated that users paying for access exhibit higher engagement and lower churn than free, ad-supported alternatives. This proves sustainable LTV.
This is a protocol-level advantage. Ad models are an application-layer patch for broken economics. Web3 embeds the business model in the protocol itself via mechanisms like ERC-20 fees or EIP-1559 burns, making value capture intrinsic and non-extractive.
key-trends
DIRECT VALUE CAPTURE
The Web2 Ad Model is Failing Creators
Platforms capture the value; creators chase algorithmic ghosts. Web3 flips the script by enabling direct, programmable patronage.
01
The Algorithmic Middleman Tax
Platforms like YouTube and Instagram insert themselves as rent-seeking intermediaries, taking 30-45% of ad revenue while forcing creators to optimize for engagement, not quality.\n- Value Leakage: Creators earn $0.01-$0.03 per view; platforms keep the majority.\n- Vulnerability: A single policy change or demonetization can destroy a livelihood overnight.
30-45%
Platform Cut
~$0.02
Per View
02
Direct Patronage via NFTs & Tokens
Smart contracts enable creators to mint their own economies. NFT memberships (e.g., Sound.xyz for musicians) and social tokens turn fans into stakeholders and patrons.\n- Upfront Capital: Artists can raise $50k+ from a single NFT drop before creating anything.\n- Recurring Revenue: Programmable royalties ensure a 5-10% cut of all secondary sales, creating perpetual income.
5-10%
Royalty Yield
$50k+
Upfront Raise
03
Community-Owned Platforms (Farcaster, Lens)
Protocols like Farcaster and Lens Protocol decouple social graphs from corporate ownership. Creators own their audience and can monetize through direct channels.\n- Portable Reputation: Your follower list is an on-chain asset, reducing platform lock-in risk to near-zero.\n- Direct Monetization: Native features like paid casts or subscriptions send >95% of revenue directly to the creator.
>95%
Creator Revenue
Near-Zero
Lock-In Risk
04
The Superfan Economy
Web2 treats all users as generic ad targets. Web3 enables granular segmentation, allowing creators to monetize their top 1% of fans who provide 90% of the value.\n- Tiered Access: Token-gated content and experiences create 10-100x higher ARPU from superfans.\n- Co-creation: Fans with skin in the game (via tokens) become evangelists and collaborators, not just consumers.
10-100x
Higher ARPU
Top 1%
Drives 90% Value
PLATFORM ECONOMICS
Web2 vs. Web3: Creator Monetization Model Comparison
A first-principles breakdown of revenue capture, user ownership, and platform dependency in creator monetization.
| Key Metric / Feature | Web2 Ad-Driven Model (e.g., YouTube, TikTok) | Web3 Direct Patronage Model (e.g., Mirror, Farcaster, Superfluid) |
|---|---|---|
Primary Revenue Source | Brand Advertisers | Direct Patrons & Collectors |
Platform Take Rate | 45-55% of ad revenue | 0-5% (primarily network gas fees) |
Creator Payout Latency | 30-60 days net terms | Real-time or < 24 hours |
User Relationship Ownership | ||
Portable Social Graph & Content | ||
Revenue Composability (e.g., royalties, splits) | ||
Algorithmic Discovery Dependency | 100% platform-controlled | Community-curated & algorithm-optional |
Average CPM for Creator | $2 - $10 (platform takes majority) | $50 - $500+ (direct to creator) |
deep-dive
THE ALIGNMENT
The Architecture of Direct Patronage
Direct patronage models create superior economic alignment by removing the extractive middlemen inherent to ad-tech.
Ad-driven models create misaligned incentives. Platforms optimize for engagement metrics, not user satisfaction, leading to clickbait and surveillance. The user is the product, not the customer.
Direct patronage flips the value flow. Protocols like Farcaster with paid storage or Mirror with collectible posts make the user the sovereign payer. This aligns platform success with user success.
Smart contracts enforce this alignment. Recurring revenue via Superfluid streams or one-time payments via Safe{Wallet} modules creates transparent, programmable patronage. The business logic is public and immutable.
Evidence: Farcaster's paid storage model funds protocol development directly from users, not advertisers. This creates a credibly neutral public good funded by its most dedicated patrons, not venture capital.
protocol-spotlight
BEYOND THE FEED
Protocols Building the Patronage Stack
Ad-driven platforms optimize for attention, not value. These protocols are building the rails for direct, programmable patronage.
01
Farcaster Frames: The Patronage Hook
The Problem: Social feeds are walled gardens where value extraction is one-way. The Solution: Embedded, interactive mini-apps that turn any cast into a direct commerce or donation point. This creates a native monetization layer for creators without platform rent.
- Zero-Friction Conversion: Users transact without leaving the feed, collapsing the funnel.
- Protocol-Native Revenue: Value accrues to creators and builders, not just the social client.
~2s
Tx Time
100k+
Frames Deployed
02
Superfluid: The Cash Flow Primitive
The Problem: One-time payments (NFTs, donations) are inefficient for sustaining long-term work. The Solution: Programmable money streams that function as real-time, continuous subscriptions on-chain. This enables patronage-as-a-service.
- Capital Efficiency: Funds are streamed second-by-second, not locked in escrow.
- Composable Salaries: Streams can be split, redirected, or used as collateral in DeFi (e.g., Aave, Compound).
$1B+
Streamed
Real-Time
Settlement
03
Gitcoin Grants & Allo Protocol: The Plural Funding Engine
The Problem: Public goods funding is plagued by coordination failure and free-riders. The Solution: Quadratic Funding (QF) mechanisms that mathematically optimize for democratic impact, not just total dollars. Allo Protocol productizes this as infrastructure.
- Anti-Whale: Small donations are amplified, preventing capture by large entities.
- Modular Stack: Enables any community (e.g., Optimism Collective) to run its own grants rounds with custom rules.
$60M+
Funded
10x
Donor Leverage
04
The Creator Coin Dilemma: Rally vs. Friend.tech
The Problem: Creator tokens often become speculative assets decoupled from the creator's actual work. The Solution: Contrasting models. Rally (ERC-20) focuses on community governance and perks. Friend.tech (Base) uses bonding curves for direct revenue sharing, creating a volatile but high-velocity patronage market.
- Direct Alignment: Revenue from key sales flows to the creator instantly.
- Liquidity vs. Loyalty: Exposes the core tension: are you funding a person or trading a meme?
100k+
Keys Sold
~85%
Creator Cut
05
Zora & Mirror: Curation as Capital
The Problem: Cultural value is captured by platforms, not its creators and early supporters. The Solution: NFT-based publishing and curation where early collectors are financially aligned with a work's success via creator royalties and on-chain attribution.
- Permanent Royalties: Creators earn on secondary sales, a true patronage rev-share.
- Curation Markets: Tools like Zora's Rewards let curators earn for promoting work, professionalizing patronage.
$200M+
To Creators
On-Chain
Provenance
06
The Endgame: Patronage-Accruing DAOs
The Problem: Isolated patronage tools lack network effects and shared liquidity. The Solution: Decentralized Autonomous Organizations that aggregate patronage streams (e.g., via Superfluid) to fund shared goals. Think PleasrDAO for collecting cultural assets or SongCamp for funding albums.
- Capital Aggregation: Pool funds to patronize projects individuals couldn't support alone.
- Exit to Community: The funded asset itself (NFT, IP) becomes the DAO's treasury, creating a patronage flywheel.
10,000+
DAO Members
Composable
Cash Flows
counter-argument
THE NETWORK EFFECT FALLACY
The Liquidity Counterargument (And Why It's Wrong)
The belief that ad-tech's massive capital pools are insurmountable ignores the structural advantages of direct, programmable value transfer.
Ad-tech's liquidity is extractive, not foundational. Its billions fund surveillance and middlemen, not user-aligned infrastructure. Web3's direct patronage models like Brave's BAT or Superfluid streams fund the service itself.
Programmable money creates superior incentives. Ad-tech relies on opaque attention auctions. Protocols like Uniswap or Farcaster embed value transfer into core interactions, aligning economic activity with network growth.
Liquidity follows utility, not vice versa. The success of Ethereum's DeFi summer and Solana's consumer apps proves capital aggregates where users find real utility, not where pre-funded ads exist.
Evidence: Farcaster's 300k+ paid users and $100M+ in creator revenue on platforms like Paragraph demonstrate users pay for quality when value flow is transparent and direct.
takeaways
PATRONAGE VS. ADS
Takeaways for Builders and Investors
Ad-driven models are collapsing under privacy regulations and user hostility. Direct patronage, powered by crypto primitives, is the sustainable alternative.
01
The Attention Crash
Ad-tech is a dying extractive industry. GDPR/CCPA and Apple's ATT have crippled tracking, while ~70% of users actively block ads. The arbitrage between user attention and ad revenue is collapsing.
- Key Benefit 1: Build for user value, not surveillance.
- Key Benefit 2: Escape the volatility of ad CPMs and platform algorithm changes.
-40%
Ad Revenue
70%+
Ad Block Rate
02
Patronage as a Protocol
Web3 turns patronage into a programmable primitive. Projects like Mirror (crowdfunding), Farcaster (paid channels), and Gitcoin Grants demonstrate direct, verifiable value transfer.
- Key Benefit 1: Zero-fee microtransactions via L2s enable new engagement models.
- Key Benefit 2: On-chain reputation creates sticky, high-LTV user cohorts, unlike anonymous ad traffic.
$0.001
Tx Cost
10x
LTV Increase
03
The Creator Economy Pivot
Platforms like YouTube and Spotify keep >50% of creator revenue. Web3 patronage flips this with direct subscriptions (via Lens, Superfluid), NFT memberships, and token-gated access.
- Key Benefit 1: Creators capture >90% of revenue versus the traditional <50%.
- Key Benefit 2: Build defensible communities, not disposable follower counts.
90%+
Creator Take
50%
Platform Tax
04
Ad Fraud is a $100B Tax
The digital ad supply chain is riddled with fraud—fake clicks, bot traffic, and opaque intermediaries. Blockchain's transparency makes every patronage payment auditable and fraud-proof.
- Key Benefit 1: Eliminate ~20% waste from fraudulent or low-quality traffic.
- Key Benefit 2: Provide investors with verifiable, on-chain metrics for growth (real users, real payments).
$100B
Annual Fraud
-20%
Waste Eliminated
05
From CAC to User-Owned Growth
Traditional CAC is a burn rate. In patronage models, early users become co-owners and evangelists via token incentives, referral rewards, and governance. This turns growth into a network effect, not a cost center.
- Key Benefit 1: Negative CAC is possible through viral token distributions.
- Key Benefit 2: Align long-term incentives between users, builders, and investors.
Negative
CAC Possible
100x
Aligned Incentives
06
The Public Goods Flywheel
Ad models underfund public goods (infrastructure, open-source). Patronage models, exemplified by Optimism's RetroPGF and Ethereum's PBS, create sustainable funding loops that strengthen the entire ecosystem.
- Key Benefit 1: Fund core infrastructure without venture debt or dilution.
- Key Benefit 2: Creates a virtuous cycle where a healthier ecosystem drives more value and patronage.
$1B+
PGF Deployed
Virtuous Cycle
Ecosystem Effect
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