Why Decentralized Social Requires a New Economic Model

Platforms like Meta and TikTok monetize user attention via ads, creating an incentive to maximize engagement at all costs. This leads to addictive algorithms, misinformation, and a race to the bottom for content quality.

• User is the product, not the customer.
• ~70% of social media revenue is ad-based.
• Content is optimized for virality, not value.

Creators build audiences and content on platforms that own the social graph and data. Platforms capture >50% of creator earnings through fees and arbitrage, while offering zero ownership or portability.

• Platform risk: Algorithm changes can destroy livelihoods overnight.
• Value leakage: Middlemen siphon value from the creator-fan relationship.
• No composability: Content and reputation are siloed.

A single corporate entity controls content moderation, data access, and monetization rules. This creates a rent-seeking monopoly that can deplatform users, extract excessive fees, and stifle innovation to protect its business model.

• Governance by fiat, not community.
• Billions in revenue from data brokerage.
• Innovation is limited to features that increase platform lock-in.

Centralized platforms monetize user data and attention, capturing >99% of the economic value. Creators are locked into rent-seeking algorithms and arbitrary de-platforming.

• Value Leak: User-generated content creates billions in ad revenue, with creators receiving a tiny fraction.
• No Portability: Reputation, followers, and content are siloed assets, creating high switching costs.

Protocols like Farcaster decouple the social graph from the client, enabling permissionless innovation. Frames turn any cast into an interactive, monetizable app.

• Owned Identity: Your social graph (follows, followers) is a portable, verifiable asset.
• Native Monetization: Creators can embed commerce, NFTs, or subscriptions directly into feeds via Frames, bypassing platform fees.

Lens Protocol tokenizes social interactions—follows become NFTs, publications are mutable NFTs. This creates composable financial primitives for social capital.

• Monetizable Actions: "Collect" posts, stake on profiles, and earn from curated content.
• Composable Yield: Social graphs integrate with DeFi protocols like Aave and Compound for collateralized reputation lending.

Permanent, cheap storage is non-negotiable for censorship-resistant social networks. Arweave provides permanent storage for posts and media, while Celestia offers scalable data availability for social rollups.

• Cost Structure: Store 1GB of social data permanently for ~$35 on Arweave.
• Censorship Resistance: Data is immutable and globally accessible, preventing takedowns.

Without costly identity verification, decentralized networks are vulnerable to Sybil attacks—single entities controlling many accounts to manipulate algorithms and governance.

• Spam & Manipulation: Degrades user experience and trust in curation mechanisms.
• Meaningless Metrics: Follower counts and likes lose signal without proof of unique humanity.

Protocols like Worldcoin (Proof of Personhood) and BrightID provide Sybil resistance. Gitcoin Passport aggregates credentials to score unique humanity for quadratic funding and curation.

• Verified Humanity: Enables fair airdrops, governance, and reputation systems.
• Programmable Trust: Developers can gate features based on verifiable credentials, not just token holdings.

Centralized data harvesting for ads creates a single point of failure and regulatory risk (e.g., GDPR, DMA). Decentralized social must decouple revenue from surveillance.

• Key Benefit: Eliminates platform-level data breaches and fines.
• Key Benefit: Aligns incentives with user privacy from day one.

Value accrual must shift from platform-owned feeds to user-owned social graphs and curation. Projects like Farcaster (Frames) and Lens Protocol demonstrate this.

• Key Benefit: Creators capture value directly via channels, subscriptions, and community tokens.
• Key Benefit: Builders can innovate on composable social primitives without permission.

Pure subscription models don't secure the network. A hybrid model where stakers earn fees from economic activity (e.g., DeSo, CyberConnect) creates sustainable cryptoeconomic security.

• Key Benefit: Staked capital provides sybil resistance and funds protocol development.
• Key Benefit: Aligns long-term stakeholders with network health, not just monthly churn.

Social capital must be a portable, verifiable asset—not a platform-specific follower count. This requires standardized identity primitives like ERC-6551 (Token Bound Accounts) and verifiable credentials.

• Key Benefit: Users can transport reputation and influence across apps (e.g., from Lens to Farcaster).
• Key Benefit: Enables novel underwriting and credit models based on on-chain social history.

A single governance token for a social protocol is insufficient. Enable nested, community-specific tokens (ERC-20, ERC-1155) for sub-communities, channels, and creator DAOs.

• Key Benefit: Hyper-local economic policy and incentive design (e.g., a meme coin for a specific channel).
• Key Benefit: Drives deeper engagement and liquidity fragmentation resistant to platform-wide volatility.

Storing social graph data on-chain (Ethereum L1) is prohibitively expensive. The solution is modular data availability layers like EigenDA, Celestia, or Avail, with settlement on a base layer.

• Key Benefit: ~1000x cost reduction for posting and storing social interactions.
• Key Benefit: Enables truly permissionless client diversity and data portability.