The rise of decentralized social networks has been surrounded by hype and excitement, but it is not without its challenges. Executives in the decentralized social media space have highlighted the difficulties faced by these networks in attracting and retaining users. According to industry insiders, as much as 99% of users who venture into decentralized social media platforms for the first time end up quitting. The reasons for this are twofold – clunky onboarding processes and a lack of familiarity with the platform and its users.
The head of growth for DeSo, a layer-1 blockchain firm, acknowledges that the process of getting started with cryptocurrencies and decentralized platforms can be tedious and expensive for newcomers. From setting up an account on an exchange to transferring funds to a wallet, and then dealing with high transaction fees, the entire process can be overwhelming. As a result, simplifying the onboarding process becomes mission critical in order to retain mainstream users and make the experience frictionless.
However, even before the onboarding process begins, potential users face another barrier – the need to understand blockchain technology, smart contracts, and wallets. This initial learning curve can be daunting for many individuals, causing them to shy away from taking the first step. To overcome this challenge, decentralized social media apps need to invest time and effort in building their communities and creating an environment where users feel comfortable and engaged. It’s akin to attending a party where you don’t know anyone; the key is to create an inviting and inclusive atmosphere.
Decentralized social media networks also face the monumental task of catching up to the network effects enjoyed by established web2 platforms like Facebook, Instagram, and Twitter. These platforms boast billions of monthly active users, while decentralized alternatives struggle to match these numbers. For example, Odysee, one of the most visited decentralized social media networks, recorded an average of only 5.3 million monthly unique users between January and April. The uphill battle for these platforms lies in attracting both creators and users to their ecosystems.
One potential tipping point that could drive user adoption is the migration of top-tier creators and influencers to decentralized platforms. If high-quality content starts to emerge on these networks, users are likely to follow suit. However, this shift is not guaranteed, and decentralized social media networks must actively work to entice content creators to join their platforms. The success of these networks ultimately rests on the ability to provide an engaging and rewarding experience for both creators and users.
Another roadblock for decentralized social media networks is the limitations of existing blockchain platforms, such as Ethereum. These platforms were not purpose-built to accommodate the unique requirements of social media applications at scale. The head of growth for DeSo suggests that a “storage-heavy” or “infinite-state” blockchain would be ideal for social applications. Such a blockchain would enable the storage and indexing of large amounts of data at a low cost, allowing for full decentralization and ownership of content, identity, and social graphs.
Without a blockchain specifically designed for social media applications, end-users may never truly own their digital assets and information. The lack of ownership could deter mainstream users from fully embracing decentralized social media and hamper its growth. The need for a purpose-built blockchain underscores the importance of ongoing development and innovation in the blockchain space to cater to the specific needs of different industries and applications.
Upside Potential and Future Growth
Despite the challenges discussed, the potential of decentralized social media networks cannot be ignored. Friend.tech, a social platform powered by the Base protocol, has experienced significant uptake in recent weeks. The platform allows creators to connect with their audience through tokenized attention, offering an innovative approach to content monetization. With over 85,000 users and 127,000 wallets registered on the platform, Friend.tech has demonstrated that decentralized social media networks can attract an audience.
Sales revenue from decentralized social media networks is projected to reach $12.1 billion in 2023, with an estimated annual growth rate of 23.6%, according to Future Markets Insights. While skeptics suggest that this may be a temporary trend, the rapid growth and potential profitability of decentralized social media networks cannot be ignored. As the industry continues to evolve and overcome its current challenges, these platforms have the potential to revolutionize the way we interact, share content, and monetize our digital presence.
Decentralized social media networks face significant challenges, particularly in onboarding and competing with established web2 giants. However, with a focus on simplifying the user experience, building engaged communities, and leveraging purpose-built blockchain solutions, these networks offer exciting opportunities for both creators and users. The journey towards widespread adoption will require continued innovation, collaboration, and perseverance, but the potential rewards are too great to ignore.