The Web2 era is in many ways the social media era. The link between the social graph and the advertising business model made a powerful tool for generating economic value that also came with many unfortunate side effects. Now, Decentralized Autonomous Organizations (DAOs) are providing a new approach to online social organizations that will have far-reaching implications.
Over millennia, small, close-knit groups that band together around daily survival goals have grown into cities, kingdoms, and ultimately nation-states. These modern social networks take this procedure one step further, establishing super-structures of human connections on a scale that has never been reached before. As viewed in this context, DAOs are much more than an incentive re-organization, providing a potential lever of civilization to drive the next stage of human cooperation.
These are some of the properties of DAOs that are expected to have the strongest impact on the social media business:
DAOs are inherently social
Once a DAO is setup, a social network is created. A DAO is a set of individuals who have come together with a specific goal in mind. To perform and cooperate efficiently, they need the means of both communication and management. DAOs naturally aggregate the contributions of all members, create a common social diagram, and enable social data to be clearly monetized on the chain.
Bridge to Web3 for social media businesses
Each social media company is a monopoly on a treasure trove of users’ data. This agreement is under increasing pressure from both regulators and users. The use of blockchain technology for the accountability, transparency and propriety of that particular data can go a long way towards dealing with these concerns.
The power of tokens for content creators
User-generated content and the creator economy are at the core of today’s social media. But most of the value generated by that business is acquired by platforms that store it. Blockchains tokens can modify this arrangement by enabling the creators to monetize their fanbase by using many of the same mechanisms that DAOs employ to reward their users for their contributions.
Early adopters as investors
Every new network is faced with the problem of cold-starting to reach early adopters and generating a business that can attract more customers. Network impacts managed by today’s social media giants are a barrier to entry that impedes the buy-in of new approaches. DAOs can make networks come to life by providing a financial benefit to early users.
The Lens Protocol, launched by Aave on Polygon in February, is a vivid illustration of a number of the above trends at work. Lens is a composable, decentralized social graph that was built from the ground up with modularity in mind. It also offers a DAO-inspired way of generating Digital Identities in Web3.
A Profile NFT is the major feature of the protocol that transfers ownership over individual content. Following a profile builds a Follow NFT, which is provided with innate rarities and utilities, such as vote delegation. This straight-forward architecture provides the basis for implementing a social DAO, allowing experimentation with new social network setups.
Feel free to contact us to learn more about the ways your business can take advantage of the power of DAOs. Stay on top of the latest developments on our blog.