The development of Web2 has relied largely on network effects and personalized user experiences, thanks to the power of big data. Web3 decentralized applications (DApps) seek to replicate a similar experience, but they have to take a different approach – a decentralized, distributed, and self-governing social graph on the blockchain – to avoid being neither fish nor fowl.
CyberConnect is one of the projects hoping to empower DApps through building social graphs to connect everyone on Web3. The day after CyberConnect closed Series A funding, Pandaily interviewed its co-founder, Shiyu Zhang, to gain insight into his observations and expectations of Web3 social graph protocol and Web3 in general. In his eyes, competition within the Web3 realm is not regarding technology, but in the interpretation of what Web3 is, and how it can transform society.
In its Series A round of funding, CyberConnect raised $15 million, led by Animoca Brands and Sky9 Capital. Founder and Partner of Sky9 Capital Ron Cao commented: “The rapid development of Web3 is going into a new phase where data analytics are becoming an essential need. We believe CyberConnect’s focus in creating a decentralized data infrastructure layer would be critical in powering the next generation of social applications for powerful personalized experiences.”
Pandaily: How did you enter the Web3 realm, and especially the Social-Fi realm?
Zhang: Web3 is a new concept that is emerging in recent years. To build a Web3 system, you need to have a decentralized account system first, as you need to have a computer to get access to Web2. Thanks to the rising trend of DeFi in 2020 and NFT in 2020, the user base of MetaMask and other decentralized wallets has been exploding. This is the foundation of Web3. After users have an account and add some assets to their wallets, they naturally need a “social identity” to tell who they are on Web3. It is a key infrastructure of Web3 but was blank when we started the project.
Pandaily: CyberConnect is not the only team that focuses on Web3 social graph. How does CyberConnect differentiate from other projects that are doing a similar thing?
Zhang: CyberConnect should be the first team to propose the idea of a “Web3 social graph.” There are two main competitors based on my current knowledge. The first one is MEM Protocol, whose seed round funding was led by a16z. The second one is Lens Protocol from Aave, one of the largest lending platforms in DeFi. For most projects, technology is not the key weapon; Instead, the team’s understanding and interpretation of Web3 decides everything. Even if both MEM Protocol and Lens Protocol both claim to be social graph protocols like us, we are taking different approaches from both technology and strategy perspectives. Web3 is still at a very primitive stage and people might have different imaginations of its final picture. Thus, people are still exploring, including investors. For example, some of CyberConnect’s investors also invest in our competitors, because they can see potential from different approaches.
Pandaily: You mentioned people might think differently of Web3’s destination. What is yours?
Zhang: There are several required principles without doubt: composability, interoperability, and self-sovereign on personal data. The team needs to consider the potential applications of the infrastructure developed by the team. It is really hard to predict the specific format of a Web3 super DApp in years. Few people could predict DeFi and NFT would be trends in the past two years. Their appearance depends on the development of blockchain infrastructure developed earlier, including solid token standards, like ERC-20 and ERC-721. With those infrastructures, more people started to use blockchain, more data were generated, and then DeFi was developed based on ERC-20 and NFT was pushed based on ERC-721. Similarly, we need to define and build new standards that are widely accepted and used if we want to create something fresh on Social-Fi.
Pandaily: I want to follow up on your statement about “something fresh on Social-Fi.” Based on your imagination, how would CyberConnect and other Social-Fi projects revolutionize the field?
Zhang: To be honest, I do not have a complete answer. A direct change is in the product format. Many people are currently trying to move what is available on Web2 to Web3 – for example, connecting your Twitter or Discord to your wallet address. Currently, you might be able to add your NFT in the wallet to your profile on Twitter, but this action does not change any product format. However, if we look into TikTok and Twitter, you will see they do not push information based on a timeline, but on the personalized recommendation system from your past interactive behaviors. However, if a decentralized data system that can store users’ on-chain behaviors existed, there would be huge progress for Web3 products on user experiences. Another thing is to transition from services-centric to user-centric, which means users can bring their data freely across different “platforms.”
Pandaily: As you said, there might be a decentralized, and of course an open-sourced, data system that stores users’ on-chain behaviors. What if Web2 giants take those data directly for free in their business, e.g. advancing their promotion system?
Zhang: There might be two possible routes. The first one is that although users have open-to-public Web3 identity, they can control whether to connect their on-chain identity to their real-life identity. The second one is to reach programmable privacy reservations through blockchain technology. The second approach is a more ideal option, but harder as well.
Pandaily: Got it. I noticed that some other social graph projects also underscored the self-governing property of Web3 data storage, and thereby proposed the data-to-earn model to reward those who are willing to reveal their on-chain behaviors to the public. What other business models might be possible?
Zhang: Even the data-to-earn model has not been tested or verified yet. There is a big risk of the existence of spam here. I agree that assetizing data is a confirmed trend, but monetizing is still questionable. Twitter is utilizing data from all of its users collectively and generating huge revenues. However, the average revenue generated by one single user’s data is comparatively much less. Currently, our focus is still on product design and community management. I am willing to explore any potential long-term business models, but I have no certain answer now.
Pandaily: It might be a difference between Web2 and Web3 products. The iteration of Web2 products is company-driven, but that of Web3 products is more community-driven.
Zhang: Exactly. Users have their own requests in the era of Web3, but these requests are always vague. Different projects might interpret users’ needs and attempt solutions in different ways, and the consensus is going to be reached gradually during the process… This also leads to differences between promotion and marketing. Both Web2 and Web3 products have budgets for marketing. Based on my understanding, Web2 products require paying agents or other third parties for ads to promote their products. However, Web3 products remove the role of middle people and reward their early-stage users with tokens directly. Simpler but more exciting.
Pandaily: Another difference between the era of Web2 and Web3 is in “team.” Most teams of Web3 projects are remote.
Zhang: The same to us. We have 30 people in total now and are based in different countries. It is very hard for you to find all the talent that you need in one place.
Pandaily: I once read a statement: the role of product manager might be replaced by community manager in the Web3 field. Do you agree?
Zhang: From the execution perspective, the importance of the PM is decreasing. However, an outstanding product manager is still necessary for a Web3 product since Web3 products still need to interpret user needs into a solid product logic and convert the logic into a stunning product. Web3 products no longer need those who are doing mechanic and repetitive work, but the need for creative and thoughtful product experts is even higher.
Pandaily: Any plan to expand the team?
Zhang: Yes, we are constantly hiring. We hope to recruit more talent to join the team and accelerate the product development process.
Pandaily: We have discussed a lot of topics on the team and the project. My last big question jumps to a broader and more macro scale. How would those data infrastructure projects, including CyberConnect, impact society?
Zhang: I highly recommend “Decentralized Society: Finding Web3’s Soul,” a paper co-written by E. Glen Weyl, Puja Ohlhaver, and Vitalik Buterin, in which authors raise multiple cases to illustrate how a decentralized society is functioning. Very foresightful and insightful. As I raised before, ERC-20 is the foundation of DeFi and ERC-721 is the foundation of NFT. To push Social-Fi, Game-Fi, or general Web3 applications to a higher level, we need to have something similar to “soulbound” tokens (SBTs) mentioned in the paper. SBTs are tightly bounded to user identity and take along user behavior-related data. In the paper, the authors point out that there are still many problems left for building SBT, including programmable privacy and community recovery. We still have a very long way to go. However, the potential applications of the standard listed in the paper still arouse my sympathy.
Pandaily: To follow up on your answer, how might SBTs be connected to other existing token standards? How does the paper enlighten you regarding the future of CyberConnect?
Zhang: SBTs might be developed into a new token standard. Under the standard, different teams can develop different SBTs to fulfill diverse needs. With those SBTs, users’ non-financial data can be stored and applied to feed the development of Web3 applications. To us, the paper provides a beautiful but distant aspiration that might need at least five to ten years to reach. During the process, we still need to continue iterating the product. It does give us some directional guidance though. A core synergy here is that there are strong ties and weak ties in people’s social networks. Current infrastructures can only tell two people are connected, but they cannot tell how close they are. SBTs might be a strong tool and theoretical guidance for us to dig into clearing up the closeness of people’s complicated networks. In summary, we are still very confident about the track we are on but will keep open-minded about any potential changes.