SocialFi has become a new trend in the Web3 world. After attracting “seed” users to blockchain, the Web3 scene has to start considering where the next billions of new users are now, and how they can be enticed into entering the rabbit hole. Social applications are definitely one path with the power to spread the concept to a broader scale.
Swapchat is one of the players seeking to bridge traditional Web2 users and the Web3 world through social products. Known for its plug-in that enables users to chat directly with sellers on Opensea, Swapchat was once introduced as the Web3 version of AliWangWang. However, according to Luke Wang, the co-founder of Swapchat, the goal of Swapchat was never to be a pure chat DApp. Instead, it hopes to BUIDL a new protocol than can revolutionize the messaging process.
Luke used to be a research assistant at MIT Media Lab and his connection with crypto can be back to 2015. According to his understanding, the competition of Web3 is eventually a competition on the protocol layer. Swapchat and its protocol Web3MQ have received their first round of funding from Mask.
Pandaily: How did you enter crypto and Web3?
Luke: Back in 2015, I was still a student at MIT. Digital Currency Initiative was just founded on campus and a lot of things happened in the field. For example, EVM was launched around that time as well. Under such circumstances, you believed you could change the world through coding. A good example was that we want to allow people in developing countries have access to basic financial services. I spent almost the whole semester researching Ethereum, but my advisor stopped me. He thought I should go back to do some “authentic” research.
I started my entrepreneurship journey two years later in 2017 and started to consider seriously whether I should be all in blockchain. However, the wave of ICO was the main topic at the time and the whole industry was pretty disordered. I decided to hold on first and see how everything could go. I made my decision to get all in Web3 in December last year. Based on my observation, I thought the bear market was coming. I believed it was the time to start to BUIDL and get prepared for the next cycle.
As to why I chose SocialFi, I firmly believe that in the next wave, the focus of Web3 is going to introduce billions of users to Web3.
Pandaily: I have noticed many people offer similar ideas. I heard a very interesting metaphor yesterday – the current Web3 community is like a boiling test tube, hot inside but still very limited.
Luke: Yes, but this is still because Web3 is too new. There is a popular saying in the Silicon Valley, “Build something 100 people love, not something 1 million people kind of like.” The current Web3 community is similar to a super community where a group of people with a strong and firm consensus is gathering. You need to have a group of people like them first and then move the whole industry forward. A friend of mine who is currently working in finance asked me what is the necessity of bitcoin. Somehow he is right. No matter bitcoin or any other Web3 things, you can see mature alternatives in the Web2 field, but it needs time to reach a big breakthrough.
Pandaily: You remind me of a widely discussed Tweet I saw yesterday in the Chinese Web3 community. It said “A friend of mine working in a big tech firm as a strategist asked me three questions to which I still don‘t have good answers. What demands can only be solved in Web3? What is the market size if the demands exist? Is Web3 a more efficient solution?” Since Swapchat is a messaging tool and there are many mature messaging tools that have existed in the Web2 field. I guess you might have some thoughts about the Tweet.
Luke: I guess those questions will exist for a long time. However, the paradigm is changing and iterating time over time in Web3. The core part of Swapchat is Web3MQ, a messaging protocol, which represents a new paradigm.
The early stage online communication is very decentralized. No matter if you are using Yahoo email, Gmail, QQ mail, or 163 mail, you can send and receive emails from each other. However, when mobile messaging becomes the mainstream, although it has the XMPP protocol, the paradigm becomes closed. I think for those OGs (original gangsters) in Web1, permissionless is a key word, but the mobile internet does not give enough space to be permissionless. A good example is Apple – once said they would never allow iMessenger to be on Android. For Swapchat and Web3MQ, we are hoping to democratize the messaging process through BUIDLing a messaging protocol and make it become a public good.
I want to raise an example, Clubhouse, to explain why a decentralized messaging protocol is important. Clubhouse did not launch the DM (direct message) feature at first. Every time I met a fun friend in an audio chat room, I had to go to Twitter or Instagram for future communications. A lot of complaints about the product came after and users left then. It is like in an exam in that you have to write down your name first. Your score might be zero if you write down your name, but it must be zero without your name written. If there were a protocol like Web3MQ existed, Clubhouse could simply set up the DM feature and focus on developing the audio chat room.
Back to Swapchat specifically, we did it based on market needs. There is a pain point in Web3 that P2P is a better choice for the NFT trading. Considering the exchange of game cards, we can see that it usually happens between two kids directly. However, Opensea is not working in this way. Other platforms are not taking the P2P approach, either.
In the long run, we are planning to make it accessible across both Web2 and Web3 platforms while keep neutral. Late July or early August, we will launch a new version, mainly focusing on tokenomics. This will be our first time to include tokenomics.
Pandaily: You mentioned Swapchat can also be used on Web2 products. From the product positioning perspective, will Swapchat be complementary or alternative to Web2 messaging products?
Luke：Our product has two layers. Swapchat is a DApp and Web3MQ is a protocol. They are independent and separated in some ways. For Web3MQ, we want to subvert the old rule and create something new. For Swapchat, we are hoping to bridge Web2 and Web3 and invite more Web2 users to try Web3 DApps.
In the long term, we will focus more on the protocol layer and return Swapchat to the community when it has reached a certain level.
Pandaily: Got it. You mentioned that the birth of Swapchat came from market needs. Since there is no DM feature on Opensea, you made one.
Luke: Yes and no. It sounds like an AliWangWang on Opensea, but it is not. AliWangWang is still a centralized product and it has not brought any fundamental changes to Taobao. We hope to make some deeper impacts and changes on P2P exchanges. Even if Opensea launched its own chatbox, it is different from Swapchat as well. Since the Opensea tool can be only used on Opensea, it is not a cross-platfrom application.
Pandaily: You said that you hope to make some deeper impacts and changes on P2P exchanges. Ideally, how can a Web3 messaging protocol revolutionize the exchange market?
Luke: This is a good question. I don’t think we have a good answer right now. One thing that we are doing is to integrate other trading tools and protocols when the security is guaranteed. Currently, only SudoSwap is integrated, since it is the most secure option. We might want more similar explorations in the future. We do not want to define how to trade, or which trading contract should be implemented, but we want to help them have better and smoother trading experiences on the social platform.
Pandaily: You mentioned security multiple times. Telegram, Discord, and some other messaging tools were found to have security flaws. What extra efforts have you made to guarantee security?
Luke: The Telegram security flaw in cloud chat is pretty universal to be honest. It is not that easy to be solved. On the protocol level, we are trying our best to plug the flaw from the fundamental construction. On the application level, we are also working with other teams to improve the level of security.
Pandaily: What is an ideal Web3 messaging tool then?
Luke: I think we still need to focus more on the protocol layer. I believe it should be open, interruptible, and composable. Those three are related – openness leads to interruptibility, which then leads to composability, and vice versa. That is also the reason why we have put a lot of effort into Web3MQ.
Pandaily: Nansen also launched a messaging tool recently. What do you think of it?
Luke: It is interesting. Nansen is a widely used and pretty popular tool in the crypto field. However, I do not think it is an organic and natural combination. It sounds like, I have traffic and the chatbox can bring more traffic. However, do you really want to chat in Nansen? Maybe not.
There are some attempts at social trading in Web2, but it is rather a share trading portfolio than for chatting. Thus, I don’t think chat is the best option for Nansen.
It is still a meaningful exploration, but Nansen’s tool is still a closed ecosystem. Swapchat is different. You can chat with anyone who is connecting to Web3MQ.
Pandaily: Swapchat and Nansen are fundamentally different.
Luke: Yes. We are hoping to BUIDL a Web3 product with Web2 features. You can argue that Nansen is pretty Web2, Opensea is Web2 as well, but it is for selling Web3 items.
Pandaily: We see many Web2 people entering the Web3 world these days. Do you think they will change the competition map of the overall field?
Luke: I am not sure. Many of them entered the industry right before the collapse of Luna. It is really a bad time to start a project. If they are not steady enough, they might give up soon.
It is true that many people from Web2 are jumping into Web3, no matter whether they’re in the Silicon Valley or in China. I think there will be a battle. Those Web2 people might bring the old-fashioned paradigm to Web3 and build based more on data, operation, and efficiency. Web3 natives might take another path that is more tech-driven. Which path will win? Let’s see.
Pandaily: I guess you are standing more on the Web3-native side.
Luke: For me personally, I chose Web3 because I believe it can do something different from Web2. When I started to contribute back in 2015, there was no financial incentive. We did it because we believed in it and wished to make some differences. Similarly, I started Web3MQ because I believe it shows what social should look like.
Pandaily: Ideally, people hope to have a solid and widely used protocol with a lot of connected applications. In the early stage, protocol developers might produce an application themselves for the demo purpose. Recently, many people are talking about “fat protocol“ and raising an idea that the internet is a traffic-driven place and that traffic is gathered on the application layer. What if the application, i.e. Swapchat, became a huge success while the protocol layer kept so so?
Luke: It is possible, especially in China, where the technical atmosphere is not that strong and people usually have less interest in technology than in application. Many people once asked me about the goals and roadmap of Swapchat, but few have asked me about the protocol thing. You know Swapchat is not my final goal, and its existence is to encourage people to connect to Web3MQ. As you said, we have Swapchat to get traffic, but Swapchat will become a WeChat without Web3MQ, which does not make any changes. I personally don’t think it is a good contribution.
Some other projects, for example, Opensea, are taking another route. Opensea was considered a Web3-native project and people thought its revenue would be shared with the community, but when it announced an IPO, people found, ‘oh no, the revenue still belongs to Wall Street’, and felt they had been cheated.
For us, we are designing the tokenomics very carefully. We want to build a fundamentals-driven tokenomics. We will launch an MVP around late July or early August and see people’s feedback. Hopefully, we can create some value via the product and bring it to the community, while keeping the product open in some ways.
Pandaily: You mentioned that China does not have a strong technical atmosphere, and people are not that interested in infra technology. Is it because the learning curve of infra and protocol is much deeper?
Luke: Technical quality requires you to be earnest, and sometimes a perfectionist. However, our culture appreciates zhongyong, moderate, and yuanhua, smooth tongue. Therefore, you can see that Chinese founders are pretty good at grasping market needs and launching amazing applications. I personally have been influenced by the mindset of BUIDLers deeply and hope to BUIDL something with the geek spirit and technical ideas. You can see that after Polygon became a thing, confidence in the Indian developer community became much stronger. We hope we can raise the confidence of Chinese developers who are working on fat protocols through the success of Web3MQ.
Pandaily: However, we have to admit that only very few people understandthetechnology.
Luke: Yes, I might be biased, but I still feel that without a technical foundation, things become too superficial. If you want to go further, you have to understand the technical essentials. Thus, I still hold the opinion that if you want to do something in Web3, read codes and build a more solid foundation. This is my personal feeling.
Pandaily: You said you successfully predicted the bear market was coming and I believe you have made some plans accordingly. Do you think the current market situation aligns with your prediction? What is your development plan for the bear market?
Luke: I do not want to take too much credit for seeing the bear market coming. We did not predict the collapse of LUNA, for example. When the market is cooling down, speculators might leave the game and we can have more time and space to BUIDL. We are also actively hiring. If anyone is willing to join us to BUIDL together, welcome. We need talent on both the technical and business sides.
Pandaily: I want to go back a little bit. You mentioned when you first joined the crypto game, your academic advisor stopped your exploration. Have you talked with him about what you are doing and what is his current opinion on crypto?
Luke: I have not talked with him. I once talked with my chair, he is pretty bullish on crypto. I think people always overestimate the ceiling and underestimate the floor. Boston is a place where everyone wants to change the world – especially those unrepresentative groups.
You can see many government leaders graduate from Harvard or MIT. It is true we have not changed the financial system of African countries, and many Web3 applications are still Ponzis and full of speculators. So, don’t overestimate its power. However, back in 2015, I did not like Ethereum. Its code was a mess. However, upon continuous contributions from the community, it has become a real thing.