Token-driven decentralized social network may have been losing momentum recently, but it has pulled a handbrake U-turn since last week to more than treble its total value locked, confounding critics who were preparing to administer it the last rites. 

High-profile cryptocurrency industry investors’ prominent mentions of the novel social media network at this year’s Token2049 Web3 conference in Singapore are also likely to have surprised many. Brushing aside skepticism, several panel guests singled out as an example of innovation beckoning towards a potentially bright future for crypto.

Paul Veradittakit, a managing partner at Pantera Capital, said had succeeded in bringing new users into Web3 not by appealing to any particular curiosity they had about digital assets, but through purely incorporating crypto into the appeal of a new social media model.

“ has done a pretty good job of getting an early adopter movement,” he said. “Being able to obfuscate the crypto component has been an easy way to get [people] onboarded to be able to experience crypto with not much crypto at the forefront.”

Alex Pack, a co-founder and managing partner at Hack.VC, praised for having bypassed the Apple Store and its policies on crypto, which he described as “very onerous.”

Creator economy boost

He said the platform offered new opportunities for users looking to monetize content, comparing its model favorably to those of Web2 social media networks, which he said had wielded excessive power over users.

“The concept of like crypto social is really fascinating,” he said. “Facebook and Twitter were Trojan horses. They came in and created networks for people to talk to each other, and eventually for followers to interact with leaders and creators, and then in a sneaky way they completely intermediated the way that fans interact with leaders and creators, and they did everything that they could to make it hard for [them] to understand who [their] followers are, and how to monetize them directly. 

“This was great for social media companies, because then they could control the whole thing, and they could disempower the legion of fans. The opportunity for and DeSo (Decentralized Social) … is that [they] could unbundle this and create a whole monetization layer to the creator economy.”

Veradittakit said there was great potential for social media to be disrupted, but Joey Krug, a partner at Founders Fund, said more work would be required.

“In terms of social and crypto more broadly, the main the main thing that’s needed for it to really take off is some kind of big zero-to-one difference versus the existing social media platforms,” he said. “I’m not sure anybody’s really quite delivered on that yet.”

Pack said that more Web3 infrastructure would be required for such platforms to realize their potential.

“There’s a lot that needs to be built, all of the infrastructure, like token gated communities, putting in cash flows and royalties and true economics,” he said.

DeFi development

Krug zeroed in on decentralized finance (DeFi) as a part of the ecosystem that was in need of an infrastructure boost in order to develop to its full potential.

“The DeFi space, writ large, feels like it’s in a trough of disillusionment right now,” he said. “But it’s an area we’re very excited about fundamentally long term and we’re definitely looking to invest more there, as well.”

Perhaps the most critical problem facing DeFi is simply the lack of tools that non-crypto native people can use, with even the basics of staking, lending and yield farming needing to be demystified in order to gain more users and traction overall.

Min Teo, a managing partner at Ethereal Ventures, said DeFi developers might consider looking to TradFi for guidance on improving the ecosystem.

“There’s a bit of an identity crisis between different products and protocols at the moment,” she said. “Look at the existing financial system – you have people who are building B2B products for banks, and then asset managers who are then distributing to retail. In crypto and DeFi, everything has just collapsed into one, so I bifurcate the two when I think about it. And as we mature in DeFi innovation, I think there might be a strong chance that we started looking more like how TradFi works.”

“There are a lot of core primitives that still need to be built to make the experience faster, improve latency, and just make it more similar to what users are accustomed to,” she said. “Otherwise, from an adoption perspective, it’s challenging to see how we’ll get more users on chain.”

“There are just not enough people building apps,” Krug said. “The infrastructure is at a point where … you could build something that’s really zero to one and people go, ‘Wow!’ when they when they use your app. We didn’t think that was possible … six or seven years ago, but I think the tech stack today is at a point where it’s actually feasible.”

Pack said stablecoins were critical to building out the DeFi ecosystem and, as a representation of real-world assets, integrating DeFi into the broader architecture of the finance system

“Stablecoins [are] the enabling thing behind DeFi, and the most promising, most exciting chart in crypto,” he said. Referring to their uptake trajectory, he said: “It’s still up and to the right, and there’ll be more real-world assets, and that’ll feed into DeFi, and it’s a positive feedback loop.”

 “Today, you could think of DeFi as a crazy playground,” he said. “It’s just a really good jungle gym playground for crypto assets … but there are very few real-world assets, so if we could extend that and add more real-world assets – euros, T-bills, stocks and stuff like that … that’s probably the biggest thing as opposed to, like, big infrastructural leaps, but once that happens, I think you can 10x or 100x it.”

Artificial intelligence

Pack and Krug said that another boost for DeFi, and for crypto more broadly, could come from artificial intelligence, a fusion of technologies that has attracted considerable attention this year.

“There’s an exciting opportunity for using DeFi and an open, composable, transparent financial system,” Pack said. “Today, you go to ChatGPT and it’s … an AI agent – it writes your essays for you and helps you cheat on your homework, but it can’t do economic stuff. It can’t rebalance your portfolio, it can’t pay your bills and it can’t run your business for you. You’d have to integrate [it] with hundreds or thousands of different payment processors. Or you could just ‘one click’ into DeFi and everything’s open API.” 

Krug said: “The AI agent thing … is actually an interesting area, [and] the next wave of DeFi will intersect there a lot. If you think about crypto, the way it works is actually a feature here, not a bug. That’ll be a big zero-to-one area. It’s probably on a few years’ horizon – three to five years versus next year.

“And then there’s a whole unexplored problem space that people just haven’t built any companies around yet,” he said. “Some of these are smaller and they’re not zero to one, but one easy thing that I’m still shocked no one’s built is a borrowing aggregator [in which] you deposit ETH and borrow, say, USDC and it continuously refinances you to get the best rate. There’s nothing that does that, so there’s a lot of things to build in DeFi.”