[Panel Transcript] Decentralized Social vs. Web3 Social Panel Recap @ ETHCC Web3 Social Day

Mask Network
15 min readSep 17, 2024

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Panel Guests:

Moderator: Suji Yan (Mask Network)

Suji: Some of our guests today lean more toward decentralization, preferring to operate independently without external influence. On the other hand, we have those like Sending.me, which has raised $20 million from VCs. I’m not sure if you’re still raising funds, but you’re certainly active in the ETHRome and Farcaster communities. Eric, I believe Codex has also raised VC funds before, with possibly more to come, right? This brings up an important point: Bitcoin started over a decade ago — almost 16 years now — and with platforms like Nostr, it feels like Bitcoin advocates are making a comeback. It’s a reminder that not everything in this space is perfect, and there’s much to discuss about the role of underground movements and creators. I’ll let you all dive into that.

Wouter Constant: Nostr is a simple concept, so let me quickly explain it for those unfamiliar. Its key innovation is the use of asymmetric cryptography, meaning your public-private key pairs make messages tamper-proof. Secondly, it uses a standardized format, essentially a basic JSON structure: an ID, content, and metadata. The point is that everything is standardized. The third element is a communication protocol for computers, which is also simple. So, in summary, Nostr relies on three core principles.

These three elements lay the foundation for a new way of operating on the internet. Nostr began as a decentralized Twitter-like microblogging platform but is evolving into something much larger. We’re essentially rebuilding the web using these three key pillars: public-private key infrastructure, standardized data formats, and relays to transmit data. Nostr, which stands for “Notes and Other Stuff Transmitted by Relays,” can transmit virtually anything, making it a highly versatile and open-ended system. Based on these building blocks, we’re witnessing the creation of a decentralized web.

There is a fundamental difference between Nostr and what Web3 aims to achieve, but we can explore that later.

Suji: From the perspective of someone like my grandma, what’s the difference between all your projects? You’re all building communication networks — some using Bitcoin, some on EVMs, and others on different blockchains. What are the key distinctions here?

Eric: We’re focused on building censorship-resistant systems, specifically a data storage network that emphasizes durability, censorship resistance, and privacy. Data storage is one of the unsolved challenges in the space. While a few players exist, none have gained significant traction yet. We’re aiming to solve that. When it comes to Nostr, data storage is a fundamental aspect of the internet, critical for any application. If you want true decentralization, your data must also be decentralized. Censorship resistance starts with ensuring that data is genuinely decentralized, and that’s the problem Codex is addressing.

Limone.ETH: I’m not here to sell anything — I’m simply building on Farcaster, though I don’t work directly for them. I’ve been in Web3 for over two years now, engaging with crypto and observing decentralized social spaces. It’s fascinating to see the different approaches — whether community-led, protocol-led, or product-led. I don’t think Web3 social media protocols are competing with each other; rather, we’re all working to address the issues of centralized social networks and the need for decentralization. I’m excited to learn more about the benefits of different protocols like Nostr, Codex, and Sending.me.

Suji: I know the CEO of Sending.me, who was an OG in the Web1 era. If you’re from Asia, you might remember Dolphin Browser from the early 2000s, right after the dot-com bubble and shortly after Google Chrome launched. Dolphin was like the Chinese version of Chrome and gained significant success before being acquired. Now, the founder is back in the decentralized web space. I asked him why — he could have just relaxed and invested in Bitcoin. So, why start again?

Shane Gaffney: The founder of Dolphin Browser witnessed firsthand how centralized platforms can control access — Dolphin Browser was removed from the Play Store despite being one of Chrome’s biggest competitors, even with around 200 million users. This experience fueled the drive for decentralization, where no centralized entity can decide, “We don’t want you here anymore.” That’s part of why Sending.me was created. It’s an all-in-one messenger, integrating socializing, private messaging, trading, and token-gated communities for creators. On Sending.me, users can trade and transfer Bitcoin or Ethereum. We support both networks and everything Web3. We like to call ourselves all-in-one because we handle everything — trading, chatting, payments, and even fun features like “money guns” for creators to distribute USDT. Token-gated communities for creators are a significant part of our offering.

About Working on something without the goal of making big profits

Suji: How do you feel about working on something without the goal of making big profits? Jack Dorsey’s OpenSats Foundation supports projects like this without the pressure to generate revenue, and he’s still wealthy after leaving Twitter, thanks to Square. I raised funds from VCs for Mask Network, but sometimes I wonder — what if we hadn’t raised anything? Would we be where we are today? Most of our support has come from the community, not VCs. What are your thoughts on projects that operate without VC backing?

Wouter Constant: I’m not a developer, but Nostr started as a protocol idea around 2019 with no funding. It gained momentum in 2022, and Jack Dorsey’s support in early 2023 through OpenSats, a charity foundation, gave it a boost. Nostr was embraced by the Bitcoin community, many of whom aren’t under pressure to monetize immediately. The focus is on building public infrastructure first, with monetization being a possibility down the road. The ethos here is to create something meaningful without the initial drive for profit. Bootstrapping comes from a shared vision and the love of Bitcoin’s ideals.

As for whether Nostr will support Ethereum, that’s an interesting question. Nostr and Ethereum don’t really intersect. Nostr could technically support Ethereum, just as it could support Visa payments — it’s more about public-private key pairs than blockchain technology. There’s no inherent connection between Nostr and Ethereum, but developers could build Ethereum-based applications using Nostr if they wanted to. The two systems can complement each other, but they don’t have a direct relationship.

What do you think is the core problem that needs to be solved? For example, in decentralized storage or censorship-resistant storage — does the current internet not already address these issues? Why is this still a problem, and how do you plan to solve it?

Eric: The need for decentralized, censorship-resistant data storage is crucial in Web3 social applications. Imagine you post something politically sensitive on a public forum. If your data is stored centrally, it can be censored or removed easily. We saw this with Tornado Cash — while the contracts couldn’t be taken down, everything else, like domain names and servers, was targeted. If we want true Web3 social, we need fully censorship-resistant data storage. Decentralization must be complete — otherwise, censorship becomes inevitable.

Wouter Constant: How do you propose to prevent government intervention? That seems to be a key part of your pitch.

Eric: Our focus is on data durability. Censorship resistance is a natural byproduct, but our main goal is making data durable and decentralized. We’re not directly trying to challenge governments, but we believe individuals should have the right to store their data privately, without third parties snooping or selling it. This is one use case, but we’re also targeting more technical layers, like roll-up data for Layer 2 solutions. By decentralizing data storage, we can make it cheaper and more reliable. When data is spread across multiple nodes, even if some fail, others can maintain availability. While we can’t promise your data will always be accessible, we can ensure a high level of durability.

Shane Gaffney: Just to clarify, this isn’t about fighting governments — it’s about taking control away from private companies like Google or Amazon, who can decide to remove or sell your data. Data breaches happen all the time, and your data ends up being sold in shady parts of the internet. Our solution allows users to own and control their data, instead of leaving it in the hands of these corporations.

Wouter Constant: But do these companies really sell your data? If it’s encrypted on their servers, how would they even know what to censor? It seems like you’re proposing to shift control from private companies to another system. What does it really mean to “own” your data?

Shane Gaffney: Owning your data means having control over where it’s stored and how it’s used. Right now, on centralized platforms, you don’t have that control. Sure, you could store your data on a personal server at home, but that’s impractical for most people. Decentralized storage gives users control without needing to rely on third parties.

Wouter Constant: But even if you “own” your data, once it’s online, it’s out there — the internet never forgets. So what does control really mean in that context?

Suji: You’re discussing decentralized storage, but I’m from China, and the government can easily block endpoints. Apple complied with government demands, and Google pulled out of China. Even with decentralized storage, governments can still remove access to main clients like Farcaster or Nostr. The Chinese government could block these within 24 hours. What’s your solution for that?

Limone.ETH: In my opinion, the solution lies in compromise. We can talk about decentralization and censorship resistance all day, but people still need to use these networks. Sometimes, that requires practical compromises. Farcaster, for example, likely knows that many of its nodes are hosted on AWS or other centralized platforms. But the key is that if those platforms shut down, individuals can still access the code, spin up their own nodes, and keep the network running. Decentralization isn’t about achieving perfection — it’s about maintaining enough flexibility to ensure communication can continue when centralized bottlenecks try to block it.

The Global State of Web3 vs. Nostr’s Decentralized Key System

Fiatjaf: There is a problem with file storage for decentralized networks, and some people think file storage is an important feature of a network. Nostr doesn’t try to solve that problem, because if you try to have a network with all its content available at all times, you inevitably have someone who controls that data. Nostr avoids that by not having an owner, CTO, or a company involved.

Wouter Constant: That is essentially the same concept I wanted to introduce. There are always trade-offs. Regarding the problem of “data durability,” Nostr doesn’t make any promises other than censorship resistance. This isn’t a new concept for the internet, but the difference in Web3 is that you’re trying to introduce a decentralized global network state. You want a coherent global state where everything is visible at all times. On one hand, this lets you make assumptions that lead to user-friendly applications. But personally, I don’t believe you can create a perfect decentralized state. I think the only viable example of that is Bitcoin. I won’t go into that debate when it comes to Ethereum, but that’s where I see the issue.

The real problem is the network effect. Right now, things operate through centralized platforms that have captured network effects — practically everyone uses them. So the challenge is figuring out how to get everyone to adopt our solution, while also avoiding the issues of centralized platforms. We want to be free of those platforms, but we need to retain the network effect because that’s where the added value is. Nostr handles this by introducing interoperability through its standard. When Fiatjaf introduced Nostr, it seemed obvious, but apparently, it wasn’t. Fundamentally, the paradigm shift we’re working toward centers on asymmetric cryptography. Keys are not user-friendly, but they offer a lot of benefits by giving us online sovereignty. However, our main problem is making them easy to use. If we focus too much on creating decentralized global states, we’re heading toward a dead end, as Fiatjaf mentioned — you’ll eventually end up creating your own walled garden.

Limone.ETH: On this point, I think Farcaster and Nostr are similar in trying to solve the same problem. Farcaster offers interoperability between clients. The decentralized global state on Ethereum is accessible to anyone who wants to build on top of their Farcaster identity. You can move between applications while keeping your decentralized social identity. If I use a Twitter-like Farcaster client and switch to a TikTok-like client, my followers and post history stay with me through my Farcaster account. Where I think Farcaster has succeeded more than Nostr is in its connection to Ethereum. Being operable with ETH opens up a wide range of potential use cases.

Wouter Constant: When you mention integrating other apps and smart contracts, that’s done simply through signing transactions as a user. So, as long as something uses keys, it can interact with other systems. What more do you need than the ability to sign?

Limone.ETH: Signing transactions on Ethereum lets you connect that to your Farcaster identity. For example, if I mint an NFT or send a payment to a friend, I can do it through my Farcaster identity. That way, minting or sending payments is linked to the same identity in Farcaster. This makes it easy to create a profile page from Farcaster, connect my Ethereum address, and pull in everything that’s on-chain. This expands the ecosystem since many people are building on Farcaster, but even more are building on Ethereum. Because Farcaster is tied to Ethereum, it can leverage the huge developer community there, which strengthens Farcaster’s position in the SocialFi space.

Wouter Constant: I get that you can piggyback on Ethereum’s ecosystem, but how long before that becomes a downside? Doesn’t it eventually become a problem that Farcaster is tied to Ethereum? For example, onboarding users might be tricky because they’ll need to interact with Ethereum before they can start using the platform.

Limone: Actually, users don’t need to know about Ethereum at all. For instance, when using Warpcast (the main Farcaster client), you don’t need a wallet or any knowledge of Ethereum. You can use Apple Pay to create a Farcaster account and start sending messages, all while signing transactions without even realizing it.

Wouter Constant: But that’s from the user’s perspective. What about developers? If I’m a developer building on this system, aren’t I forced to work within the Ethereum ecosystem?

Limone: It depends. The cool thing about Farcaster is that the only part tied to Ethereum is the identity layer — a smart contract that links your Ethereum address to a unique username. Everything else — messages, interactions — exists on a peer-to-peer network. It’s a decentralized system where thousands of nodes sync messages, making it very lightweight. You only need to deal with Ethereum’s complexities when working on the identity layer.

Wouter Constant: But the key difference is: in Nostr, there’s no synchronization, no global state, and no promise of one. Fundamentally, Farcaster could have been built using the Nostr standard. There’s nothing stopping Farcaster from adopting the JSON key scheme that Nostr uses. If you’re aiming for a global state or Web3, you can still leverage Nostr and achieve interoperability across other applications.

The Storage and Infrastructure Design of Social Apps

Suji: The Sending.me team works with both Ethereum and Bitcoin, right? Why not combine those efforts? Most developers have forgotten how to build browsers, but you could create one that integrates Nostr, Farcaster, and a censorship-resistant data system like Codex.

Shane Gaffney: Yeah, I think everyone here would agree that’s something we’d want to explore.

Suji: So, back to the original internet model…

Eric: Wait. Why wouldn’t we just use Nostr? From my perspective, another company under our umbrella is Waku, a messaging protocol. It’s a general-purpose system that’s not tied to any blockchain. Waku focuses on private messaging and even includes anti-spam features.

Suji: So with Waku, can I make Bitcoin interact with Ethereum? Can Bitcoin keys talk to other keys via Waku?

Eric: Waku is just a messaging protocol. It generates its own keys, but it doesn’t inherently allow for cross-chain communication. It encrypts messages, and the encryption is specific to the keys it generates. Imagine a group chat where everyone sends encrypted messages to each other using their keys — it works, but things get tricky when participants go offline and messages need to be stored.

Wouter Constant: That’s a key point. Nostr isn’t peer-to-peer because peer-to-peer systems don’t work efficiently.

Peer-to-peer systems have been attempted many times, but they don’t scale. Enthusiasts might use them, but they run into issues. That’s why Nostr introduced relays. These are essentially dumb servers that can be used in any combination. Whether you use one large server or several smaller ones, it doesn’t matter. Servers are reliable, and we don’t need to trust them for much beyond storing messages. Message integrity is verified through signatures, so the only trust required is for storage.

Eric: But how long can you trust a server to store your messages?

Wouter Constant: If I really need my message to be stored, I’ll pay for a reliable service. Maybe I’ll go to “Bob” — someone with a highly redundant server farm — and pay him to ensure my message is always there. It’s a market trade-off, but it’ll be costly, and there aren’t many “Bobs.”

Suji: That reminds me of Coinbase’s early days with cold storage. It was like a bunker with heavy security measures, similar to what you’re describing for data storage.

Eric: Right, and in extreme cases, some systems might even rely on underground cables or ham radio for communication.

Suji: When I first talked about decentralized social networks with my grandma back in 2014 or 2015, even I found it confusing. Fast forward all these years, and it’s still difficult to explain. The landscape has evolved — now we have Nostr, Bluesky, and others — but it’s still hard to explain to people what I do. To this day, no decentralized social network has reached 10 million users. Nostr might have 2 million, Farcaster around half a million, and Lens another half million. There’s no mass adoption, except for Mastodon, which saw a boost due to external factors like Donald Trump.

Eric: Yeah, one major issue is that people working in the application layer often say, “I’ll just store it on IPFS because it’s decentralized,” but they forget that there’s no guarantee anyone will store their data. Without incentives, no one has a reason to keep that data alive. You need a payment system to make it sustainable. For example, take Status (the app) — back in 2017, it was meant to be a WeChat-like app with Ethereum integration, serving as your gateway into the Ethereum ecosystem. But they quickly realized there was no decentralized infrastructure to support it. They spent a lot of money building that infrastructure from scratch.

Now, they’ve built Waku, a messaging protocol, and are working on other pillars of Web3 like Codex for storage and Nomos, a Layer 1 consensus protocol. The challenge is that infrastructure isn’t glamorous — it’s not the “sexy” part. But the “sexy” stuff relies on this infrastructure to work.

Limone: Before we focus on building all this infrastructure, we should start with something simple that people can actually use, like what Status did with Waku. If it works and gets adopted, great; if not, we should go back to basics and rethink decentralized systems. Otherwise, we’ll end up with all this infrastructure and no clear use for it.

Shane Gaffney: Yeah, the main issue with Web3 and decentralized social networks is onboarding new users. The current apps aren’t seamless — they’re clunky. It’s not an issue of decentralization but rather poor application performance. Peer-to-peer networks can work, but we need more development to make them smooth and user-friendly.

Eric: I agree. Just because people say something won’t work doesn’t mean we should stop innovating.

Wouter Constant: You’re about to get some pushback, but I see where you’re coming from. The danger with open protocols is that only one company might end up fully implementing them. We’ve seen this happen with things like Matrix and Mastodon. Think about browsers — how many engines do we really have? Chrome, Firefox, maybe Opera and Safari, but that’s it. If a protocol gets too complex, only large corporations with tons of resources will be able to implement it. At that point, it’s only “open” in name. Look at Chromium — if Google decides to take Chrome in a different direction, everyone is forced to follow.

Shane Gaffney: Exactly. They could delist you or fork away from you.

Wouter Constant: Right. Complexity is the enemy because it increases the chances that one party will control an “open” protocol. They’ll start making arbitrary decisions, and you won’t be able to stop them.

Where Are We Right Now?

Suji: On a scale of 1 to 10, where do you think we are in terms of decentralized social networks?

Wouter Constant: I’d say we’re at a 1. We’re just beginning to see the paradigm shift where public-private keys are being integrated into society. This shift will take generations. You can make the user interface as sleek as you want, but many people still won’t understand public-private keys — maybe their kids will. We need to temper our expectations for adoption. We’re at the very start of something fundamental.

Eric: That’s a tough question. Maybe a 2 or 3. Everyone thought spinning up a server would be cool, but it took over a decade and huge companies to make it happen. With the right investment, we can speed things up, but there are still many challenges with decentralized networks. Once we solve the infrastructure problems, innovation will accelerate, but it won’t be linear. I’m hoping for significant progress in 10–15 years. In the meantime, buy Bitcoin, buy Ethereum.

Limone: In terms of adoption, we’re probably at a 1 or 2. But in terms of technological development, I’d say a 3 or 4. More people are showing interest and getting inspired to build on top of the existing protocols.

Shane Gaffney: I’d agree with 3 or 4. We’re all on the same page — it’s still early days. Over the next 10 years, we’ll likely see a significant rise in decentralized social networks. Ask us the same question in five years, and we might be at a 7.

Eric: These discussions are crucial for innovation. You don’t need consensus to make progress.

Wouter Constant: Agreed. If your data isn’t stored in a censorship-resistant, persistent manner, only the victor’s arguments will survive. We need a way to ensure that everyone’s data is preserved without censorship.

Suji: Thank you, everyone. Special thanks to Fiatjaf for his input. He said something earlier that stuck with me: “No CEO, no company.” That’s the ideal vision, but for now, we still need CEOs to pay the bills. It’s great to hear so many different perspectives, but I think we all agree that we’re still at Stage 1 when it comes to decentralized social networks.

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