Is Web3 Social And Lens The Next Step To Becoming A Self Sovereign Individual?

Moonrock Capital
14 min readDec 20, 2022

Where Are We? What Can We Remember From The Dot-Com Era And Web2?

There are often parallels drawn between crypto and the DOT com bubble, so let’s focus on that for the time being and see if they are justified and what happened after the bubble.
It’s not the prices we want to focus on, but the sequence of how we got to Web2. What we could observe is that pre bubble the core infrastructure foundations have been laid along with the major UX improvement through search engines and the first commercial product market fits with marketplaces. When the market realized the potential, among other things, an extraordinary speculation on domain names started. In crypto terms, you can draw the parallels pretty similarly with blockchains/state machines as core infrastructure, individual middleware protocols like indexer oracles as middleware, and consumer PMF with DeFi and digital collectibles. Followed with extraordinary speculation in NFTs.

After the dotcom meltdown, it can be observed that a golden founding period began in which the majority of today’s well-known Web2 players were founded. On the consumer side, it can be observed that functioning PMFs such as marketplaces (Amazon and eBay) have been duplicated and adapted to any niche for services and goods. Our thesis at Moonrock goes hand in hand with this and we focus on applications and models that have shown a sustained need. We focus on core infrastructure, middleware, dApp models and application sectors that have shown a PMF plus being able to produce a sustainable non incentivized cash flow.

Even Vitalik has recently described it somewhat similarly:

“My excitement about Ethereum is now no longer based in the potential for undiscovered unknowns, but rather in a few specific categories of applications that are proving themselves already, and are only getting stronger. What are these applications, and which applications am I no longer optimistic about? That is what this post will be about”.

Furthermore after the dotcom bubble, a fluid transition from Web1 to Web2 began, which can be characterized by widely adapted social media platforms. It enabled a transition from a read-only user base to a read-write interactive user base. A shift to Web3 will also be a smooth transition and can rather be seen as extra opportunities to what was possible until now. Web2 Social media has multiplied the utility of the web by allowing everyone who was logged into the same silo to interact with each other. In contrast to an internet that consisted mainly of information consumers, the network effects have been significantly strengthened by enabling interactivity between individual users. We can still remember the excitement when we first used social media platforms and noticed how culture went online. When we use protocols like Lens now we see some parallels only that instead of culture going online this time it is going on chain.

Network Effects

I know you have seen this image probably a hundred times but let’s have a look back on the network’s “laws”. We do not want to go too much into the assumptions of Sarnoff, Metcalfs, and Reed here, but we do want to pick up on the basic concepts.

  • Sarnoff observed that in the radio & TV broadcast era, the value of the network would grow in direct proportion to the size of the network. (Consume only)
  • Metcalf’s law refers to communications networks such as the telephone network in which the value of the network is represented by the number of peers to the power of 2. In the end, it’s the individual links between participants.
  • Reed’s law, on the other hand, describes that in group forming networks value can scale even faster. The simple assumption is that the number of connections cannot be represented only by nodes to the power of 2, but that the individual sub-groupings must be added.

At the moment, there is no social graph in Web3 that can create groups and thus increase the overall value of the network, but there is a financial communications graph that can reflect the properties of Metcalfe’s Law. A native version of Web3 social would bring better coordination possibilities and network effects more akin to Reed.

Before we dive into the rabbit whole of Web3 social, Lens and the valueflow we want to add that web2 social media platforms are also showing interest in integrating crypto. Only the adaptation of web2 social media, which could partly run on crypto rails, would increase the network effects many times and could onboard billions of users to our financial communication network in the long term.


Discord has just announced that Solana will be the first blockchain to be supported. However, Discord is not the only social media platform that wants to interact with crypto. Especially Ethereum, Polygon and Solana support now seems like the norm and we have already become accustomed to NFTs as PFPs in our social media apps. Meta has even gone a step further with the partnership of Arweave, which is being used to store digital collectibles of their platform. Players like Meta can become the kingmakers in all of this by deciding which networks have the privilege to tap into their network effects. Rebuilding themselves as partial web3 interfaces enables new marketplace use cases for social media platforms to generate additional revenue by taking a cut of digital goods sales. The eternal search for a business model for social media led them to an ad based model. Here we see the opportunity for distribution as in Web2 the sacrifice has been made to first create network effects and then extract user value through ads. The more cash flow they could generate with this, the less targeted advertising they can run, thus increasing the UX again because it’s a less extractive relationship. A feed which feels like a dopamin fueled shopping channel isn’t the right experience we should aim for plus it’s also taking value from a global communication network.

Looking at the numbers Web2 social already has a large amount of the world as its network effects. For native Web3 social it will be hard to compete so they have to bring better products by a wide margin and not copycats with small improvements.

Native Web3 Social

With the use cases of money and DeFi, crypto has taken the first steps towards bringing the user to a self-sovereign individual. With Web3 Social, we see the acceleration of the thesis that blockchain addresses can be used for decentralized identities, thus enabling further steps towards a full sovereign individual. Gradually, further individual characteristics could be linked to blockchain accounts. Besides doing on-chain investments and farming, people started getting paid to their wallet address or used their wallets for voting in the protocols in which they are interested or involved. Accounts have started to represent e.g a work or interests history. A broader identity picture to a pseudonym address began to form. A big next step was the adaptation of names, art and PFP NFTs which allowed to bring more culture on chain. Currently people can create a very good identity profile with investments, donations, memes, DeFi activities, collections and so on. Wallets are no longer just access to financial borderless assets, but can be seen more as a digital passport that carries a history. Decentralized identity is an abstract concept which is mainly characterized by the fact that all the data is owned/controlled by the user instead of the platform. However, this does not only consist of state-issued verification certificates but also of a person’s Instagram account as well as their basic interests and contributions, such as many other things. An user starts just as a pseudonym identified by a public key but he/she/it can further adapt this address to one’s own identity.

If the user wishes to build a broader identity profile around their address key concepts such as access controls, decentralized identifiers, verifiable credentials/attestations come to mind. The following image from an 1kx research report summarizes the individual parts of the identity stack.


A broad online personality even without direct connections to the real identity of the person behind the account is possible which could bring even more trust in anons. Something similar to “Lindy” could arise the longer an address expresses itself, works and lives in a certain way. While it is relatively easy to fake or modify my LinkedIn at the moment, it will be much more difficult in an on-chain future. The basic tenor of verify and don’t trust will be carried forward and the social cost of behaving unethically could be higher. On the other hand, completely new use cases are emerging. Many people know the feeling of hearing a musician when the artist can still be called e.g “underground”. As soon as the artist goes viral, you can see people claiming they knew the artist before. In a future where the on-chain social history plays a bigger role in our lives it could be better evaluated who follows or listens to someone and for how long. All in all, through better targeting, the artist can build a long-term relationship with his most loyal fans, while the fans maybe can enjoy certain benefits with holding attestations for being an OG fan or holding a POAP from the first concert. With a more native version of social network on crypto rails, context could now be created around identity. Social interaction with better matchmaking through a shared state, but where the individual decides how much identity to add to a wallet address and has control over it. That user interfaces and algos can use the account data of us seems like the next logical step for a future where a user gets the best feed and dashboards for their needs.
Web3 Social also promises a future where the user has more influence or insight over the algorithms and is not just exposed to them. In case of dissatisfaction, the user can change the interface without losing his personal relationships. Linking social networks with financial rails can turn the financial communication network into a group-building communication network and thus provide more value.

Over the years, we have seen various attempts to tap into the Web3 social media market. Often external Layer1s are used for the implementation which optimize the tradeoff space of blockchains for transaction costs and speed. We see it similarly to Polynya who has often described that external general purpose L1s are unsuitable for social content storage. In the end, you get a very centralized blockchain which even then reaches the limits of scalability and you give up the main use case of a decentralized social network. The question would arise why one should take an alternative to traditional web2 players at all.


Leveraging the differences of decentralization in asset ownership and censorship resistance is a premise to be able to build a marginal better experience and find broad acceptance as a social graph in Web3. Therefore the content must be stored somewhere else and storage layers are the first which come to mind.

A Web3 social infrastructure must also have interoperability / composability with existing state machines and leverage their key advantages. A public data structure and a shared state makes it much easier to utilize cross-application data, do better matchmaking and open up new use cases. Furthermore, due to Web3 social being built upon public permissionless networks where every new infrastructure or application can access the existing network effects, there will be much more competition than in the current social media oligopoly. From a high level view we think it could look like a reddit on steroids. Individual communities can now build the best optimized interfaces in terms of their interests without having to give up the network effects to the overall network. The promises strongly remind us of the first theses around DeFi legos and a composable finance world. This time, however, composability will go even further and, in addition to pure social use cases, it will also present not known innovations between social and DeFi. We think, however, that the dangers should not be ignored once these two sectors overlap. Just as we are excited about the new innovations which will arise, we want to prevent a dystopia in which on-chain betting on certain wallets arises.

Now Tell Me Something About Lens

Given that Lens was built as a middleware protocol and is not trying to be the “social media chain”, we became aware and signed the open letter. Lens is branded as a modular, fully composable, user-owned social graph that is formed by empowering creators to own their social connections. Currently, Lens runs on Polygon, but Stani has also announced that it could run on several different networks as well. He also teased in this interview with Delphi Digital for intersections between DeFi and Social where for example uncollateralized loans could be explored with someone’s reputation as collateral.

How does Lens work?

In Lens the most revolves around the Profile NFT which gives you control over your content. The special thing about a Lens Profile NFT as opposed to an ENS is that you can post publications to it.

There are three types of publications: posts, comments, and mirrors (basically share or retweet)

Users’ publications are directly posted to their ProfileNFTs; this ensures that all content they create remains their own. Publications are not NFTs on their own but have a ContentURI that identifies the type of content it contains, such as text, images, videos, or other arbitrary content. The content is stored on decentralized protocols like Arweave or IPFS or centralized storage provider.

There are also two modules attached to publications, the Collect Module and the Reference Module. The Collect module allows other users based on your defined logic to mint your publications into a NFT which holds a reference to the URI. The reference module contains the settings of a publication such as who can comment or mirror. In contrast to publications, the relationships between accounts consist of NFTs. Lens Protocol users receive a Follow NFT when they follow a profile, which creators and communities can encode with additional value. Each Profile NFT can include a Follow Module, which contains all of the logic used to determine if a user who attempts to follow a profile should receive a Follow NFT. This makes it possible, for example, to determine whether a follower has to pay to be able to follow. Furthermore, Follow NFTs have built-in governance capabilities to allow for the creation of Social DAOs.

All in all, Lens is an NFT middleware infrastructure that represents the relationships between individual peers and the content of individual users. Applications can build upon this and visualize the basic construct accordingly for the user.

Possible Lens Infra Flows

In the following picture we have charted the possible usage flows within the lens ecosystem. As already described, the user gets access to Lens by mining a profile NFT. With a public blockchain address and a Lens profile NFT, the user can then get access to any applications in the Lens ecosystem. Through the address centric design, the user can take his/her data and logic from application to application. Created content is posted on storage networks which can then be indexed. Data Model networks can allow applications to make the raw data usable via e.g IPFS Data Streams.

If Lens becomes successful across the board, we would assume that it is implemented on numerous different state machines. Since the content is stored at specialized storage networks as Arweave or IPFS they set a foundational stone for Lens to work and are representing the bottom of the stack for social content. We at Moonrock Capital are watching closely to see if Lens enables a true PMF for protocols like Arweave or Filecoin.

To date, Arweave has generated in its lifetime a cumulative of $1.5 million in fees. With growing adoption of lens users and publications, we see storage networks revenues represent the growth of the sector pretty linear. Being at the bottom of the tech stack, they also show the least risk of being out-competed by other protocols which are built on top of them.

Lens Ecosystem

One unique thing about Lens is that you can see similarities to the beginning of DeFi in the builder behavior. Stani is a mission-driven DeFi veteran who attracts many like minded developers who want to build a better social media future for us. The vision of moving away from the current gatekeepers to censorship resistant social media where everyone has control over their own content and can eventually monetize their network is the perfect nerd sniping with a giant TAM.

A few examples of interfaces that already show good usage would be Lenster, Lenstube or Phaver.

Lenster positions itself as the decentralized version of Twitter. Users have the same capabilities and a similar interface to what they are already used to. Even if such apps cannot quite match the user experience of Web2 yet, there is the possibility of doing all interactions gasless and thus avoiding annoying wallet pop-ups. Lenstube, on the other hand, wants to position itself as a pardon to Youtube and Phaver is kind of similar to Lenster but as a phone application. In general, integration tools, applications and middleware protocols are still in their infancy and in the near future we will be able to see the innovations through composability.


We believe that in the long term, the applications that focus on the new possibilities of cross-application information and therefore new possibilities of better matchmaking as well as the best community optimized dashboards and interfaces are the most interesting approaches. As a prime example, you often see an optimized Tinder approach in which I can better break down potential romantic partners according to the various criteria of my own interests. If you take this further, it could be easier to find partners who share the same values, especially in a professional career based on a wallet history. From Web2 we could learn that the bottom of the stack platforms had the highest valuations in the long term and competitors prevailed who tried to dominate/control this area. However, any integration tool like restaurant reviews gets massive competition from players further down the line (Google). Even if we expect more modularity, we can imagine that at some point we will again see a consolidation into individual players.

If you want to get a better feel for the apps and the possibilities but can’t claim a handle yet, buy one at Opensea:[sortAscending]=true&search[sortBy]=UNIT_PRICE

and get active yourself.

Who We Are

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019.





Moonrock Capital

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019.