Decentralized social networks (DeSoc) remain a niche product, unable to compete with traditional platforms. Experts surveyed by The Block attribute this to the industry's focus on monetization, which has overshadowed the value of genuine interaction.

The Financial Incentive Misstep

Jakub Rusecki, a researcher at 1kx and co-founder of Social Graph Ventures, noted that early Web3 projects attracted users solely through financial incentives. However, these platforms failed to retain users due to a lack of quality content and authentic social connections.

Lex Sokolin, managing partner at Generative Ventures, described this approach as a "systemic error." He stated that the misconception that implementing tokenomics automatically enhances social products has become entrenched in the industry.

Monthly user count for Farcaster. Source: Dune.

“Platforms like TikTok, Instagram, and X have created such a strong bond with their audiences that it’s impossible to lure them away with mere speculative gaming mechanics,” he explained.

Alan Lu, chief commercial officer at Animoca Brands, added that a focus on profit diminishes content quality, deterring the broader audience that values genuine interaction over financial gain.

Artificial Activity and UX Issues

Brandon Kae, an analyst at The Block, labeled any visible activity on DeSoc platforms as artificial, driven by airdrops and other incentive forms rather than organic demand.

“Users don’t switch to platforms for ideological reasons. What matters to them is that the app is ‘interesting’ and that their friends are already there,” he emphasized.

However, it’s not just financially incentivized social networks that remain niche. Open platforms like Bluesky and Mastodon have also struggled to achieve widespread adoption.

David E., co-founder of Social Graph Ventures, attributed this to a cultural gap. He stated that many developers in this space are “strong technologists but lack social DNA.”

Farcaster and Lens have not achieved viral growth or high user retention. Without active brand engagement, viable monetization models for creators, or short-form promotion mechanics, the critical “flywheel” has failed to gain momentum.

Daily user count for Lens as of January. Source: Dune.

Creating a fully-fledged advertising and creator economy on the blockchain is theoretically possible but “orders of magnitude more complex” than in the established Web2 ecosystem, the expert stated.

Dmitry Kulechov, general partner at Symbolic Capital, identified three key technical barriers:

  • difficult onboarding (wallet requirement, gas fees);
  • fragmented user experience;
  • lack of Web2-level applications.

He noted that even basic infrastructure has long been hampered by scalability issues.

The Future of DeSoc

Opinions on the prospects of decentralized social networks vary.

Optimists believe the next phase will focus on product quality. Kulechov sees the solution in combining open infrastructure with user-friendly execution.

According to him, DeSoc projects could achieve mass adoption in the coming years if they become intuitive and straightforward.

David E. links a potential breakthrough to a rethinking of monetization mechanisms. He argues that decentralized social networks won’t scale until they offer an alternative to the Web2 advertising economy.

He cited protocol auctions, where brands compete directly for user attention, with revenue fairly distributed between creators and the platform. If successful, social accounts could become assets generating cash flow.

“We don’t believe the DeSoc/SocialFi narrative is dead, but the first phase has definitely concluded. The next iteration will require seamless UX, organically integrated monetization, and blockchain features that are invisible to the average user,” Lu also emphasized.

As AI-generated content evolves, digital ownership and verifiable trust may become key values, he added.

However, skeptics remain steadfast. Sokolin described current DeSoc experiments as a “dead end”: financial features have not improved user experience, and the network effects of Web2 giants remain insurmountable.

Even appealing concepts like portable identity and content ownership have failed due to a lack of proper incentives. The expert believes that in the foreseeable future, DeSoc “will not return.”

Recall that in January, Ethereum co-founder Vitalik Buterin announced a complete shift to decentralized platforms, emphasizing the need for fundamentally new tools for mass communication.