Crypto-powered social media projects are seemingly back — and not everyone is happy about it.
The smallish comeback comes after a wobbly period for so-called SocialFi projects and has coincided with the rise of Zora, a protocol that converts posts into tradable tokens on Coinbase’s Base chain.
Zora tokens peaked at 54,000 tokens created on July 27, according to Dune, an almost eleven-fold uptick from the 5,000 per day average in June. Since the launch of the Base app on July 16, the Zora token is up over 600% and trades at $0.077.
But critics liken the project’s tokens to memecoins, joke cryptocurrencies with no intrinsic value.
“Sometimes I like trading shitcoins,” Sterling Crispin, an AI developer and researcher, argued on X. “It’s occasionally fun to light money on fire trying to hit a 20x. But I know what game I’m playing. And I’m not flooding the timeline trying to convince anyone it’s not a toxic hypercasino hellscape.”
Base app launch
Zora’s surge comes amid Coinbase’s rebrand of its wallet to the Base app on July 16, which gives access to a variety of features, including the monetisation of users’ profiles and posts. The Zora protocol powers these features.
Jesse Pollak, head of Base, responded to criticism on X.
“I believe that content is incredibly valuable and that we can build new systems that return that value to the hundreds of millions of creators who create it,” Pollak said.
The Base app lets users post text and images akin to traditional social media platforms, but with new ways of making money.
The app is by no means the only project with SocialFi elements. Avara’s Lens Protocol works in a similar way and incorporates crypto components into a variety of social media apps.
How the Base app works
Once a user creates a profile on the Base app, it instantly transforms into a creator token. Every profile has a token associated with it, and the username is the ticker. When a user makes a post, that post is made into a content token.
Creators earn a portion of the fees from the trading volume of their tokens. The more people trade their coins — or tokenised posts — the more money they can make.
Still, questions remain why anyone would want to trade a social media post like a stock.
Pollak did not immediately respond for comment.
One of the largest Zora tokens by market cap is a creator token called Zeme, which is a memecoin launchpad for Zora with a market value of about $5 million.
Zora activity has surged. The number of token creators went from averaging about 1,000 per day prior to its launch on Base app to roughly 10,000 per day, hitting a peak of 22,500 creators on July 27.
Before the Base app launch, creators received less than a combined $1,000 per day in rewards, according to Dune. That figure has surged to stay consistently over $10,000. On July 27, about $375,000 were rewarded to creators.
Meanwhile, trading volume rose from less than $1 million per day to over $6 million per day, peaking at over $41 million on July 27.
But not everyone is happy with the success.
“It’s a zero sum [player versus player] game of musical chairs,” Crispin tweeted. “Nobody leaves with more than they came with unless someone else is losing. And retail gets rinsed by snipers, bundlers, coordinated pump and dumps, FNF groups, and industrial scale autonomous trading bots.”
FNF groups refers to collectives specialising in transaction front-running or sniping.
In response to this criticism, Pollak said content and creators are valuable and “that’s why there are trillions of dollars of business value created around them,” but that businesses failed to capture that value, implying that Zora enables businesses to capture that value.
“The Zora model of pairing content coins to creator coins is a net new innovation that no one else has done,” he added on X.
Zora’s recent success comes on the back of the struggles of other SocialFi projects.
Friend.tech, another SocialFi project on Base, gained about 600,00 monthly users within two months of launch in 2023, according to Token Terminal. But this momentum has since completely died out, going from over 200,000 transactions per day to under 100 with about 250 users.
Pump.fun recently said it wants to “Kill Facebook, TikTok, and Twitch.” The controversial memecoin generator’s statement coincided with the announced acquisition of Kolscan, a wallet-tracking tool.
The deal would better enable Pump.fun to track social interactions, which the protocol said would help it transform into a crypto media platform “that can scale to the billions.”
Meta, Facebook and Instagram’s parent company, has a market cap of $1.8 trillion due to it having monetised users by selling ads to them.
Pump.fun has a $911 million market cap, according to DefiLlama.
