Author: Mensh, ChainCatcher
As a pioneer and gateway for large-scale Web3 applications, SocialFi has received widespread attention from users and investors. However, as a censorship-resistant and privacy-focused platform, SocialFi faces real problems such as uneven content and fraud. The platform attracts users with a fancy economic model of "X to earn", but lacks the ability to continuously attract content creators. The leading SocialFi protocol has difficulty breaking through the bottleneck of user numbers and proving market demand.
Farcaster daily activity data for the past six months:
The Web3 anonymous dating app XO has demonstrated its real user demand with impressive data: in just over two years since the launch of the App in 2022, the number of users has grown naturally from zero to 1.5 million; Cyber L2 (the blockchain where XO is located) has more than 100,000 transactions per day; 7 million clicks and 1 million matches are generated per month; 82% of users are acquired through natural growth or recommendations; 30-day retention rate is 15% (3 times the industry standard); users spend an average of 40 minutes on XO every day (almost twice that of Facebook and Snapchat); AI agents are summoned more than 100,000 times a day to promote interaction between users; and the average revenue per paying user is $38 (1.7 times that of Bumble). The high stickiness and willingness to pay of users behind these data prove that XO is meeting real social needs. How did this dark horse of SocialFi come out?
Privacy is the top priority, creating an online tree hole for users to be themselves
XO is an anonymous dating app. It has multiple chat theme boards, combined with "anonymous chat" and "social dating", where users can post their mood stories and enhance interaction. Because more than 70% of users identify as LGBTQ+, in order to create a safe space for emotional expression and support, XO has also thoughtfully created a private community that is only open to members by invitation. XO co-founder Carol said, "The original intention of XO was to create an anonymous tree hole for modern people, where users can be themselves without worry."
The flip side of privacy is security, and XO uses a number of technologies to prevent fraud and fake accounts, a common problem in social media and dating apps. A decentralized user verification system provides verifiable credibility based on a user's on-chain activity. When signing up for XO, users are given an AA wallet associated with a unique XO Soulbound token (XOUL). The token enhances online security through multiple verification methods such as facial recognition, social network verification, ENS, and partnerships with DID providers.
In addition, XO users can choose to connect their crypto wallets in the account settings. Once the wallet is connected, if the wallet has an on-chain history, the application can verify the user's credibility through on-chain activities. Therefore, the number of social media followers of the user, the ownership of NFTs, the companionship score in the XO application, and the content posted by the user will also constitute part of the social credit score. The probability of fake accounts and robots appearing is greatly reduced.
For users with high social credit scores, XO also provides personalized AI twin service (Beta). This feature allows users to generate an AI "doppelganger" to expand social interaction capabilities and motivate users to improve their credit scores.
Proof of Personhood is another protection net that XO provides against fraud. Proof of Personhood is a limited form of real-world identity that allows a given registered account to be controlled by a specific real person, verifying the identity without revealing the identity.
Compared with the decentralized identity (DID) solutions currently on the market, such as CyberID and Lens Protocol, there is a lack of practical social application scenarios. Among the existing products with real usage scenarios, Farcaster has limited user data collection capabilities. As a passive content consumption platform similar to Twitter and Reddit, Farcaster's data range is mainly focused on user content interactions. In contrast, XO, as an active social application, can collect richer user data, covering information such as gender, age and preferences, and can give full play to the potential of personality proof in cross-platform applications, such as integrating Web2 data into Web3 applications to provide users with personalized services. This approach helps solve the cold start problem and provide users with more personalized recommendations. It is also the real foundation for user privacy protection.
Content matching + AI agent to achieve accurate friendship
Unlike traditional dating apps that use sliding matching based on user profiles, XO matches users based on their posted content, such as emotions, confessions, or lifestyles. This matching solution not only allows users to choose whether to remain anonymous to protect their privacy, but also allows for continuous iteration based on user dynamics, making matching more accurate.
Just this year, XO launched the AI assistant function. The AI pet on the XO platform is named ROO, which can take MBTI tests and provide customized feedback based on user feedback. For users who are not good at chatting, the AI agent can also become an "icebreaker" to resolve awkward atmospheres.
XO revealed that it is testing an "AI Twin" feature that allows users to create their own AI avatars to help them simulate chats before interacting with others, saving time in selecting objects and finding suitable chat partners faster.
With more than 4 million messages per day and more than 1 million matches per month, XO has strong data-driven capabilities that can be used to build robust AI assistants and recommendation system models. Similar to AWS supporting Web2.0 applications, XO's AI foundation layer consists of multiple large language models (LLMs). Based on user profiles, tags, and stories, information is input into the 16K parameter LLM to summarize the user's language style, personality characteristics, and interests, and reinforce learning from real data and integrate on-chain data, greatly reducing the time cost of making friends.
Sustainable economic and business models
In order to prevent the “X to Earn” model from being taken advantage of by the money-making studios, before officially launching the on-chain token, XO first launched the $rStar-based Chat2Earn mechanism, testing more than 5 million chat records per day to detect possible algorithmic cheating, observing users’ reactions to obtaining in-app currency through chat, and exploring which behaviors and functions users are willing to pay or consume in-app tokens for, to ensure the existence of a sustainable token economy and a balance between income and expenditure.
Based on investigation and iteration, XO finally perfected Chat2Earn. The PoC (Proof-of-Companionship) algorithm behind it is based on user chat behavior, comprehensively evaluates the quality of interaction and provides virtual currency $rStar rewards. Users improve the health value of the chat room through behaviors such as deep chat, quick reply, continuous chat days, and AI game participation, thereby triggering the reward mechanism.
In addition, Chat2Earn also integrates with NFT and decentralized identity (DID) systems, so that NFT holders of XO partners can join the exclusive Alpha community and establish connections with other NFT holders. NFT holders also enjoy higher mining efficiency, unlock exclusive store functions, and redeem physical rewards with $rStar. Through visual feedback (such as chat room background color changes and gift airdrops), Chat2Earn not only improves the user experience, but also forms a strong positive feedback mechanism, which greatly stimulates the motivation of users to participate.
From the perspective of economic ecology, $rStar is the core virtual currency of the platform, but it cannot be traded or withdrawn. This closed economic system ensures the flow of currency and consumption cycle within the ecosystem. In the third quarter of this year, XO launched $XO, which is linked to the $rStar system. Active participation in community interaction or publishing content can earn $XO tokens. $XO holders do not have platform governance rights. Users consume $XO to obtain more than 1 million matching sessions per month, and users can also spend $XO to connect with people who match their interests and values. The team also plans to use $XO as a Gas fee to access transactions including advanced features to ensure a smooth and efficient user experience.
Not only that, XO also has a very stable business model. It is precisely because of this that XO received a total of US$800,000 in seed round financing from the famous incubator TechStars, the Japanese incubator Rakutan Group and the Taiwan government fund in the year of its establishment. Currently, XO's profits come from both To C and To B.
The To C part generates revenue for the platform through subscriptions, in-app purchases, advertising, and Chat2Earn. Users get richer social features through paid subscriptions, purchase virtual goods in the app to enhance the interactive experience, and get token rewards by participating in the Chat2Earn mechanism. XO also provides users with unique digital assets and value-added services through the sale of NFTs and virtual items.
For the B2B part, XO provides customized market research and advertising services for brands through AI chat ads and opinion mining, helping brands better understand and reach target users. Enterprises can also integrate with the Web3 ecosystem through the XO platform, use NFT and DAO for brand promotion and user identity management, further enhance brand exposure and user engagement, and form a win-win business ecosystem. At present, XO has achieved full profitability.
Summary: Airdrop is imminent, SocialFi is the dark horse leading the new social narrative
On July 11, 2024, the Xoul DID mainnet was officially launched, and the team announced that it would conduct a round of $1.2 million airdrop. $XO will also be listed soon.
Speaking of the future, XO is gradually implementing personality proof to help users build their own decentralized identity (DID) through interactive behaviors in the application. The team is actively looking for different Web3 partners, such as decentralized domain name ENS, Web3 social identity ID, etc. XO hopes to truly integrate the centralized identity system into the dating scene.
At the same time, XO is also more broadly involved in fine-tuning and optimizing AI agents, gradually developing them into decentralized autonomous chatbots, and more proactively expanding their influence on social platforms.
XO already has a verified user base, and driven by personality verification and AI agents, it will undoubtedly take SocialFi further.