This week on the Defiant Podcast we speak to Stani Kulechov, founder & CEO of Aave, one of the first lending protocols in the DeFi space. He has been around since the inception of DeFi, now Aave Labs is the leading force in this completely new side to the web3 universe; social media.
Lens aims to reimagine how social networks are built, providing an open protocol for applications to flourish, and giving users the freedom to own their information and take that data with them when they move from one app to the next. Creators and influencers would monetize their content by reaching their audiences directly, and applications would gain revenue from these transactions, rather than relying on ads.
We discuss the benefits and the risks of this model. While it provides more choice and should incentivize platforms to provide a better service, is there potential for some users to be priced out of that content behind token-gated paywalls? The norm in web2 is free-to-view content. Are added incentives of decentralization and data control enough of a carrot to justify the added cost? Stani also dives into user stats in the first two months since Lens launched, and discusses what’s next for the protocol.
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👀 Only paid subscribers have access to the full interview transcript below.
Cami Russo: Here we are with Stani Kulechov, the founder of Aave. Stani, it’s so great to have you on The Defiant Podcast.
Stani Kulechov: Hey Cami, nice to be here again.
CR: We were just chatting and Stani was one of the very first guests on The Defiant Podcast about two years ago, so a lot has happened since then. I’m excited to chat about the latest because you started one of the first lending protocols in DeFi. You’ve been around basically since the start of when DeFi was even called [‘DeFi’]. But now, you are leading this totally different side of web3, which is social media, and I feel that’s such an important part of web2.0 that needs to be disrupted. I’m really excited to hear about how you’re going about that and approaching it. But before we get into Lensyou, for those podcast guests that haven’t been around for two years and don’t know you, I’d love to briefly get your background. What led you to start Aave in the first place?
The launch and growth on Aave
SK: Surely. So I’ve been building the Aave protocol and ecosystem for the past… five or so years. [Aave was] quite [an] early… part of this movement of decentralized finance, where we build protocols which allow non-custodial access into different kinds of financial applications that have transparency… Those different elements were very important to me when I came early into the space because… one of the earliest use cases with Bitcoin, the idea of being able to transfer value for one place to another without intermediaries in a very transparent fashion, actually excited me to explore… what else you can actually build. And when Ethereum came in, I think it was like one or two years into the ecosystem when Ethereum already existed, for me, the most fascinating thing was that with the concept of the Ethereum Virtual Machine, you could actually have full applications running on the blockchain.
One of the first [blockchain] use-cases was to… transfer value with Bitcoin, [so] one of the exciting things for me was what other interesting financial applications and use cases could we solve using blockchain by being able to deploy applications on Ethereum. That was very early, [and] we created [a] proof of concept called ETHLend, short for ‘Ethereum Lending’, and that was probably the second or third so-called DeFi application back in those days.
CR: When was this? Like 2017?
SK: We started to build [in 2016]. In 2017, we were on mainnet. And that was before any stablecoins were on the Ethereum network, so it was super early days. But for me, that was fascinating because DeFi started to build as an ecosystem. So we saw other kinds of applications. We saw Uniswap coming up… with the pooled liquidity model, and many of the other primitives [that] inspired us to build the Aave protocol, which is now securing roughly $7B of value on smart contracts across multiple networks.
So the product itself is deployed on Ethereum, Polygon, Avalanche, and also [the] Layer 2s Arbitrum and Optimism. And for those who don’t know, the way the Aave protocol works is that you can supply cryptographic assets into the protocol, earn interest, and use those assets as collateral… [which offers] another opportunity to pay your tuition, your mortgage, buying a car, or some other investment opportunity. And the Aave team can’t go and actually change how the protocol works arbitrarily, there’s a formalized governance process — meaning that it’s governed by a DAO, so the Aave community members have to come together and vote about how the protocol will be changed in the future.
Stani sets his sights on decentralized social media
CR: So from building one of the biggest lending protocols on Ethereum and DeFi, and Aave has seen just amazing growth so far since 2017 — I think it’s holding the most value locked of any lender outside of Maker, so it’s really consolidated its place as one of the leading lending protocols in this space. So you have a lot going on there, you even your own stablecoin, running the DAO, all this stuff related to lending on money markets. So going to Lens, it seems like such a different area, where did that idea come from? If you can talk a bit about the Genesis of Lens — when did you start thinking about this, how did it start to formalize into this decentralized social media protocol?
SK: The way we’ve seen the whole web3 ecosystem forming was from financial applications mainly. I don’t think finance is the easiest thing to build on-chain, in fact, I think it’s the hardest. But those applications that are working very well on-chain, such as the Aave protocol, are extremely good examples of how valuable the blockchain infrastructure is for what we are building, and how much transparency it’s bringing to the financial ecosystem. But actually, in my opinion, blockchain technology can be used in other categories. And we’ve seen recently with the NFT ecosystem that it allows creators to go directly to their own communities and have that relationship with their fanbases, create their own collections, and value their social capital within that community.
So, for me, there was always this idea that blockchain can be used beyond financial transactions, and there’s a lot of value you can actually store and reflect on-chain… I started building social applications before I was building financial applications. So the way I started to learn programming is by building web applications. That was the time when, for example, very early on, Twitter was one of the first applications that started to grow in the community where I was participating, which was the Ruby On Rails community — that was the framework that was used to build Twitter. And at the same time, that was the revolution or evolution of web2.0 social and where the internet became not only a place where you self-host a webpage or host it through a cloud provider, but actually you have these platforms where you can go and actually create content and interact with other peers across globally. That was when Reddit was getting more traction, Digg as well, and what we know today as web2.0 social spaces.
For me, the exciting thing was that for the first time ever, you didn’t need to be a serial developer or host a homepage [to] actually produce content and be a creator on the internet. You could even create eCommerce shows, and it was a very empowering movement. And I still think web2.0 social has been a big contributor in the empowerment of people and, and democratizing access to information, access to different kinds of goods and services, and creating opportunities for people.
What we are doing with web3 and the Lens Protocol is essentially taking a step further where we are [creating] this amazing infrastructure, but at the same time, we aren’t creat[ing] it in a way where [users create] all the data and all the user interactions, but essentially [provide] a lot of data for the platforms that are then used to understand what we might like[,] want to give our attention to, and… be interested in buying — so the users become a more of a product.
With decentralized finance and seeing how you could actually create a lot of accessibility, remove this trust between centralized parties, [and] actually strengthen the ownership of the users. And that’s where the whole idea of web3 is where you create user-owned networks [and] you bring the power back to the users. And that’s what Lens Protocol essentially is trying to solve.
CR: Got it. Yeah, the promise of this web3 social media landscape where users are owners of their own information and data, I think, is something that’s very inspiring for most of us in this space. But okay, just clarify… [Lens and Aave are] two completely separate projects? Or is there a way that Aave and Lens work together?
SK: They’re separate projects. So the way we work in the Aave team is that we have a separate Aave board which is focusing on contributing to the Aave ecosystem. And the Aave ecosystem is in good shape in the sense that there are multiple contributors that are building and developing the protocol further, and we’re one of those contributors. The Aave DAO itself is self-sustainable, so it’s earning income from the protocol activity and using that income to essentially reward those contributors across the space and also give additional grants.
We have a separate team that is working directly on the Lens Protocol, but we share resources in the sense that we have this incredible knowhow from years of building smart contract-based protocols, and that’s very valuable for us. So there’s a slight separation, but at the same time we are all kind of like a part of a bigger family.
CR: Got it. So when you say ‘we’, you’re talking about the development company behind Aave, and now also behind Lens?
SK: Yeah, exactly, the software company.
CR: Got it. So it’s interesting that you’re saying that the Aave DAO has reached a point that it’s self-sustaining, that it’s getting revenue from its own on-chain activity and paying contributors that way. So now, you can allocate some of the resources of the Aave company to produce this other… social media protocol.
SK: Yeah, exactly. I think it’s a part of the bigger idea that there’s a lot more space to actually innovate. So our core idea within Aave has been that we want to innovate, and we’re not only looking at categories like, for example, how we could innovate in decentralized finance, but we are always looking into [potential] outputs. So, for example, [we are looking into] what kind of impact we can create if we build a new protocol. What kind of impact we can create in decentralized finance? How can we empower users when they have their own social graph and their own on-chain profile? [How can we] change the ownership and the dynamics of how we interact with social media today? And that’s what is most valuable for our team when we think about what kind of things we can build.
The innovations underpinning Lens Protocol
CR: Really cool. So getting deeper into Lens and how it works. I get why you started it and the motivation of this user-owned social media platform, but for people coming across this idea for the first time, how does it actually work? Is it like Facebook and Twitter where you create an account, have a profile, post stuff online, and have followers? Or is it something else? Is it that instead of a profile, you have a wallet? If you can break down the details on what, in practice, this actually means?
SK: In practice, it really resembles the mechanisms that we know today in social media. So, effectively, the way it works is that as a user, you create a profile and that profile is tokenized as an NFT. So you can store it in your wallet, or you can transfer it to somewhere safer and delegate the power to post from somewhere else. And once you create your profile, you can start publishing — that means that you can publish any type of content on a protocol level. So you can publish videos, audio, text, or any other supported file formats. And then you can also follow different profiles that already exist on the Lens Protocol.
One thing to note is that the protocol is created for applications. So, essentially, the applications can choose how they want to store the data or reflect the data storage. So, for example, the data can be reflected to IPFS on-chain, or something like RV, or you can even still use something like cloud or self-hosted data. So, as a protocol, it’s very flexible [in terms of] how you, as a developer or social media application builder, want to use it. But regardless, those features are also available for the end user as well.
CR: So Lens, right now, is a protocol, like a set of rules and standards for publishing so that users can create a profile that’s minted as an NFT. And it allows the users behind those profiles to post different kinds of information — it can be video, text, audio, or different kinds of files. And then separately,… because it’s open-source… that same protocol allows… anyone to build on top of it, so developers can then build different applications on that protocol. Does that mean that Lens users who are posting their content are automatically a part of all of the applications that are being built on the Lens Protocol just because they have a profile on Lens? Is that how it works?
SK: Yeah, they can be part of all the applications. So one of the key ideas about the Lens profiles is that you need to only create your profile once, and essentially if there’s an application built on top of the protocol you can go to that application — you don’t need to create a new profile. So you have this compatibility between different applications — well, I would say more of a portability.
Also, a new application can actually choose… what kind of content they want to show to the user. So the benefit of having a common social graph is that you have all this information available. It’s easier for the user to actually switch between different applications. But at the same time, it means that those applications need to also curate their experience for the users.
So, for example, if you’re creating an application that is focusing on video, you might want to only pull some of the content from other video applications that are… aligned to the same vision that you might be building. The benefit here is that every single application that is onboarding users [will] benefit the rest of the applications… So they’re effectively building the social graph together.
CR: How do applications benefit from each other? Can you get into that point?
SK: The way they can benefit is that each of the different applications might have their own kind of focus point or user experience. So the focus might be, for example, on a certain type of content, or a specific type of interest graph… So let’s say we have an application that might have an interest graph of a particular sport, and some other one might have another sport, and maybe someone builds another application that is picking all the content from sports in general, that’s just a simple example. But also, the way it works is that when you build something on top of Lens Protocol, you can submit metadata. Where there is the application ID, there’s also the focus — which type of content the application is focusing upon, the content itself, meta-tags, etc. — and effectively this creates a bigger data graph that those applications can use.
Besides the applications, there is also a middle-layer. For example, there is a Lens API that is indexing all the data from the Lens Protocol [and] the decentralized social graph, and that API is then serving the applications what kind of data they want to actually pull from the whole graph. And the idea is that Lens API is going to be more decentralized in the future as a node network. So anyone can actually run their own node or take the data from a service provider, and it opens up doors to create different kinds of algorithms as well.
So a practical example is that when you use Twitter, you pretty much have to use the experience they provide and the algorithms they’re providing. So, as a user, you don’t have any choice. But for example, in the future with Lens Protocol, you can actually choose your algorithm. You can choose your application that is fitting the content and the need you have, but also on the algorithm level. So it creates more flexibility and freedom for the user as well.
CR: That’s so interesting. Okay, to bring it kind of back to a web2.0 sort of analogy, it would be as if say Twitter, Facebook, Instagram, Reddit, etc., were all building on top of the same protocol layer infrastructure, and then anyone with an account on that protocol would immediately be able to take all of their data that they’ve ever posted on each one of those different applications, depending on whatever data those applications filter. For example, early on, I used Facebook — a lot more than now, now I don’t ever go on Facebook… — but there’s like this whole history of Facebook posts [and] maybe I could port all that information to Twitter if I wanted to if that’s the social media network that I use more often now. I wouldn’t have to lose the information on the other applications that I’m not using, because all that information is just shared across the base protocol. Is that kind of the idea?
SK: Yeah. So essentially the way the internet is built today, for example, is that we have a lot of protocols that we are using to have this portability in terms of connectivity. But when it comes to the application layer and we look at Facebook and Twitter, the platforms, they don’t have portability because one of their competitive modes is that they’re able to create the network architecture within that platform and look at the users. So if Twitter changes, if you love Twitter today, but it changes their policies — they maybe change the user experience or the algorithms in a way that you might not enjoy the application anymore — maybe you’re also a creator [and] you post lot of content and you get traffic to your homepage, you can’t actually take your audience out of there.
So you can’t do a digital exit out of the platform. That’s how it’s built so they can grow, and grow the network effect they have and use it for their advantage. But then, when we look into Lens, effectively, we’re bringing the portability to that profile layer so that you create the profile once [and] then you can actually flag what data you want to have… in one application, let’s say, Facebook, and [also flag[ what you want to have on, let’s say, Twitter. So there’s the ability on that middle layer level to flag, for example, whether you want to show everything you have, or whether you actually want to just have things that you want to talk about your work on one application, and things you want to talk about with your friends on another one… The key difference here is that the protocol is very flexible [in] how you use it. So the idea is that we build it in a way where we are very unopinionated. Effectively, you can choose it to reflect data on-chain, or to IPFS, or to store privately. So you could effectively create a more private application, or more public [application], depending on the use-case…
We are [currently] working… on v2 of the protocol. Currently, when you create a profile, you choose a handle. But in the future, you can mint a profile in a permissionless fashion, and you can use a canonical name-space that already exists, or you can use your ENS, or if you are an application builder building something new and you want to create a completely new name-space, you can also do that. So, effectively, in one way, it creates the data portability [and] data liquidity, but also it creates the ability to have that flexibility on what data you want to have in which platform.
CR: Got it, super interesting! Okay, so if you have this ability to port your data anywhere, and like you said, the reason you can’t do that in web2.0 is because there’s these ‘walled gardens’ that allow applications to grow their market size. So how do the economics work for applications on Lens? How do they monetize? How do they build their network effects if anyone can very easily leave and take their profiles and information elsewhere?
New models for monetizing content on social media
SK: I think the ability to leave is actually good from the user perspective. And also for those applications that are just starting, they effectively need traction for the user. It means that for the first time ever, the algorithms and applications have to actually work for you and provide value for you. And the way I see the monetization aspect is that when you create these different applications, obviously it depends on the use-case itself, but there’s a couple of monetization tools built into the protocol itself.
Whatever content you post within the Lens Protocol, so let’s say if it’s content of audio, video, or even just basic text, you can actually as a user collect that content as NFTs. So, as a creator, I can actually set [a] particular post to be free to collect so anyone can come and collect it for free. Maybe you can only collect it for 24 hours. But also, I can set fees to collect. So, for example, I can set it that you can collect this post if you pay $2, for example, or 5 USDC, or MATIC. Or you can even create auction-based systems.
So, effectively, there’s a concept of having user-generated content as an asset class. And it’s kind of like a similar model [to] what we have in the NFT ecosystem now — we’re buying these various NFT collections because we want to be part of the community and we want to be part of supporting the community and the creator. So it’s taking that as a concept and expanding into social. And then, if you have a big audience, you can also amplify the content that you see across the social network and amplify to your own audience with so-called mirroring — and you can get mirror fees that the creators are splitting from the collect fees. So those things you can actually on the front-end level share with the protocol itself. And it’s not the first time when actual front-ends are monetizing with protocols. OpenSea is a good example where they’re using protocols behind the scenes, and because they have this activity on the front-end, that’s where a lot of the monetization happens. But also, I believe that there’s going to be opportunities to monetize also for the algorithm creators, [where] users are actually for getting a better experience and using applications that they really love, and that are not just there because their whole audience is stuck in that one platform.
CR: So is the idea that you are seeing a future where you’re paying for content in social media. So say I follow some influencer on Instagram in this kind of web3 world, I would be paying them some small fee in order to follow them to reward them for their content creation. And then the application would take a fee off of those transactions. Is that how it would work?
SK: Yeah, you could. So a good example is that if you have a music creation application where you see music creators effectively creating content related to music. That can be actual songs, albums, or just even something related to the music like text or background information — all that can actually be collected as NFTs. And part of those fees can go to the application, part to, let’s say, the protocol treasury, and most of them for the creators. The amazing part is that the creator is the one who is setting the fees, and there is competition between the applications, so they need to provide value as well.
I like to think of it as… the best way to monetize digital goods because, for example, if you hear music today on the radio, obviously someone is paying for that, but it’s not actually [that] people are paying the artist. Music on the radio, or watching, for example, a movie, that’s more distribution, and it’s more the monetization model we created in the past. But here, you can actually have a verified NFT of content that is created by a particular creator, and use that as a monetization tool. But obviously you can add more towards that. Those are just base monetization models we have added into the protocol, and you can actually add more.
The protocol itself is very modularised, so you can add the example that you gave, where you pay to follow someone you subscribe to. So you can add a pay-to-follow module. You can create a module where you could redirect your DeFi yield to particular creators… The beauty is here that the smart contract exists on-chain…, so you can create on-chain compatibility and use DeFi and everything else that is built on top of the same network. But you can also choose not to use that and have some of the functions off-chain as well.
CR: Do you think that in a future where social media is being monetized and there’s a price on content, is there a risk that this will just exclude a big portion of the population that doesn’t have the available resources and income to be paying for this type of content? Honestly, I imagine it is a huge portion of the population that would rather give their information to Facebook and Instagram in order to use it for free than own your information and pay if it means using these services for free. It seems like a lot of people just value this over privacy and decentralization at the moment. What do you think about this huge part of the population that just wants to use this stuff for free?
SK: Yeah. I mean, most of the content that’s created for collection on Lens Protocol is actually free. It’s just this small percentage that is set to pay-to-collect. I personally am a big believer in [both] free NFTs and also charging for the content. They both have exciting use cases, and you can, as a trader, use both of them. The cool part here is that you can collect those NFTs, and some of them might become culturally relevant or valuable for that community at a later stage. So you have that financialization part as well. So, in one way, it’s not only about being able to collect what is paid, but actually you contribute to the ecosystem the way you might see fit. So, for someone, it might be collecting those free NFTs.
But what the protocol itself aims to do from the impact perspective is actually unlock your social capital and ensure that you have the ownership for what you create, and the ownership between your audience. Let’s say that you might not create a lot of content, but you have a [large] following. If you see some interesting content, you can reflect that to your audience and earn as a curator as well. And curators are kind of like a creator class within not just in social landscape but in general, which are undervalued. So we create a lot of Spotify playlists, for example, we might create a who-to-follow list, and we are not rewarded as the user. So that user base is something that we’re elevating as well within the protocol. But I do believe there’s a lot of value in the free NFTs, but also value that you can create your own community and your own follower network. And that’s the value you actually have. And maybe someone from another network might be interested in what you are creating on the protocol.
CR: Okay. So, you’re saying that not all content will have a price and will need a subscription, or will have to be paid for. And maybe the way that applications monetize is through the fraction of the content that’s in that application that does have a price, but maybe the large majority of content that’s created and of users aren’t actually having to pay for that?
SK: Yeah, exactly. And when you look at how web2.0 social media works today, effectively the users, as you said, are giving their data. They’re constantly training machine learning algorithms to know exactly what they might like, what is relevant for them, and effectively they’re selling their attention. They’re also selling their buying power [and] purchasing power at the same time. So all that ad revenue that… Facebook and Twitter get… comes from the pockets of the users itself. So there are of course user bases that are paying for most of the monetization within the web2.0 social landscape. But most of the users obviously might not be consuming anything that is advertised to them. And I think it’s just very important to create better models of monetization than advertisements.
There are a lot of issues with them. I don’t see advertisements necessarily dying completely. There’s a way where you can amplify content that is relevant for your audience and do collaborations from creator-to-creator perspectives. But the way it’s done today as mass advertisement with web2.0 social, it leaves pretty much no choice for the users than to actually consume or see those ads, unless they pay for some sort of a premium feature. And I think opening up the doors where you say that [users] don’t have to be locked in a platform and can actually have portability, and now algos and applications need to focus on what’s valuable for you — they have to compete on your actual value. I think that will change the game completely.
Leveraging external social value on Lens
CR: Do you think that there’s also the opportunity for users to be paid directly for their data by the applications they’re using? So it’s more of a voluntary way to share your information [and] you’re consenting to it because you’re getting paid or getting something in return. Is that something that’s a part of this plan?
SK: I think what’s valuable is to use your web3 footprint, because in one way, that’s your social capital as well. And based on your web3 footprint, [you can] effectively use it in a way where you can actually reward certain kinds of behavior or create accessibility — for example, opening up some interesting features for the users. But on the Lens Protocol, you can do a lot of that on a follower basis. So, for example, I can create content and only let my follower-token IDs [numbered] one to 100 can access that content and reveal it — that’s something that can be done. Or they can actually access content that has a real redeemable part that is, for example, physical. So you can expand towards that ecosystem.
What NFTs and smart contracts are good at doing is very fine data — essentially, that something happened in the previous block or previous time, and using that for unlocking future value. And I think the biggest challenge that I have seen, especially with the NFT ecosystem but [also] in the web3 space, is that we create a lot of value amongst ourselves. So we can verify who participated in the governance, who minted an NFT two weeks ago of a particular NFT project, but there’s lot of people coming into the space that don’t have that social footprint. And that creates a bit of inequality in the social capital. Because the way the ecosystem works, it currently doesn’t recognize the off-chain social capital that you have generated on Instagram or elsewhere. And I think this is where a lot of value comes in actually being able to bring that capital through oracles or other ways, and actually ensure that the newcomers that are coming to the space feel that there is equality in the sense that what they have achieved previously could be valuable in web3 as well.
CR: How would that work? Would they be able to use their web2.0 content on Lens? How would they increase their social capital as a newcomer?
SK: The way the protocol is built is that it’s very agnostic [in] what kind of algorithms you can actually create and use from the middleware-layer where these applications have been built. So you can create an application that uses, let’s say, your web3 footprint, but also it could use something that is off-chain. So you can connect your Twitter, get your some of the Twitter data and create value out of that if you want to do that. So that is possible on the middleware-layer. And it’s more of an opportunity for data engineers to come and actually find different ways of using theta data in the social graph as well.
A simple example I’ve seen someone build in a hackathon is a migrator where you can migrate all your Twitter content onto the Lens Protocol. That’s a very simple example, but I believe more in just having some significant data points that are valuable to you, and you can port them on-chain that might be helpful for you to establish your social presence on-chain.
CR: That’s so interesting. Do you see a future where this social profile would be ported onto DeFi applications?
SK: It could be fascinating. I mean, some of these profiles are going to get more and more traction and they might have ongoing revenue from NFT collections. Maybe it could be an interesting way of using, as working capital, finance through DeFi, and financing the growth — because a profile can be your personal profile, but it can also be a brand that you created and are representing. But also, that data could effectively be used as something like a social reputation score that could be used in decentralized finance, and maybe even have those undercollateralized loans that everyone has been talking about for ages.
CR: Interesting. So your social score achieved on Lens could potentially allow you to get an undercollateralized loan on Aave?
SK: Exactly. And because the protocol is modularized, you can build various different collect modules. We have a few community builders that are doing that. There is one specific module that actually takes all the revenue that you get from the collects and is essentially depositing it to the Aave protocol so you can earn more as a creator. This is the beauty of how we designed our architecture.
So we rely upon the smart contracts to have this verification and programmability between these modules, and also everything that exists on-chain, but then it’s up to users and applications to actually decide how the content is reflected. We want to use off-chain decentralized file storage, so it’s an interesting approach that we have taken because we’re firm believers that using smart contract-based logic is interesting, and the web3 social footprint that you have is valuable for your social graph.
CR: Very cool. Okay, so we’ve talked about how these applications, and even users, can monetize this web3 social media. What about for the Lens Protocol itself and for like Aave company? What’s the business model there?
The growth of the Lens community and economy so far
SK: Over the years, our business model has been pretty much building protocol infrastructure and being part of the contributors [to] whatever we build and give to community ownership. With the Lens Protocol, I think it will most likely follow a similar path, [where] maybe, at some point, the protocol goes to user-ownership…
We launched the mainnet two months ago, and there’s over 63,000 profiles minted on Lens, and as of today, we have over 1M follow NFTs minted. So whenever you follow someone, [you] mint a follow NFT, and whatever [they] are posting [their] latest post is reflected in the follow NFT if I go and see [their] wallet. So it creates this kind of protocol-level communication channel with your audience.
We have over 350,000 and NFTs collected as well, which has brought roughly 200,000 points of revenue directly for the users. So every single profile on average is earning $3.50 on the Lens Protocol, which is quite cool because it goes directly to the users. Some [of it] goes to the users that are mirroring the content for their own audiences. And the protocol itself has a fee collection built in, but it’s set to zero. So that’s something that the community can at some point activate if they have community grants that they want to pay.
Also, as a developer, you can actually contribute to the core smart contract base and build additional monetization tools and other modules. So the protocol is completely open-source. Anyone can actually use it for their own purpose.
CR: Wow, that’s so interesting! So 63,000 Lens profiles, a million follows… You said 350,000 NFTs — are those just pieces of content that have been minted as NFTs?
SK: Yeah. So it might be a meme, it might be a video — for example, you can post your podcasts onto the Lens Protocol and your fans can collect and you can even charge for their collection and maybe that’s like an equivalent to tipping. So those NFTs essentially can be any content, and it’s actually quite fascinating how the meme-culture could be empowered because we’ve seen retroactively memes being bought afterwards. So we saw with the Doge meme and… the Nyan Cat meme that basically those NFTs were auctioned later in time — like 10 to 15 years after their creation. But here, you can create a meme that can go viral and collect fees, and you might earn revenue, and then someone else might actually even sell that meme later.
Again, you have these economical feedback loops, which is interesting, and that generates value [for] that particular content. I think this is very fascinating, maybe for you from a writing perspective… we’ve seen a lot of digital art being collected as NFTs, but I see a lot of value in collecting content itself, and especially written content. And the fact that… real content like the constitution was being bid [for] between $40M to $50M, having something in digital form could be equally as valuable because it’s the idea behind it and the history that goes into that piece of content that creates that social capital and social value. And that, I think, is the future.
CR: Very cool. So I could post The Infinite Machine as an NFT on Lens, and maybe people could bid on it.
SK: Yeah, exactly. I hope you do.
CR: And you said $200,000 — is that [the dollar-value] of fees have been created?
SK: Yeah, in roughly two months, and it’s still beta, so this is very fascinating. So the protocol isn’t permissionless yet — that’s the v2 that we are working on. So the way you are able to access the protocol is effectively that we have been whitelisting different communities — BoysClub.eth, Developer DAO — if you hold particular NFTs like a Crypto Cobain, Paulie NFT, and a bunch of other impactful projects across the web3 ecosystem, we whitelisted addresses to come and actually claim their Lens profile. And we are effectively using the on-chain data to create the early user group within the Lens protocol and see how they are interacting. But our longer vision is actually not just to empower the people who are already in the web3 space, but also the newcomers. So we’re putting a lot of effort into making it very easy to interact with Lens Protocol.
So in the middleware, with Lens API, we also created ‘Dispatcher’, and dispatcher effectively is a relayer which pays the gas costs, so the transactions are gasless. A few days ago we hit 2M gasless transactions. On top of that, it allows you to delegate signing to that dispatcher, so you don’t need to sign for Metamask transactions, which means that you are interacting with some of these applications — like the community-built LensShare, LensTube, The Orb, and whatnot — in a way where you would interact with any web2.0 social media application. So [it’s] as if it’s normal application and the blockchain logic happens in the back end, and this brings us closer to the experience that we have in [the] normal applications we are used to without seeing Metamask popups. The next step is actually [optimizing more] for mobile and then making it even easier for users to generate their Ethereum address and have like a low-transaction account that they use to interact with the Lens Protocol through those different applications.
So we’re focusing quite a lot on actually pushing the whole web3 ecosystem closer to the mainstream, because we believe that the mainstream will not come by buying something like Ethereum or MATIC. They actually will come by interacting with the blockchain with non-financial transactions, and some later users will become active or passive DeFi users. So I think that’s where a lot of value comes, and that helps the narrative of blockchain — that it’s not only for finance, there’s actually a lot of doors that it’s opening and magnificent use-cases that are empowering our communities.
CR: So this dispatcher, is it kind of like an automated robot that’s signing transactions and paying for transactions, like working in the background? If so, where, where is that money actually coming from? Who is actually paying for these transactions?
SK: Currently [fees are] paid with the Polygon grant that we have received. The gas costs aren’t that big of an issue with a network this size, but over time, obviously if the Lens Protocol becomes widely adopted, then the solution is actually moving to transacting on a Layer 2 where we can scale in a way that the more we have users, the more cheaper the transactions… But for now, the Polygon ecosystem has been quite nice because there’s already Proof of Stake [and] the block times are faster. But in the future, I think Layer 2 is the way to scale and reduce transaction costs as well.
CR: That makes sense. You’ve been talking about making Lens permissionless, and that obviously sparks the idea of a token. Is that the plan down the line?
SK: I mean, we’ve been focusing quite a lot on the product itself, how it works, and making sure that Lens Protocol actually is a utility and usable for our ecosystem, and can actually be beneficial for the users. I mean, so far, the data looks incredible. We had had a lot of good feedback and we learned a lot during the past months. We’ve been building the protocol obviously way longer, roughly a year and a half, but… during the past months where we had more hackathons [and] more developers building on top [of Lens], we actually learned how to improve the protocol. So I think now our main focus is the Lens Protocol v2. And that’s going to be most of the work and heavy lifting going forwards.
Looking ahead to mainstream adoption
CR: Okay, so V2 is the focus, and, I guess, a token [is] TDB down the line. This is all so fascinating. When [and] how do you think the mainstream user comes in? Where do you see this in five years, and how does it reach the everyday audience that’s not involved in web3 at the moment?
SK:
I mean, we’re pretty far in terms of the user experience, because the user experience can be very optimistic. When you post content, you can see that happening right away in the user interface, and the blockchain logic can happen in the backend. And meanwhile, when you’re scrolling the feed, for example, if something breaks in that blockchain interaction, then you get a notification to resubmit a transaction, or it can be resubmitted in the back end. It can be very optimistic.
It’s more about how we manage securing, for example, the user keys, and part of the Lens Protocol v2 will also think about focusing on improving the way we have the delegation. So you could delegate your posting power to your specific address, and with certain functions. So making that easier, and [making it] easier to generate a low transacting address as well for the users that don’t have Ethereum addresses now just by signing with their email. And making… the feeling [of using] blockchain… as if you are using any web2.0 application [where the blockchain] logic happens in the back-end. So that’s one thing.
And then using interesting applications. So in my opinion, if… whoever is building an application which is kind of like trying to replace Twitter, Facebook, Instagram, or YouTube, it’s going to be a very hard game because those applications already have their social networks [and] they’re quite strong networks. For example, Twitter, they’re still innovating. There’s some things happening, interesting incremental updates, and so forth. What’s going to take this technology forward is the actual use-cases, and building new applications that are attracting interest graphs together. So we have to build something new to win something old. And I think that’s the way to go. And just by restructuring and creating, let’s say, a web3 Twitter or Facebook isn’t gonna take us far, it’s about actually creating those new parties where people want to go.
CR: I love that take. I know it’s really early, but what are some of the encouraging, innovative applications that you’re already seeing that are doing something that’s different? Or maybe it’s too early and at this stage we’re just kind of replicating what’s already out there?
SK: That’s an interesting take. A lot of the things that have been built in hackathons where we’ve got most of the feedback — and I’m super happy that we choose this path — we’ve seen those developers actually rebuilding current applications that exist in web3 into web2.0. So there is LensShare [and] Lenstube, and they’re actually ways to explore the content. I’m quite excited about a product called Orb.
Orb is using Lens Protocol for the feed, and also the main idea of the application is that you can, as a non-web3 user, learn about web3 and go through different kinds of courses, and then you get rewards as NFTs, and then you can post that achievement on your feed. And at the same time, in your profile, you can also add different kinds of portfolios — what you have done before your achievements, where you worked before, schools, etc. — and post them into the feed… Why this is important is that many of the web3 companies are growing quite fast, and we need a lot of talent into the space [from] outside of the web3 ecosystem, and learning is a big part of that.
So you might have big companies like Coinbase, for example, where you have employees that know every single yield farm and NFT drop, to people who might not interact at all with, let’s say, Ledger hardware wallet. So you have differences between virtual knowledge and experience, and these applications help us to onboard more people and educate, and then show them job opportunities as well which actually reflect what they have learned, and kind of match the talent market as well. And in one way, you can say it’s better than Linked in, but when you look at the application, it’s actually a way to stay up to date with what’s happening in this space and learn about the progress as well.
CR: Awesome. Okay, I know we’re, we’re over time, but this has been fascinating. I’m super excited to see where this all goes. I’m happy I claimed my Lens profile very early on. And just to wrap up, very last question — Stani, I want to hear your thoughts on how you are defiant?
SK: Well, I think I’m natively defined because I care about the values that we have in the web3 community — that’s basically approaching and solving problems through community perspectives, and also staying with the communities. So for me, it has been important that over the past years, obviously I’ve become more excited about new things, but being able to come back [to the community] all the time and talk about the exciting things has been very valuable to me. And I think ‘defiant’ means being community-first, which I very much appreciate.
CR: I love it. Thanks again for coming on the podcast, this has been amazing, and again, I’m super excited to see where this goes. But I think a web3 social media network is very much needed. So yeah, excited to see you build it.
SK: Amazing. Thank you for having me here and [allowing me] to share what Lens is.