One of the promises of web3 entrepreneurs is to put the data back in the hands of owners through decentralization. Singapore-based CyberConnect is among a handful of blockchain startups working to fulfill this vision, and it recently closed a Series A funding round totaling $15 million.
The main co-investor of the round is Animoca Brands, the Hong Kong-based company that has risen in recent years from a game development underdog to an investment juggernaut in the web3 world. The other co-investor is Sky9 Capital, a Shanghai-based venture capital firm founded by Ron Cao, who is known for helping Lightspeed Venture Partners set up shop in China.
“In web2, companies with the largest social network own users’ social charts and build walls around them to curb competition and advance business interests,” said CyberConnect CEO and Co-Founder Wilson Wei.
As such, Wei and his team are building a social “protocol,” the underlying rules that allow data to be shared between computers, for applications, and in the case of web3, without a centralized agent like Facebook. The end goal is for users to travel across web3 platforms with their followers and followers.
An app experience powered by CyberConnect looks like this: users connect their crypto wallet – which has become a universal gateway to any web3 app – to a social platform, showing all their existing connections. They are given recommended user addresses to follow, which are based on CyberConnect’s indexing. Once they track someone, that piece of information is added to CyberConnect’s network and becomes “portable and self-sovereign”.
To date, CyberConnect has supported 23 projects, including Project Galaxy and Mask Network, reaching a total of 710,000 users.
Other companies are building similar infrastructure to enable follower interoperability, such as Lens, which is operated by Aave, a decentralized lending protocol backed by Blockchain Capital.
CyberConnect’s solution, Wei tells businesstraverse.com, consists of two components. Like Lens, it offers a software development kit (SDK), a piece of software for developers to build custom apps that allow end users to manage their social charts, and a “social data network” that collects user behavior in web3, such as which tokens and NFTs they have bought.
Rather than using smart contracts like Lens, CyberConnect’s SDK is built on top of InterPlanetary File System (IPFS), a peer-to-peer network for storing and sharing data, and Ceramic, a network that manages volatile data without centralized servers, which Wei claims is a more “economical and gas-efficient solution.” Smart contracts are computer programs that run automatically according to the contract terms and incur “gas charges,” the payments made by users to offset the computing power needed to process transactions.
“Smart contract-based protocols create value from scarce items, while all the data stored in the chain costs a non-trivial amount of gas costs. There are only 10,000 NFTs in one collection and a limited number of bitcoins,” explains Wei.
“In contrast, the social context welcomes the abundance of data. There’s just an ever-increasing number of new users, new connections, and new content, and that data will naturally be dynamic and need to be constantly updated.”
CyberConnect plans to monetize the social data network, including various participants such as data contributors, indexers and recommendations, curators and users. The network will not be authorized, meaning anyone can participate, and will include incentive mechanisms centered on demand costs, Wei said.
The startup, headquartered in Palo Alto, works with a team of 27 people in the US, China, Canada and Europe.
Several risk investment firms, including: Dragonfly, recently warned web3 startups to brace for a cooling industry in the wake of the recent crypto market crash and wider macroeconomic complications. Wei undeterred, saying, “bear markets are a good time for us to focus on building.”
“As a serial entrepreneurial team, with more than seven years in social, Web3, and blockchain, past experience has taught us that it’s critical to keep building during the recession,” he says. “It will also be easier for truly visionary and value-creating projects to be properly recognized as the noise will decrease along with the market hype.”