One of the promises made by web3 entrepreneurs is putting 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 has recently closed a Series A financing round totaling $15 million.
The lead co-investor of the round is Animoca Brands, the Hong Kong-based company that has in recent years risen from an underdog in game development 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 back in the day.
“In web2, companies with the largest social network own users’ social graphs and build walls around them to stem competition and advance corporate interests,” says CyberConnect CEO and cofounder Wilson Wei.
As such, Wei and his team are building a social graph “protocol”, the underlying rules that allow data to be shared between computers, for applications, and in web3’s case, without a centralized agent like Facebook. The end goal is that users can travel across web3 platforms with their followings and followers.
An app experience powered by CyberConnect will look like this: Users connect their crypto wallet — which has become a universal gateway to any web3 app — to a social platform, upon which they will be shown all their existing connections. They will get recommended user addresses to follow, which is based on CyberConnect’s indexing. Once they follow someone, that piece of information will be added to CyberConnect’s network and become “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 allow follower interropability, such as Lens, which is operated by Aave, a decentralized lending protocol backed by Blockchain Capital.
CyberConnect’s solution, Wei tells TechCrunch, consists of two components. Similar to Lens, it offers a software development kit (SDK), a piece of software for developers to create custom apps that let end-users manage their social graphs and a “social data network” that aggregates users’ behavior in web3, such as what tokens and NFTs they bought.
Rather than using smart contracts like Lens, CyberConnect’s SDK is built on top of InterPlanetary File System (IPFS), a peer to peer data storing and sharing network, and Ceramic, a network that manages mutable data without centralized servers, which Wei claims is a more “economic and gas-efficient solution.” Smart contracts are computer programs that execute automatically according to the terms of contracts and incur “gas fees”, the payments made by users to compensate for the computing power required to process transactions.
“Smart contract-based protocols are creating value from scarce items while any data stored on-chain costs a nontrivial amount of gas fee. There are only 10,000 NFTs in one collection and a limited amount of bitcoins,” Wei explains.
“In contrast, social context welcomes data abundance. There’s only an ever-increasing number of new users, new connections, and new content and that data will be by nature dynamic and need constant updates.”
CyberConnect plans to generate revenues through the social data network, which include different participatns like data contributors, indexers and recommenders, curators, and users. The network will be permissionless, meaning anyone can join, and include incentive mechanisms revolving around query fees, according to Wei.
The startup, headquartered in Palo Alto, operates with a team of 27 across the US, China, Canada and Europe.
Several venture investment firms, including Dragonfly, have recently warned web3 startups to brace for a cooling industry in the wake of the recent crypto market crash and wider macroeconomic compliactions. Wei is undeterred, saying “bear markets are a great time for us to focus on building.”
“As a serial entrepreneurial team, with more than seven years in social, Web3, and blockchain, previous experiences taught us that it is crucial to keep building during the downturns,” he says. “It will also be easier for truly visionary and value-creating projects to be properly recognized as the noise will die down together with the market hype.”