Decentralized version of Discord? Can Towns, backed by a16z, break the curse of on-chain social?

Author: 1912212.eth, Foresight News

On April 11, the Web3 social protocol Towns Protocol completed a $10 million Series B funding round, led by a16z crypto, with Coinbase Ventures participating for the first time and Benchmark continuing to invest. Back in February 2023, Towns had already completed a $25.5 million Series A funding round, also led by a16z.

In the current bleak state of the crypto market, not only has funding for niche sectors nearly vanished, but even the financing amounts for popular sectors have significantly decreased. With many funds adopting a conservative style and unwilling to invest, why is a16z still betting on the less favored social sector? What new things does Towns bring to the table?

Real-time Messaging Application Open Protocol

Towns Protocol is an open protocol for building decentralized real-time messaging applications. It includes an EVM-compatible Layer 2 chain and decentralized off-chain flow nodes, deployed on Base. Towns allows users to create programmable communication use cases in a permissionless manner, referred to as Spaces. These Spaces are ownable and support on-chain subscriptions (membership), a scalable reputation system, and end-to-end message encryption.

The ecosystem of Towns Protocol aims to empower people to create, manage, and participate in digital communities in a secure and permissionless way. Its main goal is to provide a robust, secure, and decentralized platform that allows people to have complete control over their data, privacy, and interactions in these digital spaces while protecting their reputation.

The Towns messaging protocol is the core infrastructure for verifying and transmitting encrypted messages between users. It introduces an innovative approach to secure and private group messaging. The protocol is designed to operate seamlessly within blockchain infrastructure, leveraging the robustness of decentralized technology to provide a high-quality permissionless messaging experience.

Read/write permissions are protected on Base, allowing Towns to make trade-offs in activity to send messages to thousands of participants at speeds comparable to existing centralized social networks. The Towns protocol was initially built for a wide range of chat application scenarios, incorporating the business logic of chat, but in the future, the protocol will be abstracted to serve as a foundational layer for any form of encrypted messaging use case.

What are its features?

Towns consists of three components: first, the Towns Chain, a Layer 2 blockchain solution (built on OP-Stack), which serves as the backbone of the Towns messaging protocol, providing consensus mechanisms and security guarantees. Second, the flow nodes, responsible for managing the flow of messages within the protocol, handling tasks such as message validation, storage, and encryption. Third, there is permission management, used to manage user permissions and access control within Spaces, ensuring the security and organization of the communication environment.

Its interface style is similar to Discord, but Towns also has its own characteristics. Its login interface supports Google and Twitter accounts, even including competitors like Farcaster, without the need for a native crypto wallet.

Application Chain Built for Social Networks

Towns Protocol is an application chain specifically designed for social networks, protecting read/write permissions on Base. The application chain can make trade-offs in activity, enabling it to send messages to thousands of participants quickly, similar to existing centralized social networks.

Ownable Communication Spaces

Space creators truly own the Spaces they create, which exist as on-chain assets.

Programmable Spaces

Spaces are deployed on-chain in a programmable interface, allowing for custom rules, such as who can read and write, and can integrate with any other externally compatible EVM contracts.

On-chain Membership System with Built-in Protocol Fees

Users need to hold valid membership tokens to send and receive messages within Spaces. Membership pricing includes protocol fees to cover network operating costs.

On-chain Social Graph

Membership tokens and Spaces can be discovered on-chain, forming a transparent social network structure.

Scalable Reputation System

Towns' communication Spaces are programmable, allowing members to maintain specific reputation scores for the Spaces on a peer-to-peer basis, which can be discovered on-chain.

End-to-End Encrypted Messaging

Advanced encryption technology ensures secure and private communication, protecting the messages between senders and authorized users.

Token Economics

According to its official documentation, the Towns token is deployed on the Ethereum mainnet, with an initial supply of 10 billion tokens. The Towns token has multiple uses within the Towns Protocol ecosystem, including delegation to node operators, delegation of space addresses, and participation in governance.

Towns tokens can be delegated to node operators, who are key components of the network's operation. To gain approval from the DAO and begin operations, node operators must obtain a minimum amount of token delegation to ensure they have sufficient vested interest in the network's success and security. Token delegation can be directed to the addresses of node operators or to any valid space address within the network. Spaces can then redirect the received delegated tokens to specific node operators, providing flexibility in delegation strategies. In addition to their role in delegation and network operations, Towns tokens also play an important role in the governance of Towns DAO. Token holders can participate in the decision-making process, influencing the direction and policies of the DAO.

Regarding the inflation mechanism, the Towns token has an initial annual inflation rate of 8%, which is set to decrease linearly over 20 years, ultimately reaching a 2% inflation rate. Inflation rewards are distributed evenly among all active node operators at the end of each cycle, which occurs bi-weekly. Thus, the inflation rewards distributed every two weeks are calculated using the formula: (annual inflation rate / 26).

In terms of reward distribution fees, each node operator has the right to set their own percentage fee for their services. This fee is deducted from the total inflation rewards allocated to that node operator for the cycle. After deducting the node operator's fee, the remaining inflation rewards are proportionally distributed to the delegators of that node operator. Towns will also open its staking functionality in the future.

Currently, Towns has not announced any information regarding airdrops.

Summary

The CEO of Towns Protocol is Ben Rubin. He is an experienced entrepreneur and co-founder and CEO of the popular video social application Houseparty and the live streaming application Meerkat.

（The intermediary is Rubin）

Rubin is known for his achievements in building innovative online communities and real-time communication tools, with his career focused on enhancing user connections and interactions through technology.

According to its official introduction, Towns currently has nearly 1 million members, with consumption sent through Spaces conversations exceeding $500,000. Its protocol revenue has also been continuously growing since this year.

The Web3 social sector has witnessed countless protocols that have quickly faded away—bursting onto the scene with grand promises of disrupting the traditional landscape, only to fall into obscurity due to technical bottlenecks, user attrition, or ecosystem closure. In the current sluggish crypto market, how to attract more users to create and enter group chats, and how to encourage users to settle down, remains a real challenge that all social protocols must face.