The Evolution of Encrypted Social Media: From Group Chats to Information Economy

The history of cryptocurrency seems to always be filled with the temptation of "getting rich quickly." However, upon closer inspection, what is often hidden is the fate of the "chives."

In the cryptocurrency space, CT does not refer to medical devices, but rather is an abbreviation for Crypto Twitter. As an industry observer, I often focus more on underlying protocols and data analysis rather than hot topics or gossip news. This leads my information flow to be mainly concentrated on project development and experiential learning.

Recently, I noticed that "hype" has become a major feature of Chinese encryption Twitter on CT. In light of this trend, I have focused more on the Kaito project itself, which combines the marketing strategies of opinion leaders (KOL) with the concept of "shearing the sheep," forming a standardized model.

Kaito has successfully built a communication platform between project parties and KOLs, reminiscent of internet products like Meituan or Pinduoduo. It has become another project that can continue to operate after issuing tokens, following StepN.

Kaito is not a completely original conceptual product. From media yearframes to promoting KOL internal competition, Kaito is essentially a culmination of Chinese information flow over the past decade.

Group Chat Era: 2018-2021

The now mainstream encryption ETFs, stablecoins, and DeFi may seem unfamiliar to many early participants. At that time, the world of encryption was more pure, centered around Bitcoin and mining. Although resources were limited, everyone firmly believed that Bitcoin would eventually appreciate.

Professional content production, that is, the KOL model primarily based on user-generated content ( UGC ), has a clear starting point.

It is widely believed in the industry that this starting point should be set at the "3 o'clock community" in 2018. Since then, WeChat groups and AMAs (Ask Me Anything) have become the main marketing methods for several years, allowing founders to communicate face-to-face online with potential "community members."

The involvement of a well-known venture capitalist marks the recognition of this niche public opinion feast by the mainstream, symbolizing much like the well-known investor buying BAYC years later.

Using a common metaphor in the encryption circle, AMA is the way to issue information assets, the WeChat group is the launch pad, and the 3 o'clock community is equivalent to a certain trading platform at that time, together forming the core memory of the first real bull market of Bitcoin after 2017.

Although the first generation of KOLs had already emerged at that time, the "Battle of Thousand Media" still unfolded in the form of traditional media. There are two main reasons for this: first, the market's recognition of the distribution capabilities of KOLs was not high at that time; second, it was the tail end of the peak period of entrepreneurship in the self-media industry triggered by WeChat public accounts.

In other words, the market recognizes the combination of traditional media personnel and media brands more. Many encryption media outlets have been established or received financing, among which one media outlet has performed particularly well, becoming an industry benchmark.

The period before May 19, 2017, can be said to be the most beautiful era of the encryption industry, worth remembering forever.

Twitterscan: An Attempt in 2022

On May 19, 2021, a ban forced the industry to undergo "forced migration." Physically, entrepreneurs took their mining machines across the ocean; on a spiritual level, the encryption community experienced a migration from Weibo to Twitter, which completely shook the information advantage of Chinese media.

Prior to this, Chinese media held a relatively advantageous position. The founder of a certain exchange secretly invested in a certain encryption media outlet, the founder of Ethereum personally flew to Shanghai, and the founder of EOS learned to use WeChat. In this context, it can even be said that Chinese media is in a dominant position, as they control the largest computing power market and consumer market in the world, and there is no need to specifically publish content on Twitter.

But after May 19, the situation took a sharp turn. As encryption gradually became mainstream overseas, from venture capital to listing coins, Silicon Valley and Wall Street gradually took control of every link, and Chinese media had to learn to lower their stance to deal with overseas project parties.

A key variable is that a well-known Chinese encryption media also disappeared with the ban. The highest quality content producers and disseminators vanished after getting rich, leaving bewildered Twitter Chinese encryption users.

The KOL trend has just begun, and the KOLs in technology and investment research are the first group to achieve success. At that time, certain well-known individuals were the main contributors of content, and in-depth research represented by certain analysts became mainstream.

KOLs who make a living as KOLs are just starting out at this time, but there has been a huge change since 2022.

1. A certain exchange goes bankrupt, a certain algorithmic stablecoin collapses, centralized exchange regulation becomes stricter, and the market falls into an absolute trough; even the best project analysis is hard to justify.

2. The technological narrative is gradually collapsing, with the gap between ultra-high financing amounts and actual delivery results widening, only to fully erupt by 2024.

The dual collapse of research and technology has created a highlight moment for professional KOLs, represented by Twitterscan. In September 2022, Twitterscan completed a $4.56 million financing, with the involvement of a well-known capital playing a role in market recognition.

The product concept of Twitterscan is not complicated; it helps users discover market trends by organizing encryption users and content on Twitter. This is thanks to the low cost of the Twitter API at that time.

However, Twitterscan faces a fatal problem: how to achieve a business closed loop?

Referring to the monetization methods of other information flow products, the main profit comes from paid APIs and user level segmentation. Clearly, Twitterscan finds it difficult to persuade users to pay a second time for content that is already public information.

A project that later emerged seems to have drawn some experience from Twitterscan— it must be commercialized, and it must introduce token economics.

Friend Tech: Chip Entrepreneurship in 2023

Friend.Tech in 2023 is not far from us; it is the first stress test of KOL monetization capabilities, and a certain voice social platform is the second.

The FT team has completely changed the way Twitterscan presents information streams, encouraging KOLs to trade their "influence"—Key, and even create false influence among each other. This is not surprising, as the FOMO sentiment is a key factor driving trading volume.

FT is also the first blockbuster application launched by a certain public chain, and it is also the last large-scale application successfully developed by anonymous developers in my memory. According to a certain data platform, the daily active users of FT once exceeded 100,000.

Although the number of addresses cannot be equated with the actual number of users, I believe this data is relatively accurate. Although a certain emerging platform's English Twitter ranks high, its influence is clearly not as great as FT's. The total number of global encryption users adds up to about this magnitude of active users.

From August 10 to September 1, FT's daily revenue dropped from a peak of 1165 encryption coins to almost nothing. Although there were several rebounds afterwards and even acceptance of investment from a well-known investment institution, along with plans to issue tokens in 2024, it was just a repetition of the old plot seen in some projects.

FT proves to us:

1. The content itself is not valuable; as a trading target, content can only serve as an intermediary for information flow and capital flow, and cannot directly withstand the impact of transactions.

2. SocialFi has faced repeated failures: from an early project to a decentralized social platform, it seems that in the crypto space there is only the "asset issuance" model to imitate.

Twitterscan indicates that a pure information flow is difficult to profit from, while FT tells us that a purely capital flow can only sustain for two to three weeks. But together they explore more information:

1. Encryption of Twitter messages is indeed very valuable, but it requires the right approach, ideally separating information flow from capital flow;

2. The subsequent shift of entrepreneurship towards KOLs is an inevitable trend, with KOLs positioned in the intermediary space between exchanges, project parties, and retail investors.

Kaito: Strategic Transformation for 2024-2025

There is a misunderstanding that Kaito initially had little connection with the KOL business.

Kaito is a direct product of the AI rush in the encryption circle after ChatGPT shocked the world. In February 2023, GPT emerged, and generative AI subtly seemed to have the power to conquer everything. Meanwhile, the encryption industry, after experiencing internal turmoil and the burst of the metaverse bubble in 2022, is eager to leverage AI to regain its momentum.

Kaito's initial business model was AI search, but it was more focused on content in the encryption currency field. There are several other similar products, but Kaito seems to have realized that something was not right.

1. Traditional blockchain explorer tools have high research and development costs, poor profitability, and fierce competition;

2. The information analysis tools are not very useful, especially when it comes to discovering valuable information; Twitter itself has not solved this problem.

The most impressive aspect of Kaito's early research and development stage was the long-term internal testing, during which invitation codes were extremely scarce. It is now meaningless to determine when Kaito shifted to KOL rankings, as a certain voice social platform successfully encouraged KOLs to actively compete.

Kaito relies on product strength rather than the timing of its arrival to attract KOLs. Before appearing on a certain voice platform, encryption KOLs have been surrounded by bots and spam information for a long time since the professionalization and commercialization that began in 2022. Kaito has given "real KOLs" their first opportunity to stand out.

Bold speculation suggests that Kaito's KOL ranking and point calculation may not rely entirely on algorithms, and human factors could be more important than AI. After all, there are not many KOLs on encryption Twitter, and according to the 80/20 rule, human processing is still feasible within the statistical range of 1000-10000.

So, Kaito completed the following three steps:

1. Separate information flow and capital flow. KOLs only need to focus on improving their rankings, and naturally, there will be collaboration opportunities. Robot accounts and fake follower accounts will be excluded. The marketing team of the project only needs to focus on rankings to identify truly influential KOLs.

2. The ranking system does not involve tokens; it is more like a fair market leaderboard. Although there may be some manipulation, it is mainly the KOLs who are working hard to improve their rankings. This method can control market sentiment and popularity, while KOLs will attract the attention of project parties and exchanges, thus achieving the conversion of information flow into capital flow.

3. Kaito has ended the glorious era of traditional agencies. Kaito itself is a business that operates in practice, which is also the fundamental reason it can maintain its business model after issuing tokens. Kaito itself has become the largest and most standardized agency in the market.

However, a certain event proves that information flow platforms still face significant challenges in exploring more tokenization attempts beyond airdrops, staking, and listings. A certain DEX can continuously split small-cap tokens, but the development of information flow platforms is still subject to many restrictions.

As for emerging concepts or business lines such as InfoFi, Kaito Connect, and Kaito Pro, they have not created new frontiers that go beyond the existing ranking system, and I will not elaborate further on this.

In summary, Kaito has successfully facilitated healthy competition among KOLs, occupying an indispensable role in the market. Even if a large exchange were to compete for this market, the results might not necessarily be favorable. As mentioned earlier, the fair value of the market is difficult to measure, and the social features of a certain exchange have not surpassed encryption Twitter, which is clear evidence.

Conclusion

What is Kaito's future direction?

In simple terms, it is a product that can bridge the flow of information and the flow of funds, directly generating transactions based on the flow of information.

The complex part is that encryption users do not truly recognize the value of information flow; liquidity seems to always follow liquidity itself.