Will Towns, backed by Binance and a16z, launch a decentralized Discord?

Original Title: "Decentralized Discord? Towns Receives Additional Investment from a16z, Can It Break the Curse of On-Chain Social?"

Original Author: 1912212.eth, Foresight News

Editor's Note: In April of this year, the communication platform Towns Protocol completed a $10 million Series B funding round led by a16z, being dubbed as the "decentralized version of Discord." On August 3, Towns Protocol revealed its tokenomics: the total supply of the TOWNS token is 10 billion, with over 10% of the tokens to be airdropped to early users, partners, and content creators. On the 4th, as per the official announcement, Binance spot trading as well as a Binance HODLer airdrop will go live for TOWNS. This article provides an in-depth analysis of the project, originally published on April 11. The following is the original content:

On April 11, the Web3 social protocol Towns Protocol completed a $10 million Series B funding round, with a16z crypto leading the way. This round of funding was led by a16z crypto, with Coinbase Ventures joining for the first time, and Benchmark continuing to add investment. As early as February 2023, Towns had already completed a $25.5 million Series A funding round, also led by a16z.

In the current bleakness of the crypto market, not only has the investment in niche tracks nearly disappeared, even the funding amount in popular tracks has sharply declined. With many funds adopting a conservative style and hesitating to invest, why is a16z still betting on the underestimated social track? What new things does Towns really bring to the table?

Real-Time Messaging Application Open-Source Protocol

The Towns Protocol is an open-source protocol for building decentralized real-time messaging applications. It consists of an EVM-compatible L2 chain, decentralized off-chain flow nodes deployed on Base. Towns allows users to create programmable communication use cases in a permissionless manner, known as Spaces. These Spaces are ownable, support on-chain subscription (membership), an extensible reputation system, and end-to-end message encryption.

The Towns Protocol ecosystem aims to empower people to create, manage, and participate in digital communities in a secure and permissionless manner. Its primary goal is to provide a robust, secure, and decentralized platform, enabling people to have full control over their data, privacy, and interactions in these digital spaces while safeguarding their reputation.

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

Read/write permissions are protected at the Base level, allowing Towns to make trade-offs in liveness to send messages to thousands of participants at a speed comparable to existing centralized social networks. The Towns Protocol was initially built for a broad chat application scenario, including the business logic of chat, but in the future, the protocol will be abstracted to serve as the foundational layer for any form of encrypted message delivery use case.

What are the key features?

The components of Towns include three elements: Towns Chain, a Layer 2 blockchain solution (built on the OP-Stack), serving as the cornerstone of the Towns Messaging Protocol, providing consensus and security guarantees. The second is the Flow Nodes, responsible for managing message flow within the protocol, handling tasks such as message validation, storage, and encryption. The third includes permission management, used to oversee user permissions and access control within the space, 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 and even includes Farcaster, a competitor, without the need for a native encrypted wallet.

An Application Chain Designed for Social Networks

The Towns Protocol is an application chain designed specifically for social networks, protecting read/write permissions at the Base level. The application chain can make trade-offs in liveness and quickly send messages to thousands of participants like existing centralized social networks.

Ownable Communication Spaces

Space creators truly own the spaces they create, and these spaces exist as on-chain assets.

Programmable Spaces

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

On-Chain Membership with Built-in Protocol Fees

Users need to hold a valid Membership Token to send and receive messages within the Space. The membership pricing includes a protocol fee used to cover network operating costs.

On-Chain Social Graph

The Membership Token and Space can be discovered on-chain, forming a transparent social network structure.

Scalable Reputation System

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

End-to-End Encrypted Messaging

Ensure secure, private communication through advanced encryption technology, protecting the security of messages between senders and authorized users.

Tokenomics

As per its official documentation, the Towns token is deployed on the Ethereum mainnet with an initial token supply of 10 billion tokens. The Towns token serves multiple purposes within the Towns protocol ecosystem, including delegation to node operators, Space address delegation, and participation in governance.

The Towns token can be delegated to node operators, who are a crucial part of network operation. To gain DAO approval and commence operations, node operators must secure a minimum token delegation to ensure they have sufficient stake in the success and security of the network. Token delegation can be directed to the node operator's address directly or to any valid Space address within the network. Subsequently, the Space can then redirect received delegated tokens to specific node operators, providing flexibility for delegation strategies. Apart from its role in delegation and network operation, the Towns token also plays a significant role in the Towns DAO governance. Token holders can participate in the decision-making process, influencing the direction and policies of the DAO.

On the inflation mechanism front, the Towns token has an initial annual inflation rate of 8%, set to linearly decrease over 20 years to eventually reach a 2% inflation rate. Inflation rewards are evenly distributed among all active node operators at the end of each period, which recurs biweekly. Therefore, the biweekly allocated inflation reward is calculated using the following formula: (Annual Inflation Rate / 26).

Regarding reward distribution fees, each node operator has the autonomy to set the percentage fee for their service. This fee is deducted from the total inflation reward allocated to that node operator for the period. After deducting the node operator's fee, the remaining inflation reward is proportionally distributed among the node operator's delegators. Subsequently, Towns will also introduce its staking feature.

Currently, Towns has not disclosed any information about an airdrop.

Summary

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

(Rubin as the Middleman)

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 consumer spending through spatial conversations exceeding $500,000. Its protocol revenue has also been growing steadily this year.

The Web3 social track has witnessed countless protocols rise and fall—it has seen them shining with promises to disrupt the traditional ways, only to quickly fade away due to technical bottlenecks, user attrition, or ecosystem closures. Amidst a sluggish crypto market, how to attract more users to create and join group chats, and how to retain users, remain the harsh realities that every social protocol has to face.

Original Article Link