Layer One: How Arena outlasted rivals and built a real social crypto app

Welcome to Layer One: the newsletter and podcast on the intersection of crypto and the real world. Hosted by Steven Gates and Kelvin Sparks, Layer One brings you inside the conversations driving blockchain forward.

This week we were joined by Jason DeSimone, CEO of next-gen SocialFi platform The Arena, to talk about the future of the online creator economy. In this edition of the Layer One newsletter, we’re taking a closer look at the current SocialFi landscape, and asking whether crypto-native start-ups can compete with the legacy social media giants. 

The case for crypto-native social media

The SocialFi craze of 2023 saw the rise of several major platforms, each seeking to build the go-to social network for the Web3 audience. Token-gated content platform Friend.tech led the charge with a spectacular launch that saw its daily revenue at one point surpass that of Ethereum. Despite this early success, however, the project shut down a little over one year later.

Since then, many of Friend.tech's contemporaries in the sector have followed it into the Web3 graveyard. Earlier this month, social media protocol Farcaster — which raised $150 million in mid-2024 with the goal of building a crypto-native Twitter — announced they would be pivoting away from SocialFi after four and a half years of building in the niche. Despite these headlines, however, the sector has seen a modest overall resurgence, which peaked in late summer 2025.

As DeSimone told the Layer One team this week, the fundamental use case for crypto-integrated social media remains solid. His conviction is shared by some VCs: Re7 Capital earlier this year allocated a modest $10 million to a “scout vehicle” fund, offering early-stage backing for new SocialFi firms.

Meanwhile, several members of the old guard still continue to gain traction. Earlier this year, the integration of onchain social network Zora with the Base chain app saw the network overtake Solana in daily new token launches for the first time. Even meme token launchpad Pump.fun now has one foot in the SocialFi sector following the (somewhat chaotic) launch of its own livestreaming platform last year.

But the key question remains: If there really is a future for crypto-integrated social networks, will this be led by Web3-native platforms, or will the existing social media giants step in to suffocate the competition?

There are some signals suggesting it could be the latter. Elon Musk’s X has already implemented limited BTC tipping features. As the company pushes ahead with its plans to build an all-in-one super app covering payments, investing, shopping and more, it’s becoming increasingly likely that crypto will play a larger role in the future of its platform.

It’s not too much of a stretch then, to posit that if the proof-of-concept for novel features is successfully completed by smaller, crypto-native firms — whether this means token-gated content, tokenized profiles or completely new functions — X could simply replicate these at a thousand times the scale. Possessing its own native, in-app wallet and payment rails will make such integrations even simpler.

And that 1000x figure is not hyperbole. At the moment, X boasts around 600 million monthly active users. Even at its peak, SocialFi pioneer Friend.tech managed just over 600,000 according to data from Dune analytics. Farcaster currently sits just short of 250,000 monthly active users. In short, legacy social media giants dwarf the Web3 upstarts by several orders of magnitude.

The idea of a gigantic firm like X further tightening its stranglehold over the ways we interact online will sound alarm bells for many. As DeSimone said in conversation with Layer One: “One thing that will never change about the Web2 giants is that they’re rather extractive. The operators are extracting a disproportionate amount off of the users’ data and their spend.”

He envisions a world then, where even if these incumbent giants do go ahead with crypto integrations, then smaller, crypto-native platforms will nonetheless still be able to compete. Not on sheer scale, but through more equitable monetization terms, greater freedoms and greater data privacy. Ultimately then, it may not be a winner-takes-all game. An ecosystem of crypto-native SocialFi platforms can still have strong reasons for existing, even while legacy giants consolidate their grip on the mainstream.

Defining those reasons, and broadening the appeal of the platforms beyond their own cult communities, remain the key challenge for SocialFi founders.

Podcast Recap: How Arena outlasted rivals and built a real social crypto app

In the latest edition of the Layer One podcast. We were joined by Jason DeSimone, CEO of next-gen social media platform The Arena, to discuss the future of the creator economy and how he turned a struggling project into one of the longest-surviving social apps in Web3.

Subscribe to Layer One on Youtube, Apple, Spotify or wherever you get your podcasts.

In the Headlines: The stories driving the conversation this week

• Social casino platform MyPrize is bringing its operations onchain with Avalanche. The platform, which allows content creators to run livestreams where they play alongside their viewers, plans to integrate blockchain settlement and payouts on its back end, bringing enhanced transparency and faster transaction times for its millions of users. 
• JPMorgan has signalled it may begin offering crypto spot and derivatives trading to its institutional clients. The investment bank, which serves over 85 million customers worldwide, is reportedly considering expanding its offerings beyond ETFs and into direct exposure. This comes against a backdrop of traditional finance operators offering increasing crypto exposure to their clients, with Standard Chartered and Vanguard among the standout stories of 2025.
• VanEck has predicted positive price action for BTC going into the new year. In a report issued this week, the investment firm cited flagging mining activity as an indicator, noting that 90-day returns are typically positive following periods of shrinking hashrate. The medium-term outlook for BTC remains uncertain, however, with some firms like Strategy hedging against a potential 'prolonged crypto winter'.

Top of the Charts: X's user count far exceeds Web3 competitors

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Layer One is brought to you in collaboration with Avalanche.