- DeSo Labs, a company headed by Al-Naji, will use $200 million in funding to support its mission
- DeSo is backed by investors including Andreessen Horowitz (a16z), Coinbase Ventures, Winklevoss Capital, Pantera Capital, Sequoia, Social Capital, TQ Ventures, Alexis Ohanian, and others
The BitClout creator, who went under the alias “Diamondhands,” has shared his identity as Nader Al-Naji and announced the launch of DeSo, short for “decentralized social”. The blockchain platform that has already raised $200 million in funding from investors, including Andreessen Horowitz (a16z), Coinbase Ventures, Winklevoss Capital, Pantera Capital,Sequoia, Social Capital, TQ Ventures, Alexis Ohanian, and others.
Al-Naji spent about the past two years anonymously working on BitClout, what he now terms a beta demo application for DeSo. The blockchain aims to introduce a new model for content distribution by decentralizing social media the same way Bitcoin and Ethereum are decentralizing traditional finance, Al-Naji wrote on Twitter.
While he was away from the spotlight for those few years, Al-Naji never told people what he was working on, even those in his close circle, he told Blockworks in an interview.
“It was funny to go two years without showing any progress publicly, but investors and friends understood (my anonymity.) So when I went back to them recently with DeSo and BitClout almost everyone immediately came in to invest,” he said.
Al-Naji said he was initially anonymous mainly because he wanted to promote the decentralization of the platform. “When you have someone as the leader of the project, there can tend to be a reliance formed around that person, so from the standpoint of promoting people to run parts of the network themselves that was very successful,” he added.
As part of the launch, DeSo will be supported by DeSo Labs, a company led by Al-Naji. The $200 million funding will be used to invest in developers building on the platform, NFT artists in the ecosystem and help smaller creators grow their coins, Al-Naji said. Additionally, the funds will help grow the DeSo Foundation, which is a corporate entity to further support blockchain protocols and the mission of decentralizing social media, he explained.
Prior to DeSo, Al-Naji was the founder and CEO of Basis, which shutdown and returned money to investors after raising over $133 million from participants including Bain Capital Ventures, Google Ventures, a16z, Lightspeed, Stan Druckenmiller, Kevin Warsh, Foundation, and Wing.
He began working on the DeSo blockchain project in early 2019 after Basis closed shop.
The BitClout controversy
Earlier this year, Al-Naji anonymously launched the controversial BitClout which aimed to put social media on the blockchain through an open-sourced project bootstrapped by incorporating data feeds from existing Twitter profiles. The application, Al-Naji said, was intended to be a beta test for just a few hundred people to try, but it spread way beyond that number.
The platform was “owned by its users” who were to create a decentralized social media where users are tied to their “creator coin” — tokens other users could buy into based on their perceived value. While BitClout is hosted on DeSo, the website BitHunt is tracking over 140 other nascent projects running nodes and building apps on the platform, although these projects collectively have a market cap of under $4.6 million, or 0.4% that of $Clout, the platform’s native token, which is around $1 billion.
“What people got upset about was how we scraped the top 15,000 profiles from Twitter and pre-created accounts for them, to mainly prevent squatting and impersonation,” Al-Naji said. “Someone could essentially scam or trick people on these money native platforms, so by reserving those names and marking them clearly as ‘not claimed’ was the initial intent,” he added.
Beyond the accounts being created, people were able to buy, sell or trade social tokens of individual profiles and Al-Naji added that they “made that decision because there’s actually a lot of value for the owner of the profile if we do that.”
To date, of the 15,000 accounts created, about 300 people have claimed their profiles and about 25 have been asked to be removed, which they were willing to do when requested, he said.
Some notable developers in the blockchain industry have also been critical of the project and in fact demanded their profiles be removed. In March, Anderson Kill P.C., the law firm representing Brandon Curtis, the product lead for Radar Relay, filed a cease-and-desist order for BitClout’s use of Curtis’ “likeness and the content of his Twitter profile” which was done without his consent, Curtis tweeted at the time.
BitClout profiles can also be removed on the initiative of the project’s developers before being claimed. According to the project’s documentation, “reserved profiles have been removed when it appears as though the person claiming them is going to either immediately sell the pre-purchased coins that the core developers allocated to them.”
New future and money for creators
In the future, Al-Naji said he hopes that the DeSo blockchain will create a new model for distributing content and providing creators with a social platform that is money-native.
“If you make a post on social media, it’s not really yours. The private companies like Facebook or Twitter or TikTok own the monetization there,” Al-Naji said. “Creators don’t realize they can make a lot more money when the social platform is money-native,” he said.
Of the 300 accounts claimed, the value in allocated creator coins has increased, according to data by Cloutomy. This value can be transferred across applications on DeSo or traded in for USD, Al-Naji said.
“Because we allowed their profiles to be traded (through their coins), they appreciated as their profiles grew. The idea was if we leave the trading turned on, there is value for them even before they join,” he added.
To date, the top 3 users’ profiles have appreciated — at least on paper — by over $1 million, the top 100 users have reported valuation gains of more than $70,000 each, and the top 1,000 users have all accrued over $4,500 each from trades with creator’s coins, according to the Cloutomy data.
Whether these values could be realized, however, is another question. There is a single exchange providing a USD trading pair, and its volume over the past 24 hours is less than $100,000, so it’s unlikely that a meaningful amount of the reported gains could be converted to dollars in practice — the supply pressure from sales would cause the price to decrease.
The $CLOUT token has been on a steady decline since inception:
Al-Naji however is preparing for exponential growth, In the future, he said, DeSo has plans to scale up to 1 billion users as more applications join the ecosystem. Additionally, DeSo intends to move fully to proof-of-stake (it currently uses a highly centralized version of proof-of-work) before the end of the year and ultimately wants to continue to help create a new model for distributing content, he added.
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