Author: 1912212.eth, Foresight News

On April 11, Web3 social protocol Towns Protocol completed a US$10 million Series B financing, led by a16z crypto. This round of financing was led by a16z crypto, and Coinbase Ventures participated in the investment for the first time, and Benchmark continued to invest additionally. As early as February 2023, Towns completed a US$25.5 million Series A financing, which was also led by a16z.

With the crypto market in absurd situation, not only the investment and financing of unpopular tracks have almost disappeared, but the financing amount of popular tracks has also dropped sharply. With many funds being conservative in style and unwilling to take action, why is a16z still betting on social tracks that are not favored? What's new about Towns?

Open source protocol for real-time messaging applications

Towns Protocol is an open source protocol for building decentralized real-time messaging applications. It includes an EVM-compatible L2 chain, decentralized off-chain streaming node, deployed on Base. Towns allows users to create programmable communication use cases in a permissionless manner, called Spaces. These spaces are available, supporting on-chain subscriptions (membership), scalable reputation systems, and end-to-end message encryption.

Towns Protocol’s ecosystem is designed to empower people to create, manage, and engage in digital communities in a safe and license-free way. Its main goal is to provide a powerful, secure and decentralized platform that gives people full control over their data, privacy, and interactions in these digital spaces while protecting their reputation.

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

Read/write permissions are protected on Base, allowing Towns to make trade-offs on activity to send messages to thousands of participants at the same speed as existing centralized social networks. The Towns protocol was originally built for a wide range of chat application scenarios and included the business logic of chat, but in the future the protocol will be abstracted and become the basic layer of any form of encrypted messaging use cases.

What are its characteristics?

The Towns component includes three items. One is Towns Chain, Layer 2 blockchain solution (built based on OP-Stack), which provides consensus mechanisms and security guarantees as the pillar of the Towns message protocol. The second is a stream node, which is responsible for managing the flow of messages within the protocol and handling tasks such as message verification, storage and encryption. The third includes permission management, which is used to manage user permissions and access control in the space to ensure 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 competitor Farcaster, without encrypting native wallets.

Application chain specially created for social networks

Towns Protocol is an application chain designed specifically for social networks, which protects read/write permissions on Base. Application chains can make trade-offs on activity and can quickly send messages to thousands of participants like existing centralized social networks.

Able to own communication space

Space creators really own the spaces they create, which exist as on-chain assets.

Programmable space

Spaces are deployed on the chain as programmable interfaces, allowing custom rules such as who can read and write, and able to integrate with any other externally compatible contracts.

On-chain membership system with built-in agreement fees

Users need to hold valid member tokens to send and receive messages in the space. Member pricing includes agreement fees to cover network operation costs.

On-chain social graph

Member tokens and spaces can be found on the chain to form a transparent social network structure.

Scalable reputation system

Towns' communication space is programmable, allowing members to maintain reputation scores for a specific space based on point-to-point, which can be found on the chain.

End-to-end encrypted messages

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

Token Economics

Its official documents show that Towns tokens are deployed on the Ethereum main network, with an initial supply of 10 billion tokens. Towns tokens have multiple uses in the Towns protocol ecosystem, including delegating to node operators, delegating space addresses, and participating in governance.

Towns tokens can be delegated to node operators, which are a key component of network operation. To obtain approval from the DAO and start operations, node operators must obtain a minimum amount of token delegation to ensure they have sufficient investment in the success and security of the network. Token delegation can directly point to the address of the node operator or to any valid spatial address in the network. The space can then redirect the received delegate tokens to a specific node operator, providing flexibility for delegate strategies. In addition to its role in delegating 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 and influence the development direction and policies of DAO.

In terms of inflation mechanism, Towns tokens has an initial annual inflation rate of 8%, and sets a linear decrease within 20 years, eventually reaching an inflation rate of 2%. Inflation rewards are evenly distributed to all active node operators at the end of each cycle, with a cycle of two weeks (i.e. biweekly). Therefore, the inflation reward allocated every two weeks is calculated as follows: (Annual inflation rate / 26).

In terms of reward allocation fees, each node operator has the right to independently set the percentage fee for its service. This fee is deducted from the total periodic inflation reward allocated to the operator of the node. After deducting the fees of the node operator, the remaining inflation rewards are allocated proportionally to the principals of the node operator. Towns will also open its pledge function in the future.

Currently, Towns has not released any information about airdrops.

summary

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

(The middle one is Rubin)

Known for his achievements in building innovative online communities and real-time communication tools, Rubin has focused on enhancing user connectivity and interaction through technology.

According to its official introduction, Towns currently has nearly 1 million members, and the consumption sent through spatial conversations has exceeded 500,000 US dollars. Its agreement revenue has also been growing since this year.

The Web3 social track has witnessed the flash in countless protocols - they shine with bold words that subvert traditions, but they are quickly desolate due to technical bottlenecks, user loss or ecological closure. In the sluggish crypto market, how to attract more users to create and enter group chats and how to attract users to settle down is still a realistic problem that various social agreements have to face.