Towns has a total token supply of 10 billion.

On April 11, the Web3 social protocol Towns Protocol completed a $10 million Series B funding round, led by a16z crypto. Coinbase Ventures participated for the first time, and Benchmark followed up with additional investment. Back in February 2023, Towns had already raised $25.5 million in its Series A, also led by a16z.

At a time when the crypto market is bleak—with funding for niche sectors almost disappearing and even mainstream sectors seeing sharply reduced capital—many funds have taken a conservative stance, reluctant to invest. So why is a16z still betting on a social track that’s widely considered unpromising? What makes Towns stand out?

An Open Protocol for Real-Time Messaging Apps

Towns Protocol is an open-source protocol for building decentralized real-time messaging applications. It includes an EVM-compatible L2 chain and decentralized off-chain relay nodes, deployed on Base. Towns enables users to permissionlessly create programmable communication use cases, referred to as “Spaces.” These Spaces are ownable, support on-chain subscriptions (membership systems), scalable reputation frameworks, and end-to-end message encryption.

Towns Protocol’s ecosystem is designed to empower individuals to create, manage, and participate in digital communities in a secure and permissionless manner. Its primary goal is to offer a powerful, secure, and decentralized platform that gives users full control over their data, privacy, and interactions within these digital spaces—while safeguarding their reputation.

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

Read/write permissions are protected on Base, allowing Towns to balance performance while sending messages to thousands of participants at speeds comparable to centralized social networks. While the protocol was initially built for broad chat-based applications, including chat business logic, it is expected to evolve into an abstract foundational layer for all types of encrypted messaging use cases in the future.

Key Features

Towns consists of three main components. First is the Towns Chain, a Layer 2 blockchain solution built on OP Stack, serving as the backbone of the Towns messaging protocol by providing consensus and security. The second is the relay nodes, responsible for managing message flows within the protocol, handling message verification, storage, and encryption. The third involves permission management, which controls user access and roles within Spaces, ensuring a secure and well-organized communication environment.

While its interface resembles Discord, Towns brings unique characteristics. Its login screen supports Google and Twitter accounts, and even includes integration with rival platform Farcaster—no crypto-native wallet is required.

Application-Specific Chain Built for Social Networks

Towns Protocol is an application-specific chain designed for social networking, with read/write permissions protected separately on Base. This setup allows performance trade-offs, enabling message delivery to thousands of participants at speeds comparable to 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 with programmable interfaces, allowing for custom rules—such as who can read and write—and can integrate with any other EVM-compatible external contracts.

On-Chain Membership with Built-In Protocol Fees

Users must hold valid membership tokens to send and receive messages in a Space. Membership pricing includes protocol fees that help cover network operational costs.

On-Chain Social Graph

Membership tokens and Spaces are discoverable on-chain, forming a transparent social network structure.

Scalable Reputation System

Towns Spaces are programmable, enabling members to maintain peer-to-peer reputation scores within specific Spaces. These scores are also discoverable on-chain.

End-to-End Encrypted Messaging

Advanced encryption ensures secure and private communication, protecting messages exchanged between senders and authorized users.

Tokenomics

According to its official documentation, the Towns token is deployed on Ethereum mainnet with an initial supply of 10 billion tokens. Within the Towns protocol ecosystem, the token serves multiple purposes, including delegation to node operators, delegation to space addresses, and participation in governance.

Towns tokens can be delegated to node operators, who are a critical part of network operations. To receive DAO approval and begin operating, node operators must reach a minimum delegation threshold, ensuring they have a vested interest in the network’s success and security. Tokens can be delegated directly to a node operator’s address or to any valid space address within the network. Spaces may then redirect received delegated tokens to specific node operators, offering flexibility in delegation strategies. In addition to delegation and network operations, Towns tokens play a vital role in Towns DAO governance. Token holders can participate in the decision-making process, influencing the direction and policies of the DAO.

As for inflation mechanics, Towns tokens have an initial annual inflation rate of 8%, which will linearly decrease over 20 years until it reaches a steady 2%. Inflation rewards are distributed at the end of each cycle to all active node operators. Each cycle lasts two weeks (bi-weekly). Therefore, the reward distribution per cycle is calculated using the formula: (Annual Inflation Rate / 26).

Regarding reward distribution fees, each node operator is allowed to set their own service fee percentage. This fee is deducted from the total inflation reward allocated to the node operator during a cycle. After subtracting the operator’s fee, the remaining rewards are proportionally distributed to the delegators of that node. Staking functionality is expected to be enabled in the future.

Currently, there is no public information about any potential airdrops.

Summary

The CEO of Towns Protocol is Ben Rubin. He is a seasoned entrepreneur, known as the co-founder and CEO of the popular video social app Houseparty and live streaming app Meerkat.

(Center: Rubin)

Rubin is recognized for his achievements in building innovative online communities and real-time communication tools. His career has focused on enhancing human connection and interaction through technology.

According to official sources, Towns currently has close to 1 million members, with over $500,000 in spending generated through conversations in Spaces. Protocol revenue has been steadily growing since the beginning of the year.

The Web3 social space has seen countless protocols shine briefly before fading away—launched with big ambitions to disrupt the status quo, only to falter due to technical bottlenecks, user attrition, or closed ecosystems. In the midst of a sluggish crypto market, the key challenges that remain are: how to attract more users to create and join group chats, and how to retain them long-term.

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