Let’s discuss the next evolution of social networking – SocialFi – that almost everyone is talking about.
I know you may have probably read different content or watched videos online about learn-to-earn, play-to-earn… and others.
In fact, I also recently read a trending post on Hackernoon by Alan Shteynberg, Co-Founder and CEO of Wyrlds, that lists out and elaborates on various web3 ecosystem earning models.
But, let’s talk about SocialFi now. Most times, I’ll wonder if the concept of Web3 SocialFi is real.
This led me to conduct extensive research and interview web3 thought leaders – to get enough concrete facts.
Ian Gerstgrasser, founder of DERA foundation believe that no current SocialFi projects are solving a real use case currently, as he said:
“Never deep-dived into the concept as I had never heard of it solving an existing problem. Does it?”.
But let’s be thoughtful, does any existing SocialFi projects really solve any problems?
I checked out 50 acclaimed SocialFi platforms and I didn’t find some of them providing the proposed solution.
Think about it for a second, hope we’ve not been blinded with censorship resistance and incentive narrative.
These are what we’ll be exploring together in this article, and you’ll also discover the true use cases and benefits of SocialFi, what it is, and how it works. But first, let’s break down the meaning of SocialFi.
What Does SocialFi Mean?
SocialFi means the convergence of social media and decentralized finance (DeFi).
In case you don’t know before, DeFi is a blockchain application that seeks to create a decentralized and transparent financial system that is accessible to everyone.
So, by merging social media and DeFi – SocialFi aims to disrupt the traditional social networking industry and create a new kind of social media network that is based on trust, transparency, and financial incentives.
At its core, Web3 SocialFi is about empowering users and creating a more equitable online ecosystem.
In the traditional Web2 model, Facebook, Twitter, Instagram, and other social media platforms are owned and controlled by a small group of people.
This gives these companies immense power over our data and content, as well as the ability to monetize that data for their own benefit.
Upon that, we get zero reward – this practice is not fair enough!
Imagine that you’re doing daily activities to help a farmer grow his farm, but on the harvesting day, you get nothing in return.
So, SocialFi seeks to flip this model by fostering a decentralized social network in which users have greater control over their data and are rewarded for their participation.
That’s not all, it also promises to proffer a censorship-resistance ecosystem – which means any content you create will be your own forever and ever, and the platform won’t be able to tamper with it.
How Does SocialFi Work?
SocialFi is built on a decentralization concept by incorporating social media platforms into the DeFi ecosystem.
In a SocialFi network platform, users can earn rewards for contributing to the network, such as by creating content, participating in discussions, or even simply holding tokens.
These rewards are usually paid out in cryptocurrency, which can be used within the platform or traded on external exchanges.
One of the ways SocialFi networks incentivize participation is through governance tokens.
Governance tokens give users a say in how the social network platform is run and allow them to vote on proposals related to the network’s development and management.
By holding governance tokens, users are essentially becoming stakeholders in the network and have a vested interest in its success.
For instance, when you own shares in a traditional company, you become a shareholder and have a say in how the company is run.
Shareholders can vote on important decisions. The more shares you own, the more influence you have over the company’s decisions.
That’s how governance tokens also work.
To put it simply, SocialFi works by leveraging the power of blockchain technology and decentralized finance to create a more equitable and user-centric online ecosystem.
This creates a self-sustaining ecosystem in which users have a say in how the network is run and can benefit financially from its success.
The Promise And Pitfalls Of Web3 SocialFi Projects
While the concept of SocialFi is promising, many of the current SocialFi projects in this space lack the necessary components to provide true use cases or value to users.
SocialFi platforms promise to revolutionize the way we interact with social media, but the reality is that some of them aren’t worth it.
One of the biggest issues with most of these platforms is lack of simplicity and the use of non-value backed tokens as rewards on the platform.
These tokens have no inherent value and may not be backed by any asset, making them unsustainable in the long run.
Without a true value proposition, these tokens will drastically decline in value, making it difficult for users to generate long-term returns on their investment in the token.
Ian Gerstgrasser (Founder, DERA) again shared his opinion on such a token and this is what he said:
The disadvantages of such currencies are:
- Price volatility
Exposing the whole virtual economy and its participants to existential risks.
In the worst case, this can lead to a devaluation of the currency and a complete collapse of the virtual economy.
- Lack of fungibility
Due to the heritage of the newly created currency, it is an unattractive medium of exchange for outside parties.
Making it impossible to be spent outside the ecosystem unless traded for another currency on an exchange – leading to a further devaluation of the currency.
He further mentioned that this is the problem he’s trying to solve on a larger scale with DERA.
“I am not a big fan of non-value backed tokens. That’s why at DERA, we tackle this problem on a larger scale.”
Ian Gerstgrasser – CEO, DERA foundation.
So, for SocialFi projects to be truly valuable, they need to provide real use cases and be easy to use for social media users and create a self-sustaining ecosystem by not creating a non-value backed token.
However, the good news is that there are already some SocialFi platforms trying to solve the issues and even provide more value than expected, let’s explore them below.
5 Top Best Growing SocialFi Projects to Keep Eyes On
If you’re an entrepreneur eager to connect with professionals or a talent looking for the next job opportunity, Entre is the best web3 social media platform for you.
It’s the perfect SocialFi platform that fosters connections between companies and individuals.
Entre aims to become the LinkedIn of web3 as it focuses on allowing professionals to connect or network with like minded individuals.
Users can host an audio or video event and create a deep connection with their followers. Just like LinkedIn, it also has a marketplace feature where talents can source and apply for jobs or gigs.
The best part? Users can earn rewards for keeping the platform active by posting engaging and informative content.
- Cassava Network
Cassava Network can be considered an entertainment platform with a variety of features/products.
The platform allows users to play games and earn rewards, it also aims to onboard web2 users to web3 through its easy-to-use wallet.
Users can also earn by performing tasks – which also aids third party platforms to leverage Cassava Network user base.
The project has secured partnerships with leading companies in different industries.
- Jeriqo SocialFi
You can see the Jeriqo SocialFi platform as an all-in-one platform that aims to provide you with essential social networking requirements.
It’s a decentralized social media platform with an easy to use crypto wallet.
According to statistics, social media users spent an average of 2.5 hours surfing the social media platform to watch videos, stream live videos, or even read content.
However, they get paid nothing while the platform makes a ton of money from ad revenue through the influence of the users.
Jeriqo SocialFi aims to combat this issue by enabling anyone to monetize their time and activities such as watching videos, streaming lives, and others.
Do you know the amazing part of this platform? It’s the ability to chat with your loved ones, and also send and receive digital assets while socializing.
All these amazing features just in one app? Let me blow your mind.
The platform will also give you full ownership of your content and data. That is; enjoy full privacy, easily use cryptocurrency assets, have access to every social network feature, and earn from ad revenue generated on the platform.
So, the more you participate, the more your earnings pile up. But Jeriqo SocialFi isn’t even about the reward, it’s about the priceless experience you can bet from a social networking platform, all for free.
Popsocial is a decentralized social media platform that aims to enable anyone to create and own a decentralized identity to explore the beauty and possibilities of the digital world.
It allows users to access different formats of content such as videos, articles, games, etc., to educate or entertain themselves.
The user interface is easy to navigate – making it simple to use the product without web3 or NFT technical know-how, and it allows creators to port their existing social recognition to the platform.
Popsocial is built on BNB Smartchain but it claims to integrate and connect with other varieties of blockchains.
urFeed is building a product with web3 technology to solve a common problem in traditional social networking platforms.
The platform focuses on offering a social video and streaming platform, which means creators can use the platform to have a live conversation with their audience.
It’s built upon the narrative of giving ownership back to both creators and their communities.
Just as I have addressed earlier in this article, the urFeed team believes it’s totally wrong for social media platforms to charge creators to reach their audience and even monopolize their data.
Thanks to urFeed, creators can now also receive 100% of the revenue generated on subscriptions from their audience – without any intermediary involved.
It fosters gamification as it ensures every moment spent on the platform is engaging with personalized digital avatars.
5 SocialFi Crypto List
Below is the list of seven (7) existing SocialFi crypto assets and their platform brief details:
- Steem (STEEM)
Steemit is a blockchain-based social media platform that rewards users for creating and curating content.
- Minds (MINDS)
It’s an open-source social media platform that rewards users with tokens for contributing content and engaging with others.
- LBRY Credits (LBC)
LBC is an inventive token of a decentralized content-sharing platform – LBRY – that uses blockchain technology to facilitate peer-to-peer content sharing.
- BitClout (CLOUT)
Another existing SocialFi crypto asset is CLOUT which powers BitClout, a decentralized social network that enables users to invest in and trade social currency based on the reputations of influencers and creators.
- SoMee.Social (ONG)
A yet another blockchain-based social media platform that enables users to earn rewards for creating and engaging with content.
SocialFi is surely the future of social networking, there have been social data privacy complaints circulating everywhere already, and this is an opportunity for decentralized social media platforms to hijack the market.
But, it can only be achieved if the platform is solving a real problem for the users, the focus shouldn’t just only be about the incentive but value.
We’ve discussed the promise of SocialFi and the pitfalls of some SocialFi projects that may have been hindering mass adoption.
We also explored five (5) projects that are at the forefront of this mass adoption. By focusing on simplification and value, SocialFi platforms are sure of attracting and retaining social media users.