SocialFi is a revolutionary concept that bridges the gap between Web2 social media networks and decentralized finance (DeFi). It provides a free and decentralized environment for social users where they can earn through engagement.
This guide will teach you what SocialFi is and how it works. You will also discover a list of innovative SocialFi platforms.
What Is SocialFi?
SocialFi, short for Social Finance, is a blend of social media networks and DeFi. It is Web3’s approach to social media, where users have control over their content as no central authorities are running the networks.
SocialFi gives value back to content creators. They are free to create whatever they want and have more control over their data, unlike what Web2 currently offers.
Additionally, users on SocialFi platforms have multiple earning opportunities from their engagement and following, as there are no limitations to what you can monetize.
How Does SocialFi Work?
Decentralized Autonomous Organizations (DAOs) and social tokens typically play a significant role in running SocialFi platforms.
DAOs are in charge of the platforms’ governance and ensure no central authority controls user activity on the networks. The DAOs also prevent developers and the rest of the teams from altering the platforms’ code. That means every decision, including incentive sharing, depends entirely on the DAO.
The platforms’ monetization depends on social DeFi tokens, which could either be native tokens or other traded assets on the platform. Besides the in-app tokens, content creators can develop their tokens, which they can use to monetize their social interactions.
Since the platforms are decentralized, users choose which creators to engage with and will need to hold a creator’s token. The tokens also make it possible to incentivize engagement, creating functional and rewarding affiliate programs.
Digital ownership also comes into play with SocialFi applications. Creators can use PFP NFTs to prove their identity. They can also track digital content ownership through other NFTs. This model makes it easier for creators to monetize anything they post, including messages, GIFs, blogs, photos, and music. Creators can earn more revenue through advertising, which is fairly distributed on SocialFi networks.
The Importance of SocialFi
SocialFi applications are set to disrupt the social media industry by fusing the power of social networks and the decentralized nature of web3. Here’s a look at some of the most significant benefits of social.
Web2 platforms are heavily centralized, with all the data stored on a single server. Big tech companies have monopolized the platforms and ultimately control their users’ data, privacy, engagement, interactions, and monetization.
SocialFi eliminates these middlemen and gives users complete charge over their networks. The decentralized nature of SocialFi means users have better control over what they monetize and their data.
Besides, having the data spread across various web nodes reduces privacy breaches by eliminating a single point of failure, as with centralized servers.
SocialFi balances frustrating censorship and having harmful content circulating on the network. By decentralizing on-chain data, SocialFi platforms parse rules engines to curate publicly-viewable posts. Nodes can then choose who to engage with and who to block, giving users the responsibility for approving harmful content.
In this way, SocialFi offers creators more freedom of speech, allowing them to express themselves without fearing getting banned.
SocialFi networks provide various earning models for content creators and their audiences. It is up to the users to determine what to monetize.
For instance, creators can use social tokens to control who interacts with their content. Users will need a creator’s token to engage with them, which reduces the chances of spamming and incentivizes high-quality content. Ultimately, this could lead to high earnings for social influencers.
Creators can also monetize their social following and engagement and earn through the sale of exclusive merchandise and NFTs.
3 SocialFi Platforms Worth Knowing About
A myriad of SocialFi platforms are flooding the web3 industry today. Here are some notable SocialFi networks you should check out.
Thinkin is an Algorand-based SocialFi platform that incentivizes communities. DAOs can easily grow their communities through the platform’s tools and incentivize interactions within the network.
The platform employs a Write-and-Earn program that rewards social interactions in various forms. Through these rewards, communities can participate in Initial Dex Offerings (IDOs) on the launchpad. IDO allocation is, therefore, through participation and not the amount of funds invested.
Geojam is a unique social network that provides multiple earning opportunities for creators and users and creates an unforgettable experience for influencers, artists, and fans.
The social network depends on the JAM token to run its economy. Users earn the token by interacting with creators and engaging with the app. They can then redeem the tokens for exclusive merchandise or use them to participate in the network’s DeFi features, including its governance.
LuxWorld is a pioneer Travel to Earn platform built on Ethereum. One of the central drivers of the network’s creation was the COVID-19 pandemic, which primarily affected the tourism industry.
The platform utilizes the LUX token to incentivize users and their engagement during travel. Additionally, it supports minting NFTs, has an NFT marketplace, and check-in incentives.
While SocialFi has yet to reach its full potential with the development of Web3, we can already attest to its benefits. Still, there are several areas where the industry can improve. However, if you are a big fan of decentralization, DeFi, Web3, and social media, SocialFi is worth a look.