Unlike DeFi and GameFi, SocialFi has not yet experienced a centralized explosion in popularity. The concept of SocialFi emerged after GameFi, integrating different fields with finance, giving rise to the concept of SocialFi in the social domain.
As implied by its name, SocialFi represents Social Finance. Users engage in decentralized social interactions while also earning profits, satisfying their social needs while generating income.
Currently, users' personal information is monopolized and controlled by internet giants, confining users within information bubbles through algorithmic mechanisms. Commercialized viral advertising and marketing flood the internet with eye-catching and sensational content, fostering anxiety and stifling the creation of deep and meaningful content. Internet giants profit from user data and creators' content, yet they fail to equitably distribute these profits among creators and users.
Furthermore, social interaction remains an essential need in every era. Humans are inherently social beings, and have engaged in social behaviors as long as they have existed.
SocialFi features include decentralization, openness, and user control.
User Privacy and Security: In traditional social media networks, different platforms require users to register and provide personal information, leading to information leaks. SocialFi enables content sharing and transfer across different platforms while safeguarding the privacy and security of user data.
Data Ownership: Traditional social media platforms collect, store, and use user data, and those data are owned by the platforms themselves. Decentralized social platforms return data ownership to the users themselves, requiring platforms to obtain user authorization and permission to use their data.
Incentive Mechanisms: Traditional media platforms rely on advertising for profitability, making it difficult for regular users to earn income. SocialFi links social interaction with economic incentives, allowing users to earn corresponding rewards through daily social interactions.
3.1 Protocols: Lens Protocol, CyberConnect, BBS Network, and RSS3.
3.2 Public Chain: DeSo.
3.3 Middleware: Mask Network and Chainfeeds.
3.4 Application Products: Nansen Connect, Mirror, Monaco, POAP, Friends With Benefits, Snapshot, Project Galaxy, etc.
Application products can be further subdivided into categories such as tools, direct social interactions, DAO, and platforms, among others.
4.1 User Habits: Users are already accustomed to using traditional social media platforms like Twitter, making the cultivation of new usage habits and migration challenging. Additionally, compared to traditional social media with real-name systems, the anonymity of decentralized social media might reduce users' sense of social belonging. Furthermore, many Web 3 social products aren't particularly user-friendly, making them less accessible to users.
4.2 Lack of Mature Protocols or Products: The SocialFi space is currently in its early exploration stage, lacking highly mature or popular products within the realm of social protocols. Even the current leading SocialFi product, Lens, only has a daily active user count in the thousands, notably lower than traditional social products.
4.3 Small User Base: The overall number of active addresses within the blockchain space is relatively low, leading to a small target user base for SocialFi. This number significantly lags behind the user volume typically associated with highly popular applications.
4.4 Unreasonable Value Capture: Currently, the value capture mechanisms in SocialFi projects have not formed a well-functioning closed loop. Certain project token incentive algorithms are unreasonable, leading to subpar content production and social interactions.
4.5 Immature Business Model: The incentives offered by SocialFi platforms fall short of addressing creators' livelihood needs, thereby failing to provide sustained motivation for continuous content creation.
In today's internet and cryptocurrency landscape, the value of social influence is continuously gaining prominence. For instance, Elon Musk propelled DOGE into the ranks of the top 10 cryptocurrencies through continuous tweet updates.
Furthermore, various meme coins have gained attention through community culture establishment and dissemination, with their market trends directly influenced by community enthusiasm. This illustrates how the power of individuals and communities can generate significant wealth effects. Therefore, we believe that the fusion of social and financial attributes in SocialFi has the potential to lead to a new trend. With continued enhancement of the underlying technology, explosive growth could be achieved in the future.
However, the development of SocialFi also faces numerous challenges, one of which is establishing reasonable economic incentives for content creation. A common issue with existing decentralized social media platforms in the market is the monopoly of influence. Accounts that entered early or possess significant influence tend to monopolize attention on the platform, making it difficult for new users with less influence to gain visibility.
Additionally, SocialFi must also address regulatory concerns. Striking a balance between content moderation, freedom of speech, and user rights will be a significant challenge for all social projects, including SocialFi.