Is SocialFi Going To Be The Next Big Thing in the Web3.0 Era?

【TL; DR】
1. SocialFi is a field with considerable development potential in the Web 3.0 era.
2. SocialFi = DeFi + Social Media.
3. In the era of Web 3.0, blockchain will constitute the value layer of the Internet, and almost every field in Web 2.0 will be rewritten by blockchain technology.
4. The emergence of SocialFi solves the pain point of poor value transmission caused by "social media centralization".
5. SocialFi ecology has generated three categories: Personal Tokens, Community Tokens and Platform Governance Tokens.
6. If we want the current SocialFi projects to stand out from the fierce competition, we must think about how to improve the user experience, retain the user groups brought by the initial popularity and improve the sustainability of our own development.

On November 28, Monaco Planet, a SocialFi project, officially launched its Beta version. The project has received millions of dollars of investment from Three Arrows Capital and IMO Ventures. You need to have a Yacht NFT or an invitation code to register your account. Due to its special "Write to Earn" concept, the project triggered a heated discussion once it was launched, and "invitation codes were like gold dust" on major social media platforms. Meanwhile, the floor price of Yacht NFTs also increased by more than five times in a short time.

Monaco Planet wants to become a decentralized version of Twitter. Whether the project can continue its popularity in the future is not shown in this article. However, the popularity of the project actually indicates an area with considerable development potential, that is, SocialFi.

From Web 1.0 to Web 3.0

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SocialFi, as its name implies, is decentralized finance (DeFi) + Social Media. Similarly, GameFi is also in the "DeFi+" field. After the blockchain is empowered, the traditional game can realize the decentralization of ownership of data and props. In addition, the token economy under the concept of "Play to Earn" enables players to realize monetization in the game and obtain high profits. The basic mode of "traditional Internet" + "blockchain" is actually the operation logic of Web 3.0.

For more details about Gamefi, please refer to: In-Game Currencies Are Leading the Crypto Space: Gain An Insight Into GameFi’s Future

We know that the original internet, namely Web 1.0, mainly served large commercial companies, and the content on it was mainly updated by these enterprises. Other users can only browse and retrieve information, can hardly modify the content, and can not interact with the network. Therefore,Web 1.0 is rigid, develops slowly, and has static and unidirectional characteristics. Until around 2004, the birth of Web 2.0 made every internet participant become the creator of the network’s content, and anyone can publish content on the Internet. The unidirectional and static network in the Web 1.0 era has become a bi-directional information interaction network in the Web 2.0 era. Especially with the rise of social networks and the popularity of mobile intelligent devices, every Internet participant has become "We Media", and everyone can voice on the Internet and create value.

With the development of Web 2.0, the original "democratic" and "equal" internet is gradually controlled by a few technology giants, and then becomes centralized. These technology giants control the network infrastructure, the internet platform, and the data and identity information generated by each of us, which have become their profit-making tools. In the current centralized internet, personal privacy is violated and abused as the price of exchanging platforms and services. These dangerous trends are particularly disturbing.

In the era of Web 3.0, blockchain will constitute the value layer of the Internet, return the data ownership to each user, and bring "decentralization" to the Internet again. Almost every field in Web 2.0 will be rewritten by blockchain technology. Up to now, we have "decentralized finance" (DeFi) based on traditional finance and "decentralized game" (GameFi) based on traditional games. Perhaps the next one to be rewritten by blockchain is the social media ( SocialFi) we are now very familiar with.

For more details about the trust layer of Internet and Web 3.0, please refer to:
The Evolution of Web 3.0: The Path Towards Data Freedom
Trust Layer, Token, Oracle, How will Blockchain Change the World?

SocialFi Redistributes Value

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In today's social media, many participants voice on the network, generate content, convey views and create value. This process is also known as UGC (users generate content). However, with the deepening of the centralization of the Internet, users' legitimate rights on major platforms are more and more limited, and users' control over their own data and creation is becoming weaker and weaker. The value created by the vast majority of individuals on the Internet is captured by the owners of major platforms, and Internet giants earn a lot by virtue of advertising.

The emergence of SocialFi is precisely to solve the pain point of poor value transmission caused by "social media centralization" on the basis of blockchain technology. On the SocialFi platform, not only the platform and creative content are owned and managed by users, the token economy also realizes the decentralization of value transmission. After creating high-quality content, users can directly receive token rewards from other users without paying service fees to the platform, or obtain token incentives from the system through popularity indicators such as likes and comments. This is "Write to Earn" or "Social to Earn" similar to "Play to Earn".

As early as 2017, the prototype of SocialFi actually came into being, but in 2021, with the popularity of DeFi and GameFi and people's in-depth understanding of the concept of "DeFi+", a large number of projects poured into this field, and SocialFi ecology has developed greatly and it has generated three categories: Personal Tokens, Community Tokens and Platform Governance Tokens. On Coinmarketcap, there are 12 kinds of tokens in the Communications & Social Media section and 26 kinds of tokens in the SocialMoney section.


Personal tokens are generally issued by individuals and can be used to distribute to their fans, so as to realize a small fan economy. Typical examples are many personal tokens issued on the Roll platform. On this platform, all content creators can apply for minting their own personal tokens. Among them, the supply of each token is 10 million, 2 million are distributed to content creators, 1.2 million belong to the Roll platform, and the remaining 6.8 million will be unlocked month by month within 3 years.

Community tokens are generally issued and managed by a DAO. The token system will be used for community governance as an economic incentive for community contributors. For example, Whale Community, founded by WhaleShark, one of the largest NFT individual sellers, issued WHALE tokens for its own DAO governance. WHALE token holders can use tokens to purchase NFT or exchange consulting services on the platform.

For more details about DAO, please refer to:
How Will Decentralized Autonomous Organisations Lead The World? Finally, the platform governance tokens are released by the SocialFi platform and used for platform governance. For example, BitClout, the decentralized social platform of benchmarking Twitter, BBSNetwork, the decentralized forum of benchmarking Reddit, and Monaco Planet mentioned at the beginning of this article belong to this category.

Conclusion

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From Web 2.0 to Web 3.0, from Social Media to SocialFi, this is not only the inevitable path of technological development, but also the inevitable requirement for users to safeguard their own interests. In the future, SocialFi will become an important part of the decentralized metaverse.
Under the wave of blockchain, some social giants who have achieved great success in the Web 2.0 era are also seeking new opportunities. For example, Twitter is investing in Bluesky's cooperation to build decentralized Twitter. If we want the current SocialFi projects to stand out from the fierce competition, we must think about how to improve the user experience, retain the user groups brought by the initial popularity and improve the sustainability of our own development.

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Author: Ashley. H, Gate.io Researcher
*This article represents only the views of the researcher and does not constitute any investment advice.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.

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