Original Author: MASON NYSTROM

Original translation: Deep Tide TechFlow

The Internet is a market for attention, and the competition for attention is intensifying rapidly. Cryptocurrency brings a new chapter to the attention economy, providing a more efficient mechanism for evaluating attention value through ownable attention assets (such as content, social graphs, internet memes, algorithms, and platform social activities).

However, cryptocurrencies have not only changed the value of attention but also the vesting of attention.

In 2016, Tim Wu proposed the concept of 'Attention Merchants', describing how publishers and platforms profit from users' attention. Cryptocurrency has opened up a new way for users to become their own 'Attention Merchants' by owning attention assets to regain the value of attention.

The most prominent example of this trend is in SocialFi, where users can own attention flows of assets such as memecoins, internet celebrity access keys, content, etc. By allowing users to directly participate in attention-based assets, the SocialFi platform challenges the traditional power structure of attention economy, transforming users from passive consumers to active participants, becoming new attention merchants.

The Frontier of SocialFi

SocialFi is becoming an important category in Web3. Encryption social networks like Farcaster are rapidly developing, with daily active users exceeding 75,000. Telegram bots that combine group messages and transactions have facilitated billions of dollars in volume. The information market is also moving towards financialized social graphs, such as Twitter's Trends.market, Fantasy.top, and Farcaster's Swaye, Perl, and Arrina.

While not all social platforms come with financial incentives, SocialFi represents an evolution from indirectly assessing social capital to more efficiently evaluating social and attention assets. As a socio-economic technology, cryptocurrency enables social applications to add other financialized elements (such as asset trading) or integrate financial primitives at the application layer (such as the binding curve of Friendtech). The trend of SocialFi is driven by the strong demand from consumers to own and trade attention assets. Users choose to spend time in applications that allow them to earn income based on their attention or enhance their social entertainment experience through financial gamification.

For example, Fantasy is a fantasy sports trading card game and information market built on X (formerly Twitter) social graph. Fantasy allows creators to make money from their social media presence, while enabling players to earn rewards based on their intuition and understanding of certain social accounts. Elsewhere, new social networks such as Friendtech, Unlonley, and Sanko allow creators to directly monetize their social interactions through chat access passes. This benefits early purchasers of access passes, rewarding them for allocating attention to underrated creators and communities.

The core benefit of the new information market and social web is that creators and users are now attention merchants, owning attention assets in these applications and monetizing attention by using the applications.

Many applications have responded to users' desire to embed business and finance in their social experience:

• Message → Trade in the message
• Game → Ownable assets and real-money-based in-game economy
• Social → Ownable social graph, channels, content, and platforms
• Internet memes → Scene Coin and derived internet memes assets
• Information market → A new market based on social entertainment, internet celebrities, and social capital
• Exchange → Issuance of a new protocol based on social and attention assets

In the past year, the SocialFi ecosystem has grown rapidly, with a rise in attention asset exchanges (such as memecoin protocol), PvP (player versus player) social games, new forms of information markets, and the emergence of financialized social networking companies. The driving force behind this expansion is the maturity of encryption infrastructure in terms of scalability and usability, which supports new types of consumer experiences (such as mobile PWA), cheaper transactions (such as L2), and faster application iteration cycles achieved through improved development tools (such as account abstraction and wallet-as-a-service tools).

Social Web

Social Web can be roughly divided into two types and their respective creator monetization models: one-way and two-way.

• Unidirectional network is a platform where there is a one-sided relationship between creators and fans. This one-sided relationship is usually accompanied by a direct monetization model, such as subscriptions (e.g., Substack, OnlyFans, Patreon) or revenue sharing through direct advertising with creators (e.g., YouTube, TikTok).
• Bidirectional network is a platform where creators and fans have a two-way relationship (such as Twitter, Reddit, Facebook, Snapchat). Bidirectional social networks allow users to monetize by spreading content, rather than restricting its spread, such as through token-controlled access (such as influencer-controlled chats). Web2 bidirectional networks such as Twitter and LinkedIn have always made it more difficult for creators to monetize their influence directly. Instead, creators have to adopt strategies such as alliance plans, guiding users to other monetized websites (such as Twitter → Substack), or promotional activities.

By redefining users as new attention merchants, SocialFi offers a variety of new monetization options for these two types of social networks. Unidirectional networks provide creators with the ability to further monetize their top audience through tokenized content, influencer access, limited-time rewards, or social status. The unidirectional networks Drakula and Friendtech tokenize content and creators respectively, enabling top creators to generate income from volume. Sofamon presents an example of a token model, where users can gradually purchase an aesthetic item (e.g., avatar clothing) until they own the entire item, which can then be worn.

Web3 social web provides new monetization options. For example, the monetization of usernames and namespaces can generate revenue for valuable namespaces that extend to millions of users. In addition, bidirectional social networks can better utilize in-app transactions. This can be manifested as markets, channel storefronts, or in-app games within the social network.

The key difference between Web3 bidirectional network and Web2 social network lies in the new attention merchants, namely users and creators, who will be able to profit better from their activities. For example, imagine if the moderators of Reddit subreddits could own their channels, earn income based on the ads they display, or earn a portion of the revenue from transactions through their channels because of the communities they manage.

PvP Social Game

As consumer infrastructure matures, PvP (player-versus-player) social gaming has ushered in a new perspective. Most notably, a wave of "Survivor"-style competitive games has emerged, such as Crypto The Game and Blessed Burgers, which provide users with a new digitally native and highly social gaming experience to earn prizes. Other apps, such as Rug.fun or PvPWorld, offer game theory strategy games where users can cooperate with others to win prizes. In contrast, in Web2, most mobile games monetize attention through traditional advertising or offer users to pay to play in a way that skips the cooling-off period. Game developers now have a new business model, and social games are becoming more like content, with developers releasing multiple short-term apps that offer shortened play cycles, where users can earn significant rewards for participating and then move on to the next game.

New types of social games should focus on the following optimizations: multiple winners, which can increase participation; easy-to-learn games, making ordinary users feel they have a high chance of winning; and social interaction, which further enhances the spread of these games. The proposed game dynamics are more incentive-consistent than web3 games, which historically tend to prioritize pay-to-win or farm-first games rather than fun-first games.

New Markets and Exchanges

The main application scenarios of cryptocurrency revolve around market creation, especially the issuance of new asset categories, tokenizing existing assets, or expanding access to native digital assets.

• Information Market - Information markets like Polymarket have the potential to create more efficient political markets and support the creation of new event markets based on real-world events, culture, and business.
• Attention Exchange - Publishing platforms like Pump and Ape.store allow users to create new assets (such as memecoins) based on attention as a characteristic. Elsewhere, Sofaman tokenizes status and culture by allowing users to create a Telegram-based digital avatar and selling branded clothing on a bonding curve.
• Telegram Bot - The Telegram Bot brings the market and social finance games into the messaging experience, providing users with a more convenient experience.
• Points and Pre-Token - For teams that test user behavior and try dynamic incentives, points have always been an effective incentive strategy. Points markets like Michi and WhalesMarket, and pre-token markets like Aevo (Pre-token Market) can help create more efficient token markets.

Multiple sub-trends are driving the creation of new markets and exchanges. Firstly, the verticalization of social and financial platforms is driving the issuance of new types of assets for these applications. Secondly, users' ownership of on-chain activities is increasing, as they earn points, tips, and tokens, expanding the range of assets users can interact with, thereby encouraging the creation of new trading venues. Finally, users are now interacting with assets such as memecoins, feeling a greater sense of autonomy. Similar to cultural assets in the real world, such as sneakers or music, users feel a sense of control over the popularity and potential appreciation of these cultural assets, as the value foundation of these assets (user attention) is controlled by the ultimate consumer.

Built for the Next Generation of Attention Merchants

The social field is undergoing a paradigm shift, and the relationship between users, creators, and attention is being redefined. At the core of these trends is the idea that users and creators are no longer just suppliers and demanders in the attention economy, but can become merchants of their own attention.

Designing new financial or social infrastructure is not easy, let alone combining the advantages of both into a unified experience. However, early social finance tools, toys, and games that can quickly experiment, test new consumer behaviors, and capture emerging behaviors and preferences of consumers will lead the development of the next generation of SocialFi networks and applications.

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