SocialFi, emerging in Web3, merges decentralized finance (DeFi) with social networking, reshaping online interactions, information sharing, and value exchange. Utilizing blockchain and social principles, it has the potential to revolutionize Web2 social media platforms.
This featured article will discuss what SocialFi is and how it will impact the future of social media and highlight some innovative Web3 projects pioneering in this exciting new field.
What is SocialFi
SocialFi, or Social Finance, merges decentralized finance and social networking, aiming for a community-driven, decentralized social media where users manage their data, content, and generated value. Utilizing blockchain establishes transparency and fairness. SocialFi employs native tokens, encouraging engagement and governance. Users actively partake in decision-making through decentralized processes. Features like decentralization, tokenization, user participation, and privacy enhance security and transparency, preventing any single entity from total control. Native tokens boost user engagement and governance, fostering a dynamic, self-sustaining community. Users actively influence platform upgrades, features, and policies, promoting a democratic platform development approach.
5 Notable SocialFi Projects
Several projects are leading the charge in developing SocialFi, each with a unique approach to merging social networking and decentralized finance:
- Friend.tech: Friend.tech, launched in August 2023, is gaining recognition as a standout success in the SocialFi space. Within two weeks, the platform attracted over 100,000 users and generated $25 million. It operates as a social token-driven platform, enabling users and businesses to create and monetize online communities through blockchain technology. This innovative approach merges traditional cryptocurrencies with patronage systems, allowing influencers and creators to profit from their fan base in exchange for exclusive offers and content, making it a pivotal player in the Web3 landscape.
- Phaver: Phaver is a web3 social application integrated with the Lens protocol and Cyberconnect. It offers various services encompassing web3, crypto, applications, social media, and blockchain. Through Phaver, users can conveniently access all Web3 social features within a single app. This allows them to engage with their favorite creators, link their NFTs, earn rewards, and enjoy various other interactions.
- CyberConnect: CyberConnect stands out as web3's pioneer and largest social network, allowing developers to build social applications using ERC-4337/Account Abstraction. This platform lets users completely own their digital identity, content, connections, and interactions.
- Mask Network: Mask Network acts as a bridge between the internet and decentralized networks, allowing encrypted messages on Twitter and Facebook. Launched in 2019, it raised $5 million in funding. It now supports funding Gitcoin grant campaigns on Twitter and plans for peer-to-peer payments and decentralized storage. Mask Network enables DApps within social networks, forming a decentralized Applet ecosystem.
- Lens Protocol: A blockchain-based open-source social graph, that works on the decentralized network to help content creators reclaim their digital ownership by connecting them directly to their communities and fans.
The Issue with Web2 Social Media Platforms
Over 58.4% of the global population spends 2 hours 27 minutes daily on social media. However, their attention and data benefit centralized entities, leading to the saying, "If it's free, you're the product." Centralized decisions, meant for user protection, hinder content creators. Decentralization aligns with Web3 values. Web2 lacks digital ownership, risking piracy. Influencers find it challenging to monetize their social credibility directly.
SocialFi has the ability to rectify Web 2.0 social network flaws by addressing:
- Protection of Personal Data and Privacy: SocialFi's decentralized approach eliminates the need for users to divulge personal information. Unlike traditional platforms, dApps in SocialFi don't collect or store user data, safeguarding against potential leaks or crashes.
- Freedom of Speech: Decentralized networks empower users to express their thoughts freely without fear of censorship. Participants manage content, preventing central authorities from blocking users. Additionally, AI algorithms effectively control malicious content without compromising free expression.
- Digital Copyright: SocialFi enables automated copyright systems, allowing creators to sell their work directly to buyers without intermediaries. This ensures creators receive full payment while users obtain original content, bypassing the income loss often experienced with traditional copyright models.
The Future of SocialFi
SocialFi transforms social media, giving users control, data ownership, and incentives for participation. Challenges like scalability and adoption exist, but with progress, it could reshape the digital landscape, ensuring fairness and user-centric experiences.
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