As the blockchain and crypto industries are rising, the tables are turning for conventional ways of storing data, finance, and much more. SocialFi is a concept that combines these technologies to incentivize social networking using cryptocurrencies. In this blog, we will dive deep into this emerging facet of social networking and explore its inner workings, key features, and real-life examples.
What is SocialFi?
SocialFi is a cutting-edge ecosystem built from the intersection of social networking, web3, and decentralized finance. In simple words, it is an ecosystem built on web3 where people would be paid in cryptocurrencies to network with each other or post, comment, and like on each other’s social updates.
Let us decode how these 3 technologies contribute to the Web3 SocialFi’s functioning:
Social Networking
It allows people to be in touch, chat, and react with each other, just like the conventional social media platforms.
Web3
It sets the underlying base for SocialFi to work efficiently with Web3 principles like decentralization and user ownership, thus allowing SocialFi to be different from conventional social media platforms.
Decentralized Finance (DeFi)
Decentralized Finance or DeFi takes care of the financial aspect, allowing users to earn crypto rewards and participate in the financial opportunities of the platform.
How Does It Work?
Like in traditional social media, where users create and post different types of content and get paid, SocialFi also pays crypto tokens to the users for content creation and networking access to the web3 platforms. However, in both cases things work differently at the back-end.
Earlier, the social media platforms were owned, controlled, and managed by just one organization that had access to all the user data, whereas in Web3 SocialFi, all the user data is distributed among various blockchain nodes, and no single party would be the “owner’ of it, giving the user all the control of their data.
Also, to increase the participation of people, crypto rewards are given for networking activities like likes, comments, reposts, or simply for being present across the SocialFi network. These tokens can be used by them to have a say in different decision-making activities like voting etc. Thus, by incentivizing social media for the users, Web3 SocialFi has taken the way people interact with each other to a whole another level while considering user privacy and security. Apart from this, DAOs, decentralized autonomous organizations, or decentralized autonomous cooperations are like the board of members of SocialFi, which handles its work in a distributed manner.
They are used to coordinate with stakeholders, and this works by providing authorization to members like active participants or developers to make decisions and guide the organization, unlike the board of directors controlling the traditional social media platforms.
Key Components of SocialFi
Based on the working of Web3 SocialFi, let’s break down the key components of SocialFi:
Blockchain Technology
Blockchain is a decentralized network chain that stores and transmits information in the form of blocks. Each block has its unique hashes (like unique IDs) and transactional data. Blockchain stores data immutably across different nodes.
Non-Fungible Tokens (NFTs)
Non-fungible tokens or NFTs are the digital certificates of unique and one-of-a-kind things like art, music, video, or any such thing. Just like copyrights or patents, NFTs are the digital mark that gives you the authority and ownership of a particular non-fungible asset. NFTs can be created, bought, and traded using cryptocurrencies.
DAOs (Decentralized Autonomous Organizations)
DAOs act as the board of directors and management organizations in Web3 SocialFi. They consist of active members (token/crypto reward holders) of the social platform who participate in making important decisions for the platform.
Decentralized Applications (dApps)
SocialFi platforms run on decentralized apps, apps that are built on decentralized platforms like Ethereum. They power Web3 social experiences, enabling users to connect, create, and earn crypto through DeFi features.
Decentralized Storage
Based on the decentralized web server, SocialFi platforms store their data on decentralized storage solutions like IPFS storage to ensure the security, immutability, and freedom of speech of the user data.
Incentive Mechanism & Tokenization
There are different innovative payment gateways present on different types of SocialFi platforms to attract more content creators and reward their creations seamlessly.
Decentralized Governance
With DAO-backed management practices, SocialFi platforms ensure decentralized governance, unlike traditional social media platforms where just one company holds all the authority and decision-making.
Features & Benefits of Web3 SocialFi
Below given key points are the core principles of SocialFi separate it from the working of Web2 social media platforms.
Freedom from Censorship
Web2 social media platforms have a number of regulations that restrict users from posting freely or censoring their content. Conversely, Web3 SocialFi platforms are handled by DAOs, allowing users to take part in important platform decisions and bring up their thoughts freely.
Immutable Digital Ownership
Web3 SocialFi gives content creators the utmost authority and control of their data. Moreover, the uniqueness of their data is preserved by NFTs, thereby giving immutable digital ownership to creators and ensuring their data security and privacy.
Earning Potential
The crypto token rewards that are given to the users and audience are the center of attraction for content creators, investors, and various brands. Moreover, as advancements are coming into the fields of blockchain, Web3, and cryptocurrencies, the field of Web3 SocialFi has immense potential.
Real-Life Examples
Following are some real-life examples of Web3 SocialFi platforms
DeSo
Decentralized Social is a specially designed blockchain network for decentralized social media applications and allows users to incentivize their content creation. By encouraging creators to mint the NFTs for their creation, DeSo promotes digital ownership and lets creators and collectors earn rewards for engagement, and for participating in the decentralized governance.
Sapien
Sapien is the decentralized social media platform built on one of the leading blockchain networks, Ethereum. Users can create NFT for their content and thus incentivize their creations. Moreover, participants also get to earn rewards for networking and participating. Also, Sapien has its decentralized authorization organization (DAO) for decentralized governance.
Audius
As the name says, Audius is another music streaming platform that leverages the power of blockchain to promote direct artist and fan connections. The payments are done via cryptocurrencies, and thus facilitate transparent royalty payments while governing the community.
Friend.tech
Friend.tech is another SocialFi platform built on one of the top blockchain networks, Base, that uses “Keys” as their social tokens to allow users to interact with each other and earn rewards for their participation, which in turn motivates them to stay more active on the platform.
Open Campus
Open Campus is a blockchain-based education platform where users can access educational content through EDU social tokens. The system validates the standard content quality before publishing and encrypts the educational content as NFTs. Thus, educators can earn revenue and be motivated to create more content for the betterment of learners.
Hence, the above real-life SocialFi platforms in different domains like education, music, and social networking clearly exemplify the role of Web3 SocialFi in drastically transforming the working of conventional social media platforms. Moreover, networking has the power to boost any industry, and in this case, as SocialFi rises, it will elevate the markets of blockchain and cryptocurrencies as well.
Do you want to participate in the revolution of Web3 SocialFi? Then, launch your own SocialFi platform with Blocktech Brew and earn loads of money!
Contact business@blocktechbrew.com to know more.
I am the CEO and founder of Blocktech Brew, a team of blockchain and Web 3.0 experts who are helping businesses adopt, implement and integrate blockchain solutions to achieve business excellence. Having successfully delivered 1000+ projects to clients across 150+ countries, our team is dedicated to designing and developing smart solutions to scale your business growth. We are focused on harnessing the power of Web 3.0 technologies to offer world-class blockchain, NFT, Metaverse, Defi, and Crypto development services to businesses to help them achieve their goals.
