What is SocialFi and why are they the future of social media?｜Halo Wallet Web3 Academy

What is SocialFi?

So to speak, SocialFi combines finance and decentralized social media platforms and is Web3’s answer to big tech’s centralized platforms such as Meta and Twitter. But how can SocialFi succeed in a world dominated by these giant Web2 platforms? The short answer is Web3 (decentralized) platforms like SocialFi allow for the creation, management and ownership of social media platforms and the material their users provide.

The challenges of Web2 social media

Every day, 58.4% of the world population spend an average of more than 2 hours on social media. Yet, the attention, interactions, engagement and data that gets generated is monetized by a few centralized entities.

Privacy concerns

Social media platforms collect a lot of personal data, leading to privacy concerns and the potential for abuse.Centralized decision making when platforms ban content creators for talking about certain topics.

Digital ownership

Web2 applications have digital ownership and the ability to track ownership. This is particularly essential for creators and artists who share their work and thoughts online.

Dependence on Advertising Revenue

Social media platforms are heavily dependent on advertising revenue, leading to the prioritization of profit over user experience and ethical considerations. Influencers who have created a brand for themselves aren’t able to monetize their brand equity in indirect ways.

Can SocialFi save the day? What are the features of SocialFi? Let’s deep dive into these questions in the following sections.

Features Of SocialFi

Censor free

The goal of SocialFi platforms is to allow content creators and other participants to have complete control over their own data and is to allow users true freedom of expression and the ability to monetize their social media presence as they see fit.

Tokenization and Digital ownership

With the integration of DeFi, monetization can be easily done with cryptocurrencies.In SocialFi, identity management, digital ownership, and integrity of produced content can be ensured using NFTs or non-fungible tokens.

Decentralized governance

SocialFi platforms are based on a DAO or decentralized, autonomous organizational structure to prevent centralized censorship.With advances in blockchain technology, SocialFi also brings a level of scalability to social media that Web2 infrastructures were previously incapable of.

Future and challenges of SocialFi

The future of SocialFi is flourishing with 14 million users on SocialFi projects, of which 5 million are active. Twitter’s opening to NFTs or Meta’s Metaverse, which is under construction, are a few examples of how market leaders are making their way into Web3 social media.

Two key challenges that Web3 must overcome

Scalable infrastructure

It is questionable whether Blockchain can handle such a large amount of data and users generated on a daily basis as a social network of Web2.

Sustainable economic models

Creating an economic model that can withstand stress and difficult scenarios is still a difficult case for SocialFi or even GameFi. All of the above incentive aspects are only being tested on a small scale and still need to be tested for resilience through several market cycles before they become mainstream.

Conclusion

SocialFi is undoubtedly still in its infancy and has much to discover. Nevertheless, SocialFi holds great potential for the future of decentralized social platforms and creative economy models. As the world moves toward an economy for creators, SocialFi opens up a new way to interact, share information, and create revenue without a central authority. Only time will tell if SocialFi has what it takes to be adopted by the masses.

About Halo Wallet

Halo Wallet is a secure and easy-to-use crypto wallet that supports multi-chain aggregation and aims to provide Web3 users with a more efficient and deep insight into investment opportunities through the Social web. With the leading security technology audited by Hacken, Halo Wallet is a self-custody wallet that users have full control of their assets. Let Web3 users discover the value of projects earlier, monitor their investment portfolios, and make smart decisions. That is where the Halo Wallet comes into play!

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