How SocialFi is Constructing a Social Network for the Future?
According to statistics, out of the 7 billion people, an impressive 5.07 billion spend nearly 140 minutes daily on social media. During this period, they interact with various products, advertisements, and other content. While platforms and creators benefit from this engagement, users — the primary contributors to the growth of social platforms and their content creators — often lack control over their data, speech, and the ability to monetize their participation. However, this narrative is shifting as social media merges with decentralized finance to introduce a new concept called SocialFi.
Understanding SocialFi
SocialFi is a blend of two main concepts: Social Media and Decentralized Finance. To illustrate, consider Patreon, which serves as a platform benefiting both the Patreon ecosystem and its content creators. For example, a creator might reserve a valuable portion of their content as paid, requiring users to pay for access.
Such a practice might seem off-putting, right? But why do content creators do this?
Content creators are compelled to adopt this approach because platforms frequently introduce unpredictable algorithmic updates and unfair revenue-sharing models, reducing creators to mere marketing engines and diminishing their interest. Consequently, creators resort to these revenue models to sustain themselves through forced subscriptions, even if it means compromising user interest. However, SocialFi changes this dynamic by enabling creators to connect directly with users, bypassing the restrictive barriers imposed by centralized platforms and involving users as equal partners in the revenue equation.
How socialFi Exactly work?
Decentralization
Most traditional Web 2 platforms have a murkier track record. For instance, platforms like Facebook have abused subscribers’ data, as evidenced by the Cambridge Analytica scandal. SocialFi, however, decouples the practice of storing data on a single server. Instead, users have complete control over their data and can choose how they wish to monetize it. Similarly, creators can directly interact with users and post content without being subjected to the forced filters imposed by traditional Web 2 social platforms.
Censorship
Censorship is a necessary evil, but it should not follow a one-size-fits-all approach. For example, most OTT platforms and social media content are subject to censorship. China is a prominent example, where freedom of speech is severely restricted. SocialFi can help balance this by decentralizing on-chain data. Simply put, some content on OTT platforms needs to be censored, as shown in the image below.
These examples are appropriate. However, censoring content that opposes the state’s general view and political atmosphere suppresses the right to speak against injustice. In China, the Chinese Communist Party censors anything that contradicts their narratives and propaganda. SocialFi mitigates this dependency by decentralizing on-chain data, making it accessible across a broader network of nodes. DAOs can actively participate in deciding which content to display and which to hide. Since decisions are made collectively by consensus through DAOs, creators and users will enjoy more freedom than they do on traditional Web 2 platforms.
Monetization
On traditional Web 2 social platforms, revenue streams for creators and viewers are limited. However, SocialFi introduces new models where creators can use social tokens to avoid content spamming by bots and other means. Meanwhile, viewers and users can also gain value from their support of creators by accessing revenue streams through tokens and rewards.
Role of SocialFi in tackling scalability challenges?
Facebook generates approximately 4 petabytes of data daily, including 510,000 comments, 293,000 status updates, 4 million post likes, and over 136,000 photo uploads. To accommodate this level of scalability, blockchains need indexing, block size management, warp sync, and sharding. Achieving such efficiency is challenging on traditional Layer 1 or Layer 2 blockchains. Platforms like EOS.IO, Theta Network, Base, and Lens Protocol are specifically designed to meet these demands.
SocialFi’s potential growth in Web3
Traditional Web 2 social media saw a significant increase from $219.06 billion in 2023 to $251.45 billion in 2024, growing at a CAGR of 14.8%. In comparison, SocialFi has already reached $5.5 billion, with momentum showing no signs of slowing since 2022.
In 2024, the shift to DeSoc became evident due to high censorship and control during the coverage of the FTX scandal. The flawed revenue models of Web 2 social platforms have further propelled SocialFi, with DeSoc bundling into a unique concept, as shown in the charts below. Therefore, it wouldn’t be an understatement to say that SocialFi will soon come to the forefront as more users explore its long-term efficacy and trade-offs.
Popular SocialFi projects in 2024
Farcaster has integrated the entire social platform onto the Ethereum and Optimism chains. Unlike traditional social media platforms like Instagram, Twitter, Facebook, and LinkedIn, which lack interoperability, Farcaster has eliminated censorship and control over one’s data. Additionally, it has revolutionized the space by eliminating bot spamming and ensuring interoperability with other SocialFi apps developed on the same blockchain. For example, bot activities might be used to manipulate accounts or post trends on social media. Farcaster addresses this issue with a $5 sign-up fee, limiting each account to 5,000 casts, 2,500 reactions, and 2,500 links or photo posts per year, effectively curbing spamming scams on social platforms.
FriendZone
FriendZone is another SocialFi app launching on the Polygon PoS blockchain. Their vision is to prevent a single entity from controlling the entire social platform. To achieve this, they have introduced models like private alpha groups, bounties, experiences, pay-per-view, giveaways, raffles, and personalized interactions. These specific revenue models enable users to interact with creators and brands, receiving a share of the revenue in their growth. As the network of brands expands, the earnings increase for both creators and users who engage with and view their content.
Open Campus
Open Campus is another key SocialFi project to watch out for in 2024. It was launched to address the issue of people posting valuable content and information on social media without being adequately compensated. While platforms benefit from this valuable content through network activity and brand advertising, creators rarely receive compensation for their contributions. Open Campus, currently hosted on the Polygon and Ethereum chains, ensures that creators posting valuable content are compensated for all views, likes, and shares.
Additionally, the community will be rewarded for making these posts viral, allowing them to leverage their own activity to amplify valuable content to a larger audience. Projects launched on Open Campus, such as TinyTap, have seen remarkable success, doubling sales in the last two years and becoming a leading application for children. TinyTap’s 12 NFTs from its 2 NFT auctions, representing specific courses for children, have raised 240 ETH by selling them as course materials. Given this substantial network activity, Open Campus plans to migrate to their own app-specific chain known as EDU chain, although the dates have not yet been revealed.
Lens Protocol
Lens Protocol, launched on the Polygon PoS chain, addresses the issue of data abuse exposed by Facebook. On the Lens Protocol, creators have full control over connecting with the community and leveraging it for traction. However, data flow isn’t one-way; creators tapping into their fanbase must adhere to user permissions.
Users have complete control over their data on the Lens Protocol. If creators want to flood walls with ads or use data for push notifications, they must first obtain user permission. Users can then charge creators directly for using their data to display ads or facilitate direct communication with products or brands.
Theta
Theta Network, launched on the Theta Chain, introduces the concept of a decentralized video delivery network. On this social platform, users can contribute their storage resources for video streaming and sharing, earning tokens in the form of ThetaFuels (TFuels) in return. This allows for cheaper video streaming, enabling users to watch their favorite shows at a fraction of the cost compared to platforms like Netflix and Amazon Prime.
Final Thoughts
We have only just begun to explore the potential of decentralized technologies in evolving next-generation solutions. Industries such as social media have already embraced these changes. In the near future, blockchain advancements will also enhance other sectors like GameFi through DeFi, which is currently seeing intense innovation by developers and gaming corporations.
If you are developing a SocialFi platform and considering leading rollup frameworks such as OP Stack, Arbitrum Orbit, Polygon CDK, and zkSync ZK Stack, utilize our RaaS to swiftly launch your DevNet and seamlessly transition to testnet/mainnet after thorough testing. Contact us to schedule a call and discover how Zeeve RaaS can simplify your SocialFi journey.
