In August of this year, the popularity of Friend.tech attracted the market's attention to SocialFi. As of the end of October, Friend.tech's capital inflows exceeded US$450 million. Why on earth can SocialFi be able to achieve such success at a time when the currency circle is at such a low ebb? Attracting so much attention and funding? This article will give you an in-depth understanding.
What is SocialFi?
SocialFi is the abbreviation of Social Finance, which refers to an application model that combines social platforms with decentralized finance. It is also often called the social platform of the Web3 world.
Compared with the Web2 social platform, SocialFi mainly uses blockchain technology to allow users to freely create content, community governance, etc. on the social platform without being subject to any speech control, and retains the ownership of the data. Users can also Make money by creating content.
Why you need SocialFi
SocialFi can mainly improve some of the shortcomings of traditional centralized social platforms, including data opacity, censorship of speech, and the inability of creators to receive due rewards. Blockchain-based SocialFi can achieve higher transparency and fairness.
Of course, Web2 social platform and SocialFi each have their own unique advantages, but Web2 social platform has faced challenges in recent years in terms of data privacy, content ownership, advertising transparency, etc., such as deleting articles without warning, obtaining data for advertising marketing, etc. etc., which are increasingly disliked by users.
The emergence of SocialFi solves these problems, provides users with better asset ownership, and increases the profitability of financial operations.
What are the advantages and benefits of SocialFi for ordinary users?
Reduce censorship of speech: Provide users with a free and open social space without worrying about the risk of content being deleted.
Encourage creation: Encourage high-quality content creation and reward creators, and users can earn benefits through social interaction.
Decentralized Finance (DeFI): Allows users to directly participate in financial activities on social media.
Asset ownership: Users own their data and assets and are not controlled by third parties, improving privacy and security.
Why does SocialFi need to be on-chain?
As mentioned above, one of the strengths of the SocialFi platform is its censorship resistance. In the context of widespread censorship of speech in traditional social media, this has become an important selling point of on-chain social media.
Even after the bear market cooled the crypto-speculative craze, this remains a major strength of the SocialFi platform. It provides a more open and free space for social interaction.
But not all users will choose SocialFi because of decentralization. In the currency circle, people are more concerned about how to get positive interactions on social platforms to earn money.
SocialFi faces the challenges and risks of Web2
Regulatory Uncertainty: The regulatory environment in the blockchain and cryptocurrency space remains unclear and may pose risks to SocialFi’s growth.
Security issues: Although blockchain technology is highly secure, there are still smart contract vulnerabilities and attack risks.
The user experience is not as good as Web2: The SocialFi user experience is still lacking. If it is to gain mass adoption, the overall user experience needs to be more streamlined and it will take time for Web2 to adapt.
Hype first: Many users are still accustomed to using Web2 social platforms and only use SocialFi as a way to make money.
SocialFi Hot Projects
Friend.tech
Friend.tech is one of the important drivers of the Social craze this year. It has attracted widespread attention since its launch in August this year. As of the end of October, Friend.tech's TVL is still far ahead of other SocialFi projects on the market. So why is Friend.tech so popular?
First of all, Friend.tech is a decentralized social platform based on the Base blockchain, which allows users to tokenize their personal content and expertise to earn revenue.
On this platform, each user has his or her own social chat room. If other users want to enter these chat rooms to interact, they need to purchase the “Key” issued by the user, referred to as key token. These Keys represent the user's support and sponsorship of the content creator, and can be traded directly on the platform.
If a creator’s content and influence become more valuable, the price of the Keys issued by him will also increase. This can encourage the production of high-quality content, or derive other trading methods. At the same time, the official has also integrated some potential rewards, such as airdrops, to enhance community participation and interaction.
Simply put, Friend.tech’s model is like a decentralized version of OnlyFans.
This is a very interesting SocialFi network experiment, but investors should pay attention to the fact that if the creator no longer wants to operate (such as some botched NFT projects), or the airdrop rewards have been distributed, there will still be people who want to Use it? Why not just use the Web2 platform you are used to?
Lens Protocol
Lens Protocol is a decentralized social graph that uses blockchain technology to provide a more secure, private and just social experience.
Unlike Friend.tech, Lens Protocol is more like a decentralized version of Facebook and Twitter. Users can use Lens Protocol to create encrypted identities and interact with others, such as profile editing, commenting, and forwarding posts. wait.
Lens Protocol provides users with the right to control and own the content they create in the form of NFTs. The point is, users don’t have to worry about the risk of their privacy being invaded or their messages being manipulated or even having their accounts banned.
CyberConnect
CyberConnect, like Lens Protocol, is also a decentralized social graph. It has been deployed on multiple chains such as Ethereum mainnet, Polygon, Solana, BNB Chain, etc., and was launched on Binance’s Launchpool project in August this year.
Unlike Lens Protocol, CyberConnect reduces a large number of on-chain operations and instead uses off-chain verification to solve the problem.
In addition, previously Lens Protocol was only open to whitelist users for registration, while CyberConnect did not have this restriction. According to the data from Dune Analytics, the number of CyberConnect users is approximately 10 times that of Lens Protocol.
galge
Galxe was formerly known as Project Galaxy. Its main goal is to build an open credential data network by integrating various credential data on and off the blockchain, such as Discord, Twitter, Metamask and other data. Provides access to Web3 developers.
Developers can use the data and services provided by Galxe to give users relevant rewards.
For example, we at Grenade once used the Galxe platform to hold a Spring Festival NFT event. As long as users complete specified tasks, they can cast the NFT patterns we produced on Galxe to increase more community participation.
In addition, during the recent token airdrop boom, project developers often used Galxe to organize related ecological reward activities, such as Arbitrum Odyssey, Optimism Odyssey, etc., to attract users to participate in the ecosystem.
Simply put, Galxe exists to provide an open and verifiable user data infrastructure for Web3 applications. Help Web3 teams leverage relevant incentive behaviors to build stronger community systems.
View project development and explore potential projects
As SocialFi gradually develops, perhaps more and more users will pay attention to this field in the future. If investors want to observe the development enthusiasm of the SocialFi project, they can use the cryptocurrency data websites DefiLlama, DappRadar and Dune Analytics to obtain it. The number of users of the project, capital inflow, protocol revenue, etc., to discover the next potential star of SocialFi.
in conclusion
With the market boom brought by Friend.tech, the future development of the entire SocialFi ecosystem is highly anticipated. Its emergence allows social platforms to explore the possibility of decentralized social networks, bringing new mechanisms for creation, interaction, and governance, and launching new changes in social media.
However, SocialFi is still in its early stages of development. It often takes a long time for users to change their habits on existing social platforms. Moreover, this field is often dominated by big players. There are usually only a few projects that can be favored by users, such as the existing Facebook, Instagram, X, etc., after all, users do not have time to use so many platforms at the same time, so its future influence and application scenarios still remain to be seen.
