4min read
Published on: May 17, 2024
#Blockchain
#Web3
Traditional social media platforms pose risks to users' personal data exposure, lack of speech freedom, and low content monetisation opportunities. It’s time for web3-based SocialFi platforms to solve this.
Social media platforms have conquered a massive segment of the media and communication space today. They allow users to meet new people, communicate by sending direct messages, laugh with a meme, or even find a partner. There are lots of positives!
However, the nature of social media platforms has proven to be centralised. Critical voices often find it hard to assert themselves on these platforms. Being deemed as “controversial,” they usually get banned. This is where SocialFi comes in.
A fusion of social media and decentralised finance (DeFi), SocialFi is the foundation of decentralised networking in Web3.
SocialFi is a Web3-based social media model in which users directly control the content they create and leverage their influence to earn revenue. As the name suggests, SocialFi combines social media networking and decentralised finance (DeFi) to provide a decentralised ecosystem for content creators and users.
Unlike traditional social platforms like Facebook, X (previous Twitter), or Instagram, SocialFi platforms operate completely sovereignly without a controlling body, allowing creators increased freedom to create, complete control over their data, and profit based on their engagement rates.
SocialFi lets users create, manage, and own social media platforms fairly quickly compared to web2. Plus, users have multiple earning opportunities from their engagement and following, as there is no limitation to what users can monetise. Leading SocialFi platforms include Friend.tech, Open Campus, and Lens Protocol.
The economies of such platforms involve:
By leveraging the concept of social networking and the decentralised nature of web3, SocialFi platforms aim to bring a fresh, inclusive concept to the online social space. Some of the advantages of such platforms include:
Data on Web2 social media platforms is heavily centralised, all stored on a single server managed by a specific individual or entity. For example, companies like Meta and X have complete control over their users' data, privacy, engagement, interactions, and monetisation.
SocialFi’s decentralised nature allows users complete control of their content and data and how they monetise their presence.
Web2 social media is vulnerable to frequent censorship. On the other hand, SocialFi platforms promote freedom of speech with much less or no restrictions. In the case of harmful content, moderators and users collectively decide on how to address it. SocialFi platforms aim to allow users to voice their opinions without fear of being censored.
SocialFi offers creators different monetisation opportunities through cryptocurrencies and non-fungible tokens (NFTs). Creators use in-platform tokens to control who interacts with their content, and users use a token to engage with a creator's content. This lowers the possibility of spamming and encourages high-quality engagement. Creators can also monetise their social media following by selling exclusive merchandise and NFTs.
As SocialFi is still an emerging sector, it faces two main challenges.
Scalability
Social media is so intensive and interactive that it demands high transaction throughput. This challenges SocialFi platforms to process large volumes of communication data while delivering a high-quality user experience and improving platform performance.
Sustainability
Most SocialFi platforms have found it challenging to be profitable so far. To become economically sustainable and create a viable and sustainable ecosystem, web3-based social networks must address these challenges and build an ecosystem for content contribution.
SocialFi's main goal is to offer users a similar experience as traditional social media platforms but with complete control over their data, freedom of speech, full content proprietorship, and multiple channels for monetisation through blockchain technology.
Although SocialFi is still in its early stages, recent developments and abundant monetisation for content developers demonstrate promising opportunities in the near future.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.
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