SocialFi Explained – Get Paid To Socialize
Welcome to the 8th edition of Web3 and More. The past 4 editions, we were able to judiciously address popular concepts of Web3 such as the Metaverse, NFTs, DAOs and GameFi. Today, we’ll be addressing the last popular concept of Web3, ‘SocialFi’. While SocialFI hasn’t gained as much momentum or buzz as the rest concepts, it is a snowball that just started rolling and holds equal or more potential than the rest concepts of Web3.
Here’s the outline of what we’ll be addressing in this edition:
- What is SocialFi?
- What are the benefits of SocialFi?
- What are some practical examples of SocialFi?
- What is the future of SocialFi?
- Final thoughts
WHAT IS SOCIALFI
SocialFi is the short form of Social Finance. It refers to the combination of social media and decentralized finance. In simple terms, it means social media platforms that are integrated with blockchain (smart contracts) which enables them to execute DeFi functions like trading, minting, staking, farming and earning tokens. The key concept is that user content does not belong to the platform, rather, it belongs to the user who posted it and such content can be tokenized as NFTs for the profit of the creator and his/her subscribers.
For example, if LinkedIn was a SocialFi platform, each article you publish on LinkedIn could be tokenized into an NFT and you can sell the right to that article to anyone (as an immutable asset ‘‘NFT”) or keep it to gain other rewards from LinkedIn, based on the engagement your content generates.
Unlike the current state of social media where only the companies keep all the revenue generated, and influencers have to attract brand endorsements or other gigs by themselves in order to capitalize on their content, SocialFi creates a win-win opportunity for all parties involved. That is, the social media company, the creators or influencers and the users (fans), all benefit from the revenue generated on the platform.
BENEFITS OF SOCIALFI
1. Creators Empowerment
With creators having exclusive rights to their content and being able to mint them as NFTs, their chances of getting paid for the knowledge or entertainment they share has become a lot higher without any compromise to the quality of their content. There is no monthly cap to how much a creator should or can earn, it all depends on their influence and creativity. Fans or followers who wish to see the continuity of such content can buy the creator’s NFT to financially support them and the creator who makes such sales can equally stake on the platform to earn more revenue, redistribute to followers or simply withdraw to their bank accounts to scale their production.
2. Users Empowerment
SocialFi does not only benefit creators but also their followers or subscribers. Users are rewarded for commenting on posts and sharing or liking it.
Secondly, for every creator that a user supports, they are also buying into their career. It’s not a free tip or donation (although it can be sometimes), the user is more or less making an investment.
For example, if you have an engaging page on Twitter and decide to monetize it, rather than asking your followers to pay you for your posts, you can utilize SocialFi to launch a limited NFT collection, which makes any buyer co-owners of your page and content. Assuming this limited collection is just 1000 pieces of NFTs for your early supporters, you can include rewards like revenue sharing (from resale royalties), access to alpha opportunities, airdrops from future collections and collaborations among others. This makes the users earn passive income even as the creator grows and earns more.
Not to forget, the NFT they hold can always be sold to another interested subscriber at a reasonable mark up.
3. Increased Privacy Security
Since there isn’t a pressure to generate ad revenue, SocialFi platforms require and store less personal data from their users and do not sell user data to other corporations for profit. Users’ data belong to the users themselves and are not sellable unless the user chooses to share such data. If a user opts to see ads then they automatically receive a portion of whatever ad revenue that was made over their attention.
PRACTICAL EXAMPLE OF SOCIALFI
Steemit is acknowledged as the first SocialFi platform in the market. It was founded by Daniel Larimer in mid 2016 and has since become a go-to reference in this fast growing segment.
Steemit is a decentralized social networking and micro blogging platform that allows users to share original content for cryptocurrency rewards. Similar to Reddit, a creator can publish a content, then other users can ‘upvote’ or ‘downvote’ the post based on how they perceive it. A post with more upvotes gets rewards in Steemit token ‘STEEM’ which the creator can trade for other coins. The users who comment on the post can also be upvoted and downvoted, thus, enabling them to get ‘STEEM’ rewards as well.
As at when Steemit launched, NFT technology had not gained momentum, hence, it’s no surprise that they didn’t integrate NFTs on their platform. Steemit currently sits at a market cap of $111million and over 1.2million active users.
There are currently many other brands building the next Facebook of Web3, but I can’t reference them here until I get to understand and try them out.
WHERE SOCIALFI IS HEADED
While it seems fairly new, the concept of SocialFi has been receiving lots of positive attention from industry’s super powers like Binance, Paradigm and Solana Ventures since summer 2021.
While most things around Web3 are highly speculative, SocialFi isn’t one of them. The amalgamation of decentralized finance with social media couldn’t be termed nor timed any better. Many debates around social media companies violating users’ privacy and trading their personal data without their knowledge has placed social media in a pretty bad light across the globe.
Hence, SocialFi getting momentum at this moment with all the benefits it bears, makes it one of the most promising Web3 concepts to watch out for.
The fast adoption of Web3, empowerment of users and the heightened demand for free speech on social networks has begun the SocialFi snowball effect where it will grow big enough to transform every social networking platform and model out there.
Web3 is inevitable and social interaction is a must, especially in this digital age. The integration of DeFi with social media can help resolve most of the current challenges plaguing the social media industry. Much more than that, this integration is distributing equal power among every stakeholder, from brands to users.
Similar to GameFi, SocialFi holds the potential to influence billions of new users into Web3 as it is seamlessly integrated with a lifestyle and social tools that billions of people are already addicted to. Adding financial rewards to such addiction may as well be the sweetest icing on the cake.
While I’m not socially active, I sure would love to get paid for sharing my authentic opinions or findings on social media, and, I believe most others would embrace such a change as well.
I’m not a guru of any kind, so do not take my educational content as financial advice. I only hope to help you and others to make informed choices in Web3 and More.
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