The growing popularity of projects in Web 3.0 and DeFi was largely caused by people getting tired of centralization. They got tired of overpaying intermediaries for services that could be obtained directly. They got fed up with banks deciding who to lend money to and who to withhold funds from. Medical research is also focused primarily on financial benefits, rather than treating people. Therefore, blockchain projects are gaining popularity, as they offer a certain independence from a third party.
By the same principle, social networks of the future appear. Because it’s not ordinary users, but tech corporations who earn from content on Instagram, Facebook, or Twitter. In this regard, a trend has appeared toward decentralization in social networks. The trend implies the ability to own content, and earn it yourself. This article will consider what SocialFi is and how it works.
What is SocialFi and how does it works
SocialFi or Social Finance is a platform that combines the principles of social networks and decentralized finance (DeFi). In simple terms, it is a new stage in the development of social networks. Currently, all the users’ data in social networks is controlled by the management organization, and in future SocialFi projects, users themselves will be able to do it themselves.
SocialFi platforms are based on users’ earnings. By allowing content makers to earn income through content and advertising, users can monetize their communication, news feed viewing, NFT minting, and playing time.
Why SocialFi is gaining popularity
The main reason for this popularity growth is that SocialFi can eliminate the flaws of Web 2.0 social networks. Let's look at the problems that SocialFi can fix.
Protection of personal data and user privacy. Currently, users on the internet need to specify their phone number, e-mail, and other information to register on any social network. This data is kept on a company's servers. There is the risk of a server crash, as well as a leak of users’ data.
A SocialFi platform with a decentralized approach can save users from this problem. After all, dApps do not collect or store users' data.
Freedom of speech. People want to express their thoughts freely without being controlled by authorities or security forces. However, malicious content should not be left without control either.
In decentralized social networks, network participants manage the content. This makes it impossible for a central authority to censor or block users. Though, control of the malicious content is provided by artificial intelligence. The algorithm finds malicious content and deletes it.
Digital copyright. Traditional copyright models cannot fully comply with the new reality. For example, even with an official license, authors can lose part of their income when distributing digital content.
SocialFi platform allows the creation of automated copyright systems. Like decentralized content markets, where authors will sell their work directly to buyers without intermediaries. Content creators will receive full payment for their work, and users can be sure they will buy original content.
SocialFi projects which are worth paying attention to
Metaverses are perhaps the most notable representatives of the SocialFi sphere. Users there are anonymous. They create and monetize content daily. Below are a few more niche projects.
Entre — Professional network
Entre is a social network for entrepreneurs and investors. The platform allows them to communicate with each other, find investment opportunities, and make deals. Entre uses blockchain technology to ensure the security and transparency of transactions between users.
In Entre, users can find jobs and employees, as well as exchange experiences and ideas through virtual coworking. They hold general meetings, find investors, and work remotely. The platform allows users to monetize content through paid broadcasts, messages, comments, and closed business events.
Cheelee — GameFi short video platform
Cheelee is a video platform on the blockchain. Content makers create and publish short videos and get rewarded for them. Other users are paid for watching videos in the feed.
In Cheelee, every new user receives free NFT glasses. These glasses have certain features, such as the speed of attention, lenses, battery, memory, and frame. These features affect how much the owner of the NFT glasses will earn for viewing the feed. The glasses can be upgraded and improved with the help of a platform token, which is farmed for viewing content.
Skiff — Privacy-first workspace
Skiff enables users to create and manage secure private networks. They are protected from surveillance and third parties control, such as government agencies, Internet service providers, and others.
The project considers that people tend to store their data safely and do not want to display their personal information without their consent.
On the Skiff platform, users can create secure rooms and channels to communicate and share files. On the platform, they can create notes, and mark important dates and plans in the calendar, which can be shared with other users.
Arpeggi — a place to make music
Arpeggi provides a fully functional digital sound station for creating and editing music that can be recorded in Arpeggi format and registered in the ARP protocol with the information about the authorship.
On the platform, musicians can use free sounds from the endless sound library created by Arpeggi users. This allows working together on projects without having to purchase expensive licenses.
Every sound or track that has been created or uploaded to the platform turns into an NFT. When other users use sounds, make remixes, or listen to music, the creators receive royalties in the form of platform tokens.
Is SocialFi going to replace Web 2.0 social networks?
The former social networks shot up during a short period. Instagram was created in 2010 and reached 16 million daily users in two years. According to BDC Consulting, the total number of registered users in SocialFi projects by mid-2022 amounted to 14 million, with only 5 million regular users. However, metaverse users were excluded from these statistics.
According to these figures, it is premature to say that the concept has not hit an audience. Most likely, the general decline in sentiment towards cryptocurrencies has been affected.
Listing.Help analytics tend to believe that the popularity of the new social networks will grow. Niche projects for creating and monetizing content, social networks for investors and the business community, and applications for a healthy lifestyle will become the most promising areas of SocialFi.