Unlocking Revenue: SocialFi’s Power in Monetizing Social Presence 

Unlocking Revenue with SocialFi

The merging of cryptocurrency and decentralized finance (DeFi) with social media has given rise to a new phenomenon – SocialFi – in the ever-changing internet environment. This new trend has the potential to change the way we communicate, share, and monetize our online presence.

SocialFi is a word that has lately started circulating in internet groups and IT circles. It is a novel approach to combining the financial components of Web3 with social involvement and outreach. Let’s look at how this new notion may change our perception of worth, empower artists and followers, and engage online.

Getting the SocialFi Conversation Started

To begin, consider why SocialFi is on our radar in the first place. One explanation is that in 2023, several SocialFi apps drew recognition due to their new decentralization ideas. A project, for example, has been developed that allows individuals to tokenize their social network activity and, in effect, sell communication information about themselves. 

Market expansion of SocialFi

Source: LinkedIn 360 Marketupdates

We’ve also seen the tokenization of tweets, postings, and other social media output enabled by blockchain NFTs to earn yield. All of these advancements have sparked interest among content providers searching for new ways to make cash and engage with their consumers.

But What Exactly Is SocialFi?

By using decentralized technologies such as tokenization, Social Finance (SocialFi) redefines the classic social networking concept. SocialFi, which is based on the concepts of disintermediation, uses blockchain technology to give social media users greater authority over their information and online activities.

Typically, traditional social media networks centralize data ownership in the control of a single business. SocialFi, on the other hand, uses smart contracts and decentralized identification systems to offer people control over their personal information. This can assist in improving privacy while also allowing users to strategically share information and monetize their data through tokenization.

SocialFi is Reliant on Web3 Innovation

It operates inside the Web3 architecture and provides an ecosystem in which users may communicate and interact with cryptocurrencies. This includes features such as token-based rewards that motivate users for meaningful content production, sharing, and collaboration. 

In essence, SocialFi may convert social media communications into economic transactions, allowing content providers and active users to receive tokens in exchange for their efforts. 

Web2 Social Media Challenges

Every day, 58.4% of the global population spends an average of 2 hours and 27 minutes on social media. Nonetheless, a few centralized corporations and their stockholders profit from the created attention, exchanges, engagement, and data. Because of this mismatch of incentives, the one-liner “If the product costs nothing, you are the commodity” has emerged.

We’ve also seen plenty of examples of centralized management when platforms prohibit content creators from discussing particular issues. While these mechanisms are normally in place to safeguard the larger user base from damaging messages, a decentralized curation method, if one exists, would be more in line with the Web3 ethic.

The ability to monitor ownership is the third problem that Web2 apps have faced. This is especially important for creators and artists who promote their work on the internet. However, the absence of digital ownership creates vulnerabilities for digital theft if adequate safeguards are not in place.

The incapacity of Web2 platforms to monetize their reputations is another problem. Most influencers who have built their brand can monetize their brand equity in other ways. However, the social following and credibility they have built on a social media platform do not transfer straight into cash in the bank.

How SocialFi Differs From The Present Social Media Applications?


The DAO paradigm makes it easy to manage incentives evenly across all stakeholders, which has been a core design element of Web3 apps. SocialFi apps go further and higher by including the idea of social tokens or in-app usage tokens. 

We frequently see utility tokens utilized to drive in-app incentives in the worlds of DeFi and even GameFi. With SocialFi, we have social tokens that represent the economy’s third tier. These tokens are not only produced at the program level but also on the consumer’s side. Through social tokens, creators may now run their ecosystems.

Every user who has substantial brand value can have their token. McDonalds, for example, may have their token and a mini-economy based on it. The token’s worth will be directly proportionate to the user’s social influence. As a result, McDonald’s token will be worth more than that of a typical user who is just starting their social network presence.

Let us now consider what factors might influence the value of the social token in this framework. The current model is based on a few core design concepts, including:

  • Only individuals who possess a creator’s social token can interact with their postings. As a result, if you want to interact with McDonald’s postings, you must have his social token in your wallet.
  • If you want to get the notice of an influencer, your post will appear at the top of the answers if you have most of their social token.
  • Creators and influencers can establish criteria that enable followers with more than a particular quantity of their social tokens to communicate with them.
  • Artists with a large following may use their social token to develop a subscription service for individuals who want exclusive accessibility to their creative material.
  • It costs money for a user to interact with someone’s material, whether through a like or a share.

Economic solutions are being tried around some of the major aspects of monetizing involvement for SocialFi users. These concepts will minimize spamming because it will now cost to spam, improve real interaction, and, most importantly, assist artists and influencers in monetizing their brands.

Censorship and Free Communication

Most Web2 social media services have battled with this difficult and subjective issue space. On the one hand, we do not want centralized censorship, but on the other hand, we do not want bad information to be transmitted globally without any restrictions. The balance is somewhere in the middle. 

SocialFi systems depend on decentralized governance via on-chain data labelling. On-chain are all publicly available posts on a SocialFi network. As a result, this on-chain information is available for rules engines to interpret and categorize messages quickly depending on the subject and the nature of the words utilized. It is up to the nodes on the chain to select the appropriate posts. 

Each node has the option of blocking certain labels while engaging with others. If a node decides to engage in and encourage a destructive message, it may face legal consequences. As a result, what must be permitted within the network is not determined by a central authority or a small staff within a central organization. Individuals have power and hence have accountability.

Digital identification and ownership

The introduction of picture-for-proof (PFP) NFTs has generated a new type of digital identification. PFP NFTs are collections that NFT holders develop an emotional affinity to, such as Bored Ape Yacht Club, Moonbirds, and CryptoPunk.

The holders take pride in using these NFTs as Twitter and NFT profile images. While many PFP NFT holders are rapid flippers, others regard their NFTs as an extension of their personality. These NFTs form an emotional bond between the holder and them.

While emotional identification is an amorphous idea, NFT is proof-of-ownership by design. As a result, if a user creates a SocialFi profile, they can utilize their NFTs as their profile photo and authenticate ownership of their NFT by just linking their wallet.

Aside from the identity component, PFP NFTs also allow special authorization to select SocialFi networks. These networks might provide their NFT holders thought leadership, knowledge, activities, or even financial sneak peeks. This is currently in use in Discord groups, but it might be a part of SocialFi.

NFTs inside SocialFi networks also provide creators with the ability to broadcast their work. An artist producing an NFT collection can split the sale revenues with the holders of their social tokens. This establishes a reward mechanism for the artist’s fans to spread the news, perhaps increasing NFT collection sales.

Finally, by hitting a button, a message that seems like a “once in a lifetime moment” may be instantly turned into an NFT. Because of the characteristics of the creature and mismatched perks, many of these functions do not exist and cannot be replicated so smoothly on Web2 platforms.

Two Major Obstacles That SocialFi Must Overcome

All of this appears to be too good to be true, so what are we missing? Can SocialFi truly be the social media of the future? The application of the design ideas in SocialFi is not without challenges. Web3 must overcome the following obstacles: 

Scalable Technology 

Every day, Facebook creates 4 Petabytes of data. 510,000 comments are posted per minute, 293,000 status updates are made, 4 million posts are liked, and 136,000 photographs are submitted. Can blockchains handle such massive volumes? 

DeSo, the blockchain layer being developed for SocialFi apps, believes it will grow better than most existing layer-1 chains since they are specifically designed for SocialFi scenarios. To solve scalability, they employ indexing, block size control, warp sync, and sharding.

They claim, for example, that they can handle 80 postings per second for a four million user base, compared to Twitter’s 6000 posts per second for 300 million users. The only way to get this performance is to increase the block size. However, they can also use other strategies to boost throughput, such as warp sync and sharding. 

Warp sync validates transactions without requiring all nodes to check the whole record of transactions. Sharding enables processing in parallel, which increases throughput by several orders of magnitude. DeSo thinks that by combining these two strategies, they will be able to grow the platform to one billion users.

Sustainable Economic Growth

Perhaps the most difficult aspect of mode DeFi, through its derivative business models, is developing economic models that can withstand stress and outlier events. There are various systems, such as GameFi concept to earn tokens and SocialFi, that promise very significant rewards to their players. However, so far, these incentives have shown to be short-term growth strategies.

All of the factors covered in the SocialFi incentives are currently being tested on a limited basis. Before they can go widespread, these models must be extensively examined via numerous market downturns.

One negative post might swiftly devalue the social token and cause a chain reaction of losses for system members. Growing losses to one significant microeconomy on a social media network where influencers work in echo chambers can rapidly give rise to a viral impact across the system.

SocialFi is Currently Out Here

SocialFi isn’t just a theoretical concept; it’s already made its way into social applications you’re probably already using. One significant example is the use of non-fungible tokens as profile images on platforms such as X and Reddit. 

socialfi projects in web3 space

Including NFTs in profile images gives a personality and significance to the digital identity. Users may show their personality by purchasing, selling, and trading these tokens. 

In certain of its communities, Reddit has a lengthy history of cryptocurrency tipping. Users can offer a little tip for remarks they appreciate, which accumulates on the creator’s account. In the past, this was frequently in the form of meme coins like SHIB or DOGE.

Closing Thoughts

Despite infrastructural and business model challenges, SocialFi systems have promise. The world is rapidly moving toward creative economic scenarios, and this is a significant step in that regard. 

Future social networks based on DeFi principles can claim resilience only after experiencing a few downturns and surviving them. That certainly applies to SocialFi. The expanse of opportunity is limitless, if market positive trends continue to encourage advancement and investment possibilities for SocialFi initiatives stay favorable.


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