What is SocialFi?
SocialFi is a term used to describe the intersection of social media and decentralized finance (DeFi). It refers to a new class of financial products and services that leverage social media platforms and user behavior to create new opportunities for decentralized finance. The goal of SocialFi is to make DeFi more accessible and user-friendly by integrating it with social media platforms, which are already familiar and widely used by millions of people around the world.
Facebook dominates the industry, with Instagram and WhatsApp. YouTube dominates the market, targeting only the top content creators. Thus, SocialFi was born with the purpose of change that empowers creators and allows more individuals to contribute to the creator economy.
Another benefit of SocialFi is that it will create a safer barrier to entry for new users who want to enter the crypto space. Nowadays, it is very easy for new investors to be scammed by so many projects that claim to deliver the best results. SocialFi will ensure a safe space for new investors to learn while limiting unnecessary risks.
While still in its early stages, SocialFi is having a significant impact on the crypto and blockchain space, as well as the way we socialize around the world.
Overview of the SocialFi ecosystem
Basically, social tokens can be divided into 3 different categories. Specifically:
This is a fan token issued by DJ RAC, real name André Allen Anjos based on the Ethereum network. Holding RAC tokens allows users to access the exclusive Discord channel and have the opportunity to receive airdrops and unpublished content.
In addition, holders of a certain amount of RAC can participate in exclusive privileges. Such as an exclusive product launch on the Zora or SuperRare digital product marketplaces.
ROLL is one of the social token issuance platforms. Under the issuance model, Roll will issue ERC-20 standard personal social tokens to content creators on behalf of users. The supply for each individual social token is 10 million tokens, of which 2 million will be issued directly to content creators; 1.2 million tokens belong to the Roll platform and the rest will be unlocked linearly monthly for 3 years. And yet, ROLL also provides a storage and trading platform.
Currently, 200 content creators have issued their own social tokens through ROLL. However, in the first half of this year, the event of 3000 ETH being stolen by hackers on the Roll platform caused massive discussion and extinguished the enthusiasm of the entire market for social tokens.
Whale is a well-known private token, issued by individual buyers WhaleShark based on the Roll platform. The value of the tokens is based on the NFT asset held by WhaleShark itself and the valuation can be checked on NonFungible.com. Whale allocates 50,000 tokens/month to buy NFTs, donate to artists, pay team salaries, community activities, etc.
In addition, creators can earn tokens by staking their NFT works and they can also sell their works on Opensea for a premium price.
RALLY is one of the famous early stage social token issuance platforms. The project is characterized by combining RLY native governance tokens with creators’ social tokens to mint them into new personal tokens. The conversion of individual tokens must go through RLY.
The platform covers the entire issuance, social channels, deposit and trading process. Rally uses Layer 2 solutions to optimize real-time transactions and other mechanisms. Token holders have the right to manage the Rally Network.
Community content financialization
- v.cent.co – a social platform for celebrities that converts their tweets into NFTs and auctions them off. In the transaction, 95% of the token belongs to the original tweeter and 5% belongs to the platform. In the secondary sale, 87.5% of the tokens belong to the seller, 10% to the creator, and 2.5% to the platform.
- Yup – a protocol that helps track social activities and behaviors, encoding the effect of social activities such as likes and feedback on content quality. In the platform, each user and content URL link will correspond to a certain number of influence points.
- Matataki – a social token issuance and content platform denominated in RMB. Fans can use the Matataki platform to purchase personal tokens to unlock articles and other functions. The platform is backed by the META token, which is also the platform governance token and can be used for staking.
- SWAGG – a diverse social networking site focused on the SWAGG community. SWAGG has many uses and token holders can participate in the entire ecosystem built around the SWAGG token. Including getting artworks in the SWAGG network, getting airdrop rewards before public sale, providing funding for projects, sharing valuable content for rewards, redeeming tokens to create communities councils, make proposals and vote, etc.
Social Token + Dao organization
- Karma DAO – a very typical DAO community, originating from the social experiments of crypto lovers. It’s a place to share investment opinions, provide insights and recommendations, lead the community, help fund projects, and host virtual meetings.
- FWB – a private social platform that brings together a group of creators and thinkers in the field of cryptography. Participants need to hold a certain amount of $FWB native tokens to join the social circle. $FWB has a constant supply of 1 million tokens.
- Ark – an investment-oriented DAO organization. Members can create an “ARK” themselves to summon other members to buy a specific Cryptopunk. The organization regularly publishes a list of the creators involved in the project, and provides funding and support.
Social platform tokens
- Chilliz (CHZ) – is a typical social platform, focused on the sports industry. In Chilliz there is a platform that encourages sports fans called Socios. Socios currently works with 48 clubs including AC Milan, Manchester City, Arsenal, Barcelona, Paris Saint-Germain and Juventus to issue fan cards. Socios.com users can buy club fan tokens by holding CHZ. In addition, you may also have community voting rights, decision-making rights, and other rights.
- Loopss (LOOP) – an infrastructure that implements a programmable social network and generates various application scenarios. The project originates from the DoraHacks DeFi Hackathon and works on BSC. The most basic function of Loopss is that based on online payment technology, individuals can issue their own personal credit currency. Using LOOP it is possible to establish verifiable social relationships on the blockchain, perform token distribution, governance and authority based on social relationships.
- Fyooz – a social token issuance platform that assists influencers to issue individual tokens. This platform is called “star token”. Fyooz’s main partners are musicians, singers, athletes or influencers. Most Fyooz holders can get some perks, like a unique chance to participate in activities, parties, discounts, etc.
Decentralized media platform/application
- Audius – a decentralized music streaming protocol. Audius is committed to bridging the gap between music creators and fans. It’s worth noting that the platform announced a partnership with TikTok, allowing musicians on the platform to upload and share their work directly to TikTok’s Sound Kit. At the same time, musicians can also refer to the tracking links on TikTok.
- Mastodon – an open source social networking service software based on ActivityPub protocol. Its vision is against decentralized Twitter. Through the Mammoth site, users can register, post, upload photos and chat, just like traditional social networks.
- Nafter – a short content NFT socialization platform. Similar to Instagram, creators can convert created posts into NFTs and profit from selling post rights.
- Coinvise – a social token issuance platform focused on APIs, allowing developers to integrate tokens into their existing platform. On the Coinvise platform, creators or communities can mint social tokens and establish incentives on the Ethereum and Matic networks. At the same time, creators can also use tokens for rewards, airdrops, crowdfunding, access control, NFT, etc.
SocialFi investment potential
While the development of the SocialFi concept is still in its early stages, it has the potential to significantly affect cryptocurrency transaction volumes and the use of blockchain technology in general, as well as user relationships. common use of social networks and the interactions within them.
Since SocialFi projects have high potential for profitability, there has been a recent spike in venture capital funding and interest in them.
For example, the recently announced Binance Smart Chain investment program with a budget of $500 million, mentioned SocialFi as one of the main investment areas. Solana Ventures, along with Reddit co-founder Alexis Ohanian, also announced $100 million in funding for Web 3.0 social media startups. Furthermore, the joint venture company Paradigm has announced an allocation of $2.5 billion to startups under the Web 3.0 framework.
Thus, it is possible that the leading players in the venture capital market have realized the potential of blockchain technology and profit from SocialFi projects, while the flow of venture capital leads to the attraction of investors. public towards the new generation of social networks.
Outlook for the development of the SocialFi market
Currently, the niche of SocialFi projects is just beginning to fill up. Market analysts believe that the emergence of such projects is a natural transformation.
For example, the market has seen projects like Audius – a decentralized protocol for music streaming; The RAC project provides exclusive access to RAC DJ content.
Nowadays, the market is used to GameFi projects, so the most logical solution for investors is to look for platforms that combine both GameFi and SocialFi concepts. Very few such projects are coming soon and most of them are in Seed sale or Private sale stage.
In summary, investors need to monitor the emergence of projects on the leading launch platforms and assess their potential returns. The most affordable tools for this would be technical analysis of the project, overview of tokenomics, checking allocation in each round, potential transaction revenue amount and number of token holder.
SocialFi is a hybrid variant of web3.0, financial and cryptographic social power, through which users can get incentives and privileges. Hopefully with the above information, you have a better understanding of the importance and value of SocialFi in the not too distant future!
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