What is SocialFi? A complete beginner’s guide to the social network of the future.

The Crypto space in recent year, has enjoyed so much benefits from the emergence of Web2 platforms. However, we can now look up to What is SocialFi which comes with greater benefits and with the focus to overcome the hurdles that Web2 platforms could not overcome.

With this article, we introduce to you in clear terms, SocialFi; the social network of the future.

What is SocislFi?

SocialFi uses the fundamentals of decentralized finance (DeFi) to allow social media influencers, content creators, and users to monetize their social media following and engagement. Monetization is done in cryptocurrencies while identity management and digital ownership are registered with non-fungible tokens (NFTs).

SocialFi platforms are adapted to prevent centralized censorship decisions through their decentralized autonomous organizations (DAOs) structure.

Problems facing Web2 social media

About 58.4% of the global population are active for an estimated 2 hours per day on social media while only very few enjoy engagement and monetization. This makes benefits allowed to very few people.

Another challenge is the instance of centralization where content creators can only talk out certain topics that are not against the regulations of these platforms, otherwise they will get banned.

Brand equity cannot be monetized on web2 platforms. Popular influencers who have created their own brands can separately monetize their equity, however, the reputation they have been able to build on social media doesn’t guarantee money in their account.

The Principle of SocialFi

SocialFi are decentralized social applications with focus on providing solutions to the known limitations of Web2 social media platforms.

The following are notable SocialFi projects;

Mousai: a web3 music streaming platform

Diamond: a web3 micro messaging app, similar to Twitter

DeSo: decentralized social media make use of this protocol

ENTRE: a web3 app for professional networking

Explained below are some of the areas that make SocialFi more outstanding, compared to Web2.

The freedom of contents sharing

SocialFi platforms allow users to enjoy the freedom of speech. Interestingly, there is a balance to this freedom of speech which curtails harmful contents from being shared to other global users. Where this balance lies is that each individual can preferences can selectively block some contents and engage with others.

Therefore, on SocialFi platforms, content sharing is not controlled by a centralized body but individuals have the responsibility to control what content should be shared to them.

Digital identity management

SocialFi offers a better ownership and identity management system with the use of NFTs as picture-for-proof (PFP). These NFTs are proudly adopted as profile pictures on Twitter, and also as NFT profile pictures by the holders. Many PFP NFT holders consider these NFTs as their identity, which thus create an emotional connection between holders and these NFTs.

NFT are designed to be actual proof-of-ownership, whereby SocialFI users can adopt their NFTs as their profile picture and confirm their NFT ownership by simply connecting their wallet.

These unique features cannot be integrated without glitch on Web2 platforms.

Monetization

SocialFI has created a third tier of economy for creators, by allowing them to manage their economies by making use of social tokens. Users that have reputable brand equity can have their own token and a mini economy that revolve round it. The value of the token will be determined by the engagements it attracts.

Some structures are being tested to be built around some of the factors of monetizing engagement for users; the purpose of this is to prevent spamming and increase real engagement. The most important is the monetization aspect.

Limitations that SocialFi needs to overcome

Consistent economic infrastructure

Creating an economic model that is sustainable through unfavorable circumstances is an integral part of DeFi. This infrastructure must be weighed against several market odds and cycles, and be able to withstand these tests.

Adaptive data management system

The data management system must be able to accommodate and be adaptive to the volume of high magnitude of activities that will be occurring on the system. This performance is highly important as the issue of block size management system cannot be overemphasized.

Conclusion

In conclusion, What is SocialFi presents a promising future that global creators and influencers are embracing presently, there is no limit to what can be obtainable from it in the future.