What Is SocialFi? The Latest Crypto Narrative
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What Is SocialFi? The Latest Crypto Narrative

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6 months ago

Discover the latest trend in crypto, SocialFi, and how it works. Learn more about trending SocialFi protocols like friend.tech and why it is so popular.

What Is SocialFi? The Latest Crypto Narrative

Table of Contents

Crypto is a game of narratives. One day decentralized gambling is hot. The next day, it may be a new layer-two chain. The latest narrative is called SocialFi, a combination of social media and decentralized finance.

This article analyzes:

  • What is SocialFi?
  • What made SocialFi popular?
  • The reactions to SocialFi?
  • Trending SocialFi protocols.
  • The future of SocialFi.

What Is SocialFi?

SocialFi is a portmanteau of social media and finance – crypto’s latest attempt to monetize social media and social interactions online. The basic idea: you interact with others on a social media platform that allows your interactions to be monetized.
For instance, you may want to message and share and combine those two with the option to trade the value of your interactions – that is the basic principle of friend.tech. Or you could publish and monetize the value of your publications – essentially a crypto version of OnlyFans. As you can see, there are no limits to what could work for SocialFi.
Is SocialFi then the same as DeSoc– Decentralized Social Networks?

Sort of. These two overlap to a large degree, although decentralized social media like Lens Protocol or Nostr does not emphasize the finance aspect. SocialFi, on the other hand, focuses on monetizing interactions.

What Made SocialFi Popular?

The launch of the Base L2 chain allowed the SocialFi trend to take off in the form of friend.tech. The popular app, where you can trade “keys” (previously known as “shares”) of profiles, promises an airdrop down the road, which led to a frenzy of trading on Crypto Twitter. "Keys" of Crypto Twitter influencers are all the rage at the time of writing.

Source: https://coinmarketcap.com/view/friend-tech/

The “keys” have even been issued as wrapped tokens that can be traded independently of the platform. Some of the popular CT influencers are included in the top friend.tech tokens category.

What Are the Reactions to SocialFi?

The rise of SocialFi sparked a heated discussion about whether this is a sustainable new vertical or just the latest fad. Does anyone still remember Ethscriptions, Bitcoin Ordinals or BRC-20 tokens?

Christ Burniske, former Crypto Lead at ARK, thinks SocialFi is the latest iteration of the experimental cycle of crypto:

View post on Twitter

But not everyone agrees. DeFi account DeFi Made Here opines that SocialFi is just the latest version of insiders throwing around the hot potato to suck the remaining liquidity out of the market:

View post on Twitter

Alex Wice is highly critical of the friend.tech model. In his opinion, it is incomparable to OnlyFans since OnlyFans incentivizes creators to deliver new content to keep revenue up. Friend.tech, on the other hand, is similar to NFTs: early share buyers profit at the expense of later ones and have an incentive to sell when price increases.

View post on Twitter

Who is right?

Both sides have good arguments. Yes, SocialFi is an interesting new experiment and innovative elements may stick around. However, narratives have been coming and going ever faster recently.

Trending SocialFi Protocols

Source: https://coinmarketcap.com/view/communications-social-media/

You can find the best SocialFi protocols in CoinMarketCap’s top social media token category. Some of the most popular SocialFi protocols include:

Friend.tech

Friend.tech allows users to buy and trade “keys” of each other. Each share is issued along a bonding curve, meaning buying someone’s “keys” early can be lucrative if the price rises. Trading is subject to a tax on sales and purchases of “keys.” Friend.tech has been especially popular among Crypto Twitter influencers, many of whom are rumored to have investments in a possible token that could be launched later. Recently, friend.tech has been picking up interest among non-crypto native creators as well.

Qrolli

Qrolli is a decentralized social media protocol that grants users a digital identity that is dynamic and tradable. Creators can earn from content with token-gated posts, limit or monetize post collecting, and decide who interacts with their posts. There is also an on-chain referral system to benefit from growing one's circle, as well as decentralized chat and spaces.

DeSo

DeSo is a decentralized platform for long-form content, on-chain group chats with end-to-end encryption, on-chain private content with end-to-end encryption and other decentralized use cases. DeSo will offer new ways to monetize content, such as diamonds, NFTs, creator coins and more. DeSo will offer secure on-chain end-to-end encrypted DMs, group chats and private content.

The Future of SocialFi

SocialFi: fad or the future of finance?

While SocialFi undoubtedly has potential, it remains to be seen if the interest surrounding the protocols would last. While the ideas are no doubt novel, the SocialFi and DeSoc space are tackling a number of key issues with legacy centralized social media platforms, such as: privacy and security, censorship, monetization, ownership of one’s data and more.

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