Exploring the World of SocialFi: Bridging Social Media and DeFi in Web3


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Web 2 companies have been the dominant players in the online world throughout the 21st century so far. They initially introduced search engines and later brought social media into our lives. As they realized the immense value of user data, they transformed themselves, blurring the lines between hardware manufacturers like Apple, software creators like Microsoft, online marketplaces like Amazon, and search engines like Google. They began treating their users as the product.

Among the innovations of Web 2, social media has been the most lucrative, generating billions in ad revenue and subscription fees for those who succeed in this space. Unfortunately, the companies profiting from social interaction and content creation have grown into tech giants that control most revenue distribution, forming a monopoly.

Furthermore, user information has been commodified and traded without consent, sparking concerns about data privacy, as seen during the Cambridge Analytica scandal involving Facebook a few years ago.

Fast forward to 2022, and the future of the internet, based on the decentralized principles of Web 3, is becoming clearer. How about SocialFi?

To put it simply:

– Web 1 was like a Read-only experience, with static web pages.

– Web 2 brought us Read-Write capabilities, allowing interaction through blogs and social media.

– Web 3 goes a step further, offering Read-Write-Own capabilities. Here, “Own” extends beyond owning risky Web3 tokens; it also means owning your data and the tools to monetize it for your benefit.

This newfound ability to own your data and profit from your efforts is giving rise to exciting technology fields that blend DeFi elements with the crypto world and Web 2. Examples include GameFi and now SocialFi.

What Exactly is SocialFi?

SocialFi is an innovative concept combining social media features with DeFi. SocialFi platforms take a Web3 (decentralized) approach to creating, managing, and owning social media networks and the content produced by their users.

At the core of SocialFi are content creators, influencers, and participants who seek greater control over their data, the freedom to express themselves, and the opportunity to earn money from their social media presence and interactions. Typically, earnings on these platforms are in the form of cryptocurrencies, while identity management and digital ownership are facilitated through NFTs.

These platforms are DAOs designed to prevent centralized censorship decisions. Thanks to advancements in blockchain technology in recent years, SocialFi infrastructure can handle the high transaction volumes required for social media interactions effectively.

SocialFi Addresses Web2 Challenges

In the realm of Web2, individuals face several significant issues. One of these issues is the vast amount of valuable user data generated daily. Unfortunately, most of the profits from this data end up in the hands of centralized entities, leaving the individuals who create it with minimal benefits. SocialFi, however, allows users to utilize their data to generate income.

Another area for improvement with Web2 platforms is the limited ability of individuals to monetize their brands. Many influencers build strong personal brand equity on social media, which sometimes translates directly into earnings. While they can make money indirectly through ads or business ventures, a disconnect exists between their online influence and bank accounts.

SocialFi introduces innovative mechanisms that directly convert users’ reputation and fame into revenue, providing new opportunities for income generation.

Additionally, Web2 platforms often impose limitations on content creators, restricting them from discussing certain topics. While these restrictions aim to protect users from harmful content, a decentralized moderation process, which aligns better with the principles of Web3, can address this issue more effectively.

The third challenge tackled by SocialFi is digital ownership and the tracking of ownership rights. This is particularly critical for content creators and artists who share their work online. The absence of standardized digital ownership regulations creates vulnerabilities for content replication and intellectual property theft.

In Web2 social media, most of the world’s population spends considerable time online. However, a handful of centralized entities and their shareholders monetize the attention, interactions, engagement, and data generated. This misalignment of incentives has given rise to the saying, “If the product is free, you are the product.”

Additionally, centralized decision-making on these platforms often results in content creators being banned from discussing specific topics. While these measures aim to protect users from harmful posts, a decentralized curation process, if implemented, would better align with the ethos of Web3.

Another shortcoming of Web2 platforms is the need for more to monetize brand equity directly. Influencers who have built a brand for themselves can only indirectly monetize it. Their social following and credibility on social media platforms do not directly translate into financial gains.

What Are The Objectives of SocialFi

SocialFi has set out to transform the social media landscape by embracing the principles of Web3. It aims to address key challenges differentiating it from Web2, making it an increasingly popular choice.

Digital Ownership and Identity

The rise of Profile Picture NFTs (PFP NFTs) introduces a novel form of digital identification. PFP NFTs like Bored Ape Yacht Club, Moonbirds, and CryptoPunk establish a unique emotional connection between the NFT holder and the associated artwork.

This emerging form of identity gains traction as NFTs become popular profile pictures on social networks. NFTs serve as undeniable proof of ownership. To create a SocialFi profile, users can utilize an NFT as their profile picture and validate ownership by connecting their digital wallet.

Beyond identity, PFP NFTs grant exclusive access to specific communities within SocialFi, each offering unique value, such as life advice or investment trends. This model has been successfully implemented in Discord groups.

Furthermore, artists launching NFT collections can share profits from artwork sales with holders of their social tokens, incentivizing follower growth and increasing sales.

Last but not least, users can effortlessly convert special messages into NFTs with a single click—a functionality not readily available on Web2 platforms.

Moderation and Freedom of Speech

Finding a balance between moderation and freedom of speech is a complex and subjective challenge many Web2 social media platforms face. Communities often resist centralized moderation, but unmoderated content can lead to the spread of harmful content.

SocialFi aims to balance these extremes by implementing decentralized moderation through on-chain data labeling. All publicly viewable posts on the social platform are stored on the blockchain, making data available for analysis and tagging based on topics and linguistic characteristics. The decision-making authority for posts rests with network nodes.

Each node can block certain labels and interact with others, but the operator is legally accountable if a node chooses to engage with and support harmful content. In SocialFi, moderation doesn’t rely on central authorities or intermediaries; instead, control and accountability are in the hands of individual users.

Foundations of SocialFi

SocialFi is poised to revolutionize the social media landscape by embracing the principles of Web3, which revolve around decentralized social applications. It focuses on resolving key design shortcomings in today’s Web2 social media platforms.

Let’s dive into some essential aspects that set SocialFi apart from its Web2 counterparts, shedding light on why it has gained such popularity.


Ensuring fair incentives for all participants has been a central design tenet of Web3 applications, made possible through the DAO model. SocialFi applications take this concept a step further by introducing the concept of social tokens or in-app utility tokens.

In DeFi and even GameFi, we frequently encounter utility tokens that drive in-app economies. SocialFi introduces social tokens, marking the third tier of this economy. These tokens are not limited to the application level but can be created at the individual user level. Content creators can now manage their economies using social tokens.

Every user with significant brand equity can have their unique token. For instance, even someone like Elon Musk can have their token, creating a micro-economy centered around it. The token’s value will be directly tied to the user’s social influence. Consequently, Elon Musk’s token would be valued higher than an ordinary user creating their social media profile.

Now, let’s explore the factors that determine the value of social tokens in this model. Several fundamental design principles underpin this concept, including:

Only those who hold a creator’s social token can engage with their posts. In our example, you must possess his social token in your wallet to interact with Elon Musk’s posts. If you want to capture an influencer’s attention, your message can be prominently displayed at the top of their responses if you hold the most social tokens.

Creators and influencers can establish thresholds, enabling followers with a specified number of social tokens to communicate with them directly. Artists with substantial followings can establish a subscription model within their social token, providing premium access to their creative content. When a user interacts with someone’s content through likes or shares, it incurs a cost.

These principles form the basis of economic models being tested within SocialFi, aimed at monetizing participant engagement. They deter spamming, promote genuine engagement, and, most importantly, enable creators and influencers to monetize their brands effectively.

The Hurdles Ahead for SocialFi

Despite its promising advantages, implementing design principles in SocialFi is a formidable challenge. As of now, SocialFi is grappling with several obstacles that demand solutions.

Disparity in Influence

Fundamentally, SocialFi transforms personal brand value into digital currency or tokens. This process is more straightforward for individuals already renowned or established in real life. SocialFi can perpetuate exclusivity in content creation and user attraction in such cases.

Conversely, newcomers or ordinary individuals need help accessing the community and its content. They must create richer and more engaging content to attract users, a ratio that doesn’t favor everyone equally. Consequently, influence and profit potential can become concentrated among a select few, even when their content doesn’t necessarily bring substantial value.

Scalability of Infrastructure

Facebook generates a staggering 4 Petabytes of data daily, featuring 510,000 comments, 293,000 status updates, 4 million likes, and 136,000 image uploads per minute. Handling such massive data streams is a significant test for blockchain technology, integral to building and processing extensive volumes of information.

DeSo, a blockchain layer tailored for building SocialFi applications, claims to excel in scalability compared to most existing layer one chains, thanks to its specialized design for SocialFi. The project employs various solutions to address scalability challenges, including indexing, block size management, warp sync, and sharding.

Warp sync enables verified transactions without requiring all nodes to verify the complete transaction history. Sharding facilitates parallel processing, significantly boosting efficiency. DeSo is optimistic that these techniques can scale the platform to accommodate a billion users. However, not all SocialFi projects have found equally effective supporting methods, making scalability a critical challenge for sustainable SocialFi growth.

Sustainable Economic Models

The most formidable challenge in DeFi and its derivative business models is the creation of sustainable economic models. GameFi and SocialFi have witnessed significant profits for participants, but many of these gains have proven to be short-term.

SocialFi is still in its experimental phase on a smaller scale and must endure testing across multiple market cycles and unexpected events (black swan events) before achieving widespread adoption.

Users can face substantial losses if they invest in tokens associated with a famous individual who unexpectedly posts harmful content within the community. Such negative posts can lead to rapid token depreciation, potentially triggering a cascade of consequences affecting the community and its stakeholders.

The SocialFi Ecosystem

In the realm of SocialFi, social tokens have emerged as a fundamental component, and they come in three distinct types:

Personal Tokens

Personal tokens are favored by well-known individuals who use them to engage with and nurture their fan communities. Users can create personal tokens bearing their names, set pricing structures, and distribute them among their fan base. Owning a personal token grants fans access to private groups or exclusive content that the user releases.

Community Tokens

Community tokens share similarities with personal tokens but serve a different purpose. Instead of representing an individual, a community token stands for a specific community. These tokens bind members of a particular community, offering privileges for participation and contributing to the growth and development of the community as a whole.

Social Platform Tokens

Social platform tokens are tokens issued by social platforms themselves. Companies utilize these tokens for various purposes, including collateral, locking mechanisms, or community governance. For instance, in decentralized music platforms, Audius issues the token AUDIO, which users can use to access and leverage the system’s utilities.

These diverse forms of social tokens play pivotal roles within the SocialFi ecosystem, enabling a range of interactions and experiences for users, communities, and social platforms alike.

Discover These 3 Notable SocialFi Platforms

In the expanding realm of Web3, many SocialFi platforms have emerged, offering exciting opportunities and experiences. Here are three noteworthy SocialFi networks that deserve your attention:


Thinkin is a SocialFi platform built on the Algorand blockchain that revolves around community incentives. It provides valuable tools for DAOs to foster community growth and encourage interactions within the network.

One of Thinkin’s standout features is its Write-and-Earn program, which rewards social interactions in various forms. These rewards enable communities to actively participate in IDOs on the launchpad. IDO allocations are based on participation rather than the funds invested, promoting inclusivity.


Geojam is a distinctive social network offering multiple earning opportunities for creators and users, creating an unforgettable experience for influencers, artists, and fans.

The JAM token is at the heart of Geojam’s ecosystem, which serves as the economic engine. Users can earn JAM tokens by interacting with creators and engaging with the app. These tokens can then be redeemed for exclusive merchandise or used to participate in the network’s DeFi features, including governance.


LuxWorld is a pioneering Travel-to-Earn platform built on the Ethereum blockchain, with a central mission driven by the impact of the COVID-19 pandemic on the tourism industry.

The platform leverages the LUX token to incentivize users and their engagement while traveling. Additionally, LuxWorld supports the minting of NFTs and hosts an NFT marketplace. It also offers check-in incentives to enhance the user experience further.


SocialFi represents a promising frontier within the ever-evolving landscape of Web3 technologies. It offers a novel approach to social interactions, content creation, and community engagement, all while introducing innovative economic models driven by social tokens. 

As we’ve explored various aspects of SocialFi, including its challenges and notable platforms, it becomes clear that this emerging ecosystem has the potential to revolutionize how we interact in the digital realm.

However, it’s important to acknowledge that SocialFi is still in its early stages, with certain challenges to overcome. Scalability, influence disparities, and establishing sustainable economic models are among the hurdles the industry must address to ensure its long-term viability.

Nonetheless, the opportunities and benefits presented by SocialFi are undeniable. It has the potential to empower content creators, foster inclusive communities, and offer unique earning possibilities for users. 

As we witness the ongoing development of SocialFi, it’s clear that it holds promise for those who embrace decentralization, DeFi, Web3, and the intersection of social media with emerging technologies. SocialFi is a space worth watching and exploring as this exciting journey continues.


What is SocialFi?

SocialFi merges social media and decentralized finance, allowing users to engage, create content, and earn rewards with social tokens.

How do social tokens work?

Social tokens are digital assets linked to individuals, communities, or platforms, offering benefits like exclusive content and engagement opportunities.

What challenges does SocialFi face?

SocialFi encounters hurdles like scalability, influence disparities, and the need for sustainable economic models.

Name a few SocialFi platforms.

Notable SocialFi platforms include Thinkin.ink, Geojam, and LuxWorld, offering unique features and opportunities.

How can I join SocialFi?

To get involved in SocialFi, explore platforms, engage with creators, and consider participating in token-based communities to unlock the benefits of this innovative ecosystem.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Micah Abiodun

Micah is a crypto enthusiast with a strong understanding of the crypto industry and its potential for shaping the future. A result-driven Chemical Engineer (with a specialization in the field of process engineering and piping design), Micah visualizes and articulates the intricate details of blockchain ecosystems. In his free time, he explores various interests, including sports and music.

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