By James Davis
Once again, Blockchain technology has enabled Web3 developers to actualize another revolutionary concept, SocialFi. So, what exactly is SocialFi all about? Stick around! We have explained everything you need to know about the new concept in this article.
Defining SocialFi
Social Finance or SocialFi can be defined as Web3’s answer to problems users face on Web2 social media networks. It allows content creators to have total control over what they share on the internet. Moreover, SocialFi eliminates the need for intermediaries. The concept also gives content creators access to a wide range of earning opportunities. These creators are not limited on what they can monetize on SocialFi platforms.
How SocialFi Work
Social tokens and DAOs (Decentralized Autonomous Organizations) play a massive role in operating SocialFi platforms.
These platforms adopt DAOs to decentralize the governance process, thus ensuring no central entity has the power to control user activity. Additionally, DAOs prevent Web3 builders from altering the smart contracts of SocialFi platforms. What this means is every decision must be approved by the members of the DAOs.
So, how do you become a member of a DAO? Well, all SociaFi platforms issue governance tokens. The more tokens you hold, the more powerful your vote becomes.
Social tokens, on the other hand, can be created by creators who wish to monetize their content. For example, a content creator can develop a social token so that whoever wants to interact with them must buy it first.
It is worth mentioning content creators are not limited to fungible social tokens; they can also create non-fungible tokens (NFTs), meaning they are able to monetize every content they post, such as music, photos, GIFs, messages, and photos. Besides monetizing their content, creators can also earn through advertising.
What is the Importance of SocialFi?
Here are the benefits of SocialFi:
Decentralization
All Web2 social media platforms are centralized. That means the developers behind these platforms control user data and even share it with their advertisers. SocialFi is here to eliminate these centralized entities and give social media users complete control over their data.
In addition, since SocialFi platforms are decentralized, they reduce privacy breaches associated with Web2 social media platforms, which use centralized servers to store user data.
Censorship
On traditional social media platforms, when creators share harmful content, they risk being blocked. However, on SocialFi platforms, creators enjoy freedom of speech. It is the responsibility of the users to block harmful content from appearing on their timelines.
Monetization
SocialFi platforms offer content creators multiple earning models. As mentioned earlier, they can sell their content as NFTs or create social tokens to control access to their content.
Top 5 SocialFi Platforms to Know About
Hundreds of SocialFi platforms have already entered the market. Here are the leading ones:
Thinkin
This SocialFi platform targets communities with DAOs. Thinkin is based on the Algorand blockchain. It runs a Write-to-Earn program, which rewards communities for their social interactions. These communities can use the rewards to participate in IDOs (Initial Dex Offerings) on Thinkin’s launchpad.
Geojam
This SocialFi platform offers unique earning opportunities for both users and creators. Geojam’s digital economy is powered by the JAM token. Users are rewarded with the token when they interact with creators. The rewards can be redeemed for merchandise or voting rights to participate in Geojam’s governance.
Rally
This platform empowers creators with the ability to create their digital economy. With Rally, creators can mint NFTs at zero fees.
Hive Blog
Hive Blog runs on the Hive blockchain. It uses its HIVE token to reward content creators and consumers. Every time a new HIVE token is minted, it is sent to the community pool before being distributed to Hive Blog users.
Mirror
On Mirror, every post you write as a content creator becomes an NFT, which can be easily traded within the SocialFi platform.
Conclusion
SocialFi hasn’t reached its full potential yet. There are some areas that need to be improved. However, if you’re an advocate of decentralization, then you will find SocialFi beneficial.