With the Web3 approach, the new version of the Internet, the applications we use to be included in the network have started to decentralize. While the construction process of Web3 continues, another sector that has been affected like finance and gaming is the social media sector. The work and actions of giant social media companies using the content and data of their users are constantly on the agenda. At this point, SocialFi brings a breath of fresh air to social networks.
What is SocialFi?
SocialFi is a combination of social media and decentralized finance (DeFi) and can be defined as social finance. Acting in accordance with Web3 principles, SocialFi offers an approach to owning and managing the content created by users on social media platforms. On SocialFi platforms, users can take many actions such as creating content, mining NFTs, communicating with other users, playing games, participating in DAO management, and earning income as a result of these actions.
In today’s Web2.0 social media platforms, user data is as safe as the company keeps it. Often companies use this data for competitive advertising. The user gets nothing in return for the use of their data. In SocialFi, advertising revenues are shared with the user and user data is provided with a high level of security.
Which Problem Does SocialFi Solve?
There are many problems in today’s social media networks. The first of these is that the content produced by users and the data they provide are only monetized by the company. In addition, users are constantly disturbed by personalized ads and negative user experience scenarios are created. This is one of the problems that SocialFi has solved. Users own their own data and content. If they agree to have it used by the platform, they get a certain amount of revenue in return.
Another problem that SocialFi solves is censorship. There are many examples of social media platforms restricting users for certain content and posts. SocilFi, a decentralized social media network, allows users to post freely without any pressure.
One of the most important problems that SocialFi solves is content theft. There are various examples where pages that share someone else’s content get much more engagement and generate revenue in various ways. In addition, the real owner of the content cannot earn any profit. It is often very difficult to prove that the content is your own. Since SocialFi uses blockchain technology, it has the ability to track the ownership of its digital content.
Challenges for SocialFi Projects
New SocialFi projects are being launched, recognizing that this is the future of social media, given its benefits such as income justice, freedom of expression and digital ownership. As SocialFi is still at a very early stage, these projects face some challenges.
The first challenge is to provide scalable infrastructure. Millions of posts, comments, updates and notifications are made on social networks every day. The blockchain networks built for SocilFi projects must be scalable enough to cope with this amount of data. Otherwise, efficient and fast utilization will not occur.
Another important challenge is to create a sustainable economic model. SocialFi needs to create incentive scenarios that are so good that they both attract people to use the platform and allow anyone to monetize it.
Trying to balance freedom of expression, content censorship and user rights is a challenge for SocialFi projects. The right architectures must be built so that users are not affected by harmful posts.
Social Media Companies in the SocialFi Space
Aware of the impact that SocialFi will have, giant social media companies are already trying to step into this space. The most well-known applications that companies are currently doing are NFT integrations. For example, Twitter now allows Blue account users to use NFTs as their profile picture. Reddit is working to create a new NFT market after allowing a new NFT profile picture.
As can be seen, Web2.0 social media platforms see NFTs as a step towards the Web3.0 transition. NFTs are used for identity management and digital ownership on SocialFi platforms. With NFT avatars, users can represent themselves on social media.
Future of SocialFi
The SocialFi ecosystem allows users to protect their contact data while interacting on social networks and monetize through interaction. In addition, the fact that it solves the copyright problem and supports freedom of expression will cause users to turn to it when well-functioning platforms are established. Although it is currently not widely used due to infrastructure and economic problems, SocialFi is one of the promising structures of the future.