Footprint Analytics: A quick look at SocialFi

SocialFi is a decentralized network that provides social media influencers with an incentive to promote products, services and content from brands they love. This incentivization system has been the key driver of growth since its inception in 2014. It now counts over 72,000 users across its platform who contribute 87% of all clicks on branded posts each month.

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Friends with Benefits, a social DAO, started soliciting money in the first part of 2021 and, as of early September, has completed a $10 million investment round with a $100 million valuation. The FWB token increased from $17.69 to $190.69, a 977 percent rise. It got additional investment from a16z in October.

Footprint Analytics: Price of  FWB (From Jan. 2021)Footprint Analytics: FWB Price (From Jan. 2021)

However, Friends with Benefits isn’t the only SocialFi initiative that has lately garnered traction.

  • Kucoin Labs Fund invested in Torum on November 4th.
  • Monaco Beta, a project funded by Three Arrows Capital, went online on November 28th, with customers paying hundreds of dollars to be a part of it.

After DeFi, NFTs, and GameFi, all indicators point to SocialFi being the next trendy category of blockchain initiatives.

But what exactly is SocialFi, and what issue is it attempting to address? What new initiatives are on the horizon, and what are the most promising chances in space?

What exactly is SocialFi?

The combination of social networking with money on the blockchain is referred to as SocialFi, an acronym of “social finance.”

Decentralization, openness, and user control are all features of SocialFi.

What issue does SocialFi address?

The biggest social operators manage the data of social users in the Web 2.0 era. They profit from the underlying social data, with little value to users.

The following are the major issues with conventional social media that SocialFi seeks to address:

  • Attribution of data rights: Social media platforms gather and preserve as much user data as legally feasible across their platforms and from third parties, which they then own. SocialFi intends to employ blockchain technology to make user data collecting transparent and untamperable.
  • In general, social media networks generate money by selling advertisements depending on their user traffic. The platform reaps the advantages of increased traffic and engagement in the form of billions of dollars in ad revenue, while consumers solely reap the benefits of utilizing the platform. Many SocialFi initiatives regard these advantages as uneven, and therefore seek to develop methods for users to profit from their social impact and usage.
  • Privacy and security: In conventional social networking, every account registration involves the user’s information, such as mobile phone number, email address, and other personal information, which is held in the operator’s backend and is extremely prone to leaking. The anonymous nature of user identifying information helps to safeguard privacy and security, and SocialFi is built on blockchain technology.

What kind of projects can you find at SocialFi?

The majority of SocialFi projects are now built on token issuance, with so-called social-tokens serving as the backbone of these initiatives.

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Tokens come in a variety of shapes and sizes. Consider the following scenario:

  • Symbols of individuality
  • Tokens for the community
  • Tokens for social media platforms

Tokens of Individuality

RALLY

Footprint Analytics: Price of  RLY (From Jan. 2021)Footprint Analysis: RLY Price (From Jan. 2021)

The goal of RALLY, a well-known personal token distribution network, is to rebuild the interaction between artists and followers.

Creators may create and issue their own personal tokens, Creator Coin, or mint NFT for trade directly on RALLY. The Creator Coin is a qualifying certificate that grants admission to the creator’s secret Discord community, the purchase of specified items, and other benefits.

RLY, the RALLY platform’s native governance token, may be used to buy Creator Coin and swapped for any other Ethereum token. RLY first went public in April, with a high of $1.38 on April 3rd. RLY is now offered at Uniswap and Balancer for liquidity mining.

RLY purchases allow fans to engage with creators while holding Creator Coins from the creator, demonstrating their dedication and bringing them closer to the celebrity. RLYs will be provided to authors and fans as incentives when both sides’ engagement is strong.

Tokens for the Community

  • Mirror.xyz is a content publishing platform that specializes on articles and nonfiction texts. Articles (or Entries, as they’re known in Mirror.xyz) may be text, embedded photos, videos, or NFTs. When you publish an article, it creates an NFT that may be used for trading, and the article is saved on Arweave indefinitely. The platform presently enables article publication, crowdfunding, community voting, and auctions, but no token trading is yet available.
  • Friends with Benefits (FWB) is a new form of DAO that uses the FWB governance token. It began as a token-gated Discord channel and has now developed into a Web 3.0 digital metropolis with over 2,000 users. Friends with Benefits has added a token-gated events app, an NFT gallery, a Web 3.0-based editorial initiative, a virtual music studio, a real-time community dashboard, and other features to its platform.

The next phase is to concentrate on broadening the reach of DAO in real life, collaborating with communities in particular locations to provide FWB members with tangible advantages.

Tokens for Social Platforms

Audius, a music-based streaming system that is decentralized, focuses on transactions between performers and listeners.

The platform governance token, AUDIO, is a collateral, lock-in, and community governance token. Binance, Uniswap, and FTX have already implemented it.

On March 28 of this year, it reached a high of $4.03. Audius announced service integration on TikTok in August, raising the fee from $1.61 to $3.33, a 106 percent increase.

Footprint Analytics: Price of AUDIO (From Jan. 2021)The Cost of AUDIO, according to Footprint Analytics (Beginning in January 2021)

The advantages and disadvantages of SocialFi

Web 3.0 has already transformed banking and is already triggering a gaming revolution. It’s reasonable to speculate about how blockchain could disrupt social networking in the near future, as well as the problems that it will confront.

The monopoly of power is the first challenge.

SocialFi is simply a visual representation of personal worth, which is reflected in the form of money. Early entrants or celebrities with a lot of clout will be able to grow their monopoly on content production, while late entrants or less powerful general users would find it difficult to find their material.

Second, the value capture model must be upgraded.

Users of SocialFi may presently make money in two ways. 1. Produce content and wait for feedback from your audience. The other comes from the notion of Write-to-Make, which is similar to Play-to-Earn in that it allows authors to earn money by writing. This has stringent criteria for the algorithm mechanism and will roll over if the platform, such as Monaco Planet, is constructed in an unfair fashion.

Posted in: DeFi, Analysis

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