The social DAO Friends with Benefits began raising funds in the first half of 2021 and, as of early September, completed a $10 million funding round at a valuation of $100 million. The token FWB soared from $17.69 to $190.69, an increase of 977%. In October, it received another investment from a16z.
Footprint Analytics: Price of FWB (From Jan. 2021)
But Friends with Benefits isn’t the only SocialFi project that gained attention recently.
All signs point to SocialFi becoming the next hot category of blockchain projects, after DeFi, NFTs and GameFi.
But what is SocialFi, and what problem does it aim to solve? What projects are coming out and what are the big opportunities in space?
What is SocialFi
SocialFi, an abbreviation of “social finance”, refers to the combination of social networking and finance on the blockchain.
SocialFi has the characteristics of decentralization, openness and user control.
What problem does SocialFi solve?
In the Web 2.0 era, the major social operators control the data of social users. They use the underlying social data to make profits, with little benefit to users.
Here are the main problems with traditional social media that SocialFi aims to solve:
What projects are available at SocialFi
Most of the SocialFi projects are currently based on token issuance, making so-called social-tokens the core of these projects.
There are also different types of tokens. For example:
Footprint Analytics: Price of RLY (From Jan. 2021)
RALLY, a relatively early and well-known personal token distribution platform, focuses on reconstructing the relationship between creators and fans.
Creators can generate and issue their own personal tokens, Creator Coin, or they can directly mint NFT on RALLY for trading. Creator Coin serves as a qualification credential that entitles the holder to privileges, such as access to the creator’s private Discord community, purchase of specific goods, and more.
RLY, the native governance token for the RALLY platform, can be used to purchase Creator Coin and can be exchanged with any other token on Ethereum. RLY went public in April and peaked at $1.38 on April 3. Currently, RLY is available for liquidity mining at Uniswap and Balancer.
Fans interact with creators through RLY purchases holding Creator Coins from the creator, showing their loyalty and also bringing them closer to the celebrity. When the participation of both parties is high, RLYs will be distributed to the creators and fans as incentives.
The next step is to focus on expanding the scope of DAO in real life, working with communities in specific cities to bring real-world benefits to FWB members.
Social Platform Tokens
Audius, a decentralized music-based streaming protocol, focuses on transactions between musicians and listeners.
The platform governance token is AUDIO, which can be used for collateral, lock-in and community governance. It is already live on Binance, Uniswap and FTX.
Its price peaked at $4.03 on March 28 this year. In August, Audius announced service integration on TikTok, pushing the price from $1.61 to $3.33, an increase of 106%.
Footprint Analytics: Price of AUDIO (From Jan. 2021)
The opportunities and challenges of SocialFi
Web 3.0 has already changed finance and is presently causing a revolution in gaming. It makes sense to ask how blockchain will disrupt social networking in the near future, and what challenges it will face.
Challenge 1: The monopoly of influence
SocialFi is essentially a manifestation of personal value, and this value is expressed visually in the form of money. For early entrants or celebrities who are very influential, this will somehow expand their monopoly on content creation, while for late entrants or less influential general users, their content is often difficult to be discovered.
Challenge 2: The value capture model needs to be improved
SocialFi currently has two main ways for users to earn revenue. 1. Create content and wait for rewards from followers. The other is from the example of Write-to-Earn, similar to the concept of Play-to-Earn, which means writers can earn rewards through writing. This has high requirements for the algorithm mechanism and will roll over if the platform is designed in an unreasonable way, such as Monaco Planet.
Posted In: Analysis, DeFi
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