Recently we presented the context of the rise of Social Finance (SocialFi). Find out what this new DeFi affiliate concept is all about and how important it is in social media marketing in this post.
Simply put, we will say that social finance (SocialFi) is the result of the combination of social networking and decentralized finance (DeFi).
Social Finance (SocialFi) = Social Media + Decentralized Finance (DeFi)
Which simply means that SocialFi relies on social networks that are infused with the principles of decentralization so dear to Web3. These platforms are conducive to the creation, management of content or even underlying platforms by its members.
SocialFi also aims to spread applications (Boom Live, Pixie, Mousai, Diamond, DeSo, BETWEEN, etc.) that will result in the creation of content that influencers will revolve around, contributors driven by the idea of being in control of their data or freedom of expression.
Social Finance naturally emphasizes the term ‘finance’, which gives these actors the opportunity to monetize their monitoring and involvement in social networks. And while the death knell of TradFi and fiat has sounded, SociaFi is using cryptocurrencies to break through, NFTs to get a stranglehold on managing identity and digital property.
And if you’ve ever heard of decentralized autonomous organizations (DAOs), you’ll have a better understanding of how SocialFi platforms work. In their ecosystem, centralization has lost its right to exist, especially in decision-making. Blockchain helps, the SocialFi infrastructure has the best weapon to make interactions abundant.
What is SocialFi made of?
SocialFi rhymes with blockchain, NFT, DeFi, GameFi and Web3. There was no reliance on Web2, which was only interested in social network developers.
If SocialFi has become popular quickly, it is because it offers the following benefits.
Montetization via social tokens
In addition to the CAD model, social token or utility token in app make Social-Fi platforms special. economy in app has always been specific to DeFi and GameFi. By appropriating them, social finance has succeeded in extending the management of social tokens and their creation down to the user level. This is especially the case for TIME magazine which, in addition to developing its Web3/NFT community, has set up its social token “TIMEPieces”. The purpose behind this token is to “ bring artists, collectors and fans together in a collaborative way to create long-term utility and community value †
In other words, branded influencers like Elon Musk can have their own token. It will also be the center of a mini-economy that will fluctuate according to its influence on social networks.
If you want to learn more about this mini-economy, remember the following principles:
- involvement in a creator’s posts is only allowed for holders of that creator’s social tokens;
- who has the most social tokens has more visibility in the eyes of the influencer;
- ditto for the possibility to send a private message (but it is up to the influencer to set any threshold);
- artists are free to create a subscription model (premium, classic, etc.) in their social token;
- the user will have to pay in case of involvement (liking, sharing, etc.) with the content of another.
It is very likely that SocialFi will be expensive for participants, if we take into account the few points mentioned above. But we also have to agree that it will increase the authenticity of interactions on Web3 social networks, that monetization with a particular brand will be beneficial.
Freedom of expression linked to censorship
Here arises a major challenge, on the one hand, given the desire to break free from the yoke of Web2 social networks, and on the other the fear of seeing chaos reign on the Internet. Fortunately, there is some form of decentralized censorship on SocialFi platforms. This is facilitated by data labels on the chain, which promotes the work of rules engines that quickly identify content based on its nature. the help of nodes of the chain is very important in this situation.
In short, there will be no central authority in the SocialFi galaxy. Any form of control will indeed rest with the individual.
Ownership and digital identity
You are not aware that NFTs ” Image for proof (PFP) are the basis of a new digital identity format. In this category are the Bored Ape Yacht Club, CryptoPunk or the Moonbirds. All represent images where the holders show a personal attachment to the point of using them as a profile picture on Twitter, for example.
There we can speak of emotional identity, which was once associated with a wallet, confirms ownership of the NFT. It also opens other doors for the owner, especially those of communities rich in ideas, experiences, events… that can benefit him.
In addition, SocialFi can make NFTs an effective tool for disseminating an artist’s work. The fact that he has a group of social token holders, of which he is the creator, promises more incentive to sell his collection of NFTs. And if it can, it will convert a real message into a non-fungible token through established functions on SocialFi platforms.
SocialFi and Marketing Challenges
As mentioned above, NFTs have the power to influence an entire community. This makes them important assets in the eyes of marketers. In order to sell avatars, GIFs or even videos, it was necessary to address celebrities. Once it’s effective Web3, there’s no need to challenge them and pay astronomical fees accordingly. Every once in a while, anyone will be able to claim influencer status capable of getting brands to consumers.
Consumer brands also need details on how to measure the impact of influencing a community through NFTs. Likewise, virtual entertainment experiences promoted by influencers are similar to a preferred strategy for major brands in Web3.
This forces these brands to reach out to influencers who are rich in experience, powered by Web3 and who are more in line with its values. In particular, it takes into account:
- the number of attendees brought to a virtual event;
- number of mint NFT to generate;
Obviously, the help of a specialized agency or a public relations company is necessary in the search for the best profile among influencers.
It should also be noted that the success of a virtual event will depend on the clarity of the campaign message. It is therefore the job of marketers to ensure proper management, taking into account the complexity of SocialFi.
On the operational side, a company’s marketing department must expand its workforce to effectively align with the Web3 revolution. Of course, there are automation tools available to them to ease the tasks.
Beware, SocialFi has its limits, or at least challenges to overcome: the fact that the infrastructure is scalable given the sheer amount of data a social networking platform has to manage. Nor should the creation of a sustainable economic model be minimized. Furthermore, SocialFi generally presents itself as an asset to both companies and influencers. To follow closely!
Sources: CoinTelegraph; Forbes
Get an overview of news in the world of cryptocurrencies by subscribing to our new daily and weekly newsletter service, so you don’t miss out on the essential Coinstand!
The blockchain and crypto revolution is underway! And the day the impact will be felt on the world’s most vulnerable economy, against all odds, I’ll say I had something to do with it