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What Is Social-Fi? Combining Social Media And Decentralized Finance (DeFi)
Social media experienced a significant boom most recently during 2020 and 2021 lockdowns, with platforms like TikTok reaching over 700 million users and YouTube’s ad revenue doubling.
This surge led to an increased focus on content monetization.
However, monetizing content on these platforms often relies on meeting certain thresholds and dealing with fluctuating ad revenues controlled by the platform itself.
Social-Fi, a blend of social media and decentralized finance (DeFi), emerges as a solution.
It enables direct monetization through blockchain technology, allowing creators to earn from peer-to-peer transactions without intermediary control.
This shift empowers creators to monetize their skills and content freely, moving away from click-dependent earnings to a more flexible and uncensored financial model.
Friendtech, launched on August 10, 2023, spearheaded the Social-Fi movement and became a rapid viral sensation.
Built on Coinbase’s own layer-2 “Base” network, it features Twitter-linked chatrooms accessible through purchasable “keys.”
Prices for these keys are set by a bonding curve mechanism.
Friendtech charges a 10% fee on transactions, split between the platform and the chatroom owner.
This system has inspired creative ways for creators to increase key demand.
Despite its beta status and some backend issues, Friendtech generated significant revenue and fees, peaking at a total value locked (TVL) of $52 million.
Competitors and clones like New Bitcoin City followed, each adding unique features like interactive feeds and flexible creator fees.
These platforms underline the growing interest in Social-Fi, suggesting a broader movement toward the “tokenization of people.”
Past experiments in Social-Fi, like BitClout, offer cautionary tales.
BitClout, despite initial hype, lost momentum due to its cumbersome nature.
Skeptics of Friendtech draw parallels, questioning the platform’s longevity post-incentivization, especially with an expected airdrop in Q1 2024.
The future of Social-Fi hinges on successful execution.
Venture capital interest and Web3 participation signal market demand, but widespread adoption requires overcoming hurdles like high transaction fees and finding a balance between incentivization and genuine user engagement.
Social-Fi’s potential extends beyond a single platform, pointing to a larger trend of an evolving creator-led economy in both Web3 and Web2 spaces. Read more here.
How Can Tokenization And Crowdsourced Funding Reinvent Creator Monetization?
The concept of Social-Fi, blending social media with decentralized finance, reaches new heights with the integration of tokenization and crowdsourced finance.
This evolution redefines the traditional approaches of monetization for online creators or entrepreneurs.
Zucoin and Splitchain play pivotal roles in this transformation, showcasing how new kinds of ledger technology can contribute to these domains.
Tokenization, at its core, involves converting rights to an asset into a digital token on a public ledger, such as a blockchain or Splitchain.
Then, allowing smaller pieces of that digital asset to be distributed to more and more things.
It’s why Splitchain was designed to support 32 decimal places—extremely small numbers, to account for lots of future growth and tiny numbers.
Traditional blockchains typically support only 8 decimals places, limiting their use in these applications.
Without a large amount of decimal capacity, it’s harder to scale the base “layer-1” platforms into more use cases.
Many traditional blockchains have created offshoots into “layer-2” sub-networks, as a workaround for their scalability issues.
These solutions create a lot of additional complexity, fragility, extra layers of fees and more centralization.
In the context of Social-Fi, this translates to online creators and influencers tokenizing virtually anything—their time, content, or unique digital assets.
These tokens, tradable on distributed ledger networks like blockchains or soon, Zucoin’s Zutopia marketplace, enable users to sell their time and content directly to consumers, bypassing traditional intermediaries.
From skilled tradespeople launching their own businesses, to musicians publishing music, each of these processes could be turned into a digital asset, forming the basis of the tokenization movement.
The ledger’s transparency and safety ensure that transactions are fair and traceable, a significant upgrade from conventional monetization methods, where one-sided deals and benefits are often hidden or obscured from some parties.
It should help to produce fairer results for those involved too.
An open market for tokenization deals should mean more win-win deals.
Zucoin’s Splitchain infrastructure is being designed to smoothly handle such tokenized assets, providing a seamless and efficient platform for developers to extend the network with all kinds of use cases.
The ability to create and trade tokens on Zucoin’s network aligns perfectly with the emerging trends in Social-Fi, where personalized and direct interactions become the norm.
Crowdsourced finance, another pillar of this new era, shifts the focus from centralized banks and venture capital funds to mass funding.
Platforms like Friendtech have already begun to explore this, enabling users to invest in and support their favorite online creators directly.
This approach democratizes the funding process, allowing anyone to support projects or creators they believe in, rather than relying on fewer gatekeepers.
The result could be a more capable and flexible evolution of the popular crowdsourcing model, like the one pioneered by Kickstarter over a decade ago.
Where almost anything—not just products, could be given necessary resources, by almost anyone.
These resources don’t have to be financial, they could be an on-chain agreement for effort, time, or licensing other assets that are provided to a project.
It could be the ultimate way to move resources to where they need to be, based on what people choose.
Zucoin and Splitchain could be used to facilitate this transition to decentralized resource allocation models via their coming Smart Asset abilities.
With Zucoin, transactions can be executed swiftly and securely, providing a reliable medium for crowdsourced investments.
The potential of tokenization and crowdsourced resources in Social-Fi empowers online creators and entrepreneurs, giving them unprecedented control over their content, direction and abilities.
They also open up new avenues for fans and consumers to interact with and support online communities, helping to create a more engaged and invested community.
More things, in more places, in more ways, in less time.
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All the best,
—Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.