SocialFi - the future shape of social networks
Since 2020, the cryptocurrency market is going through its main transformation: the new concepts of Defi, NFT, altcoins, and Metaverses coming to the place of relic utility tokens and suffering security tokens, stuck in vicious regulation circles.
The market reform had a positive impact on the trading volumes of the leading BTC and ETH crypto assets, while the spread of altcoins increased the level of diversification of market offerings to unprecedented levels.
At the same time, the downside of progress has been noticed - an overabundance of offers on the market, the daily emergence of new concepts, and their symbioses gave rise to some chaos, which, in turn, led to an increase of unprofitable projects and fraud cases.
Despite certain difficulties, a lot of investors and crypto enthusiasts remain optimistic about the DeFi sector and its future. But what exactly is the future of DeFi? For many, this is the GameFi concept that has already taken a firm place in the market and the growing SocialFi concept.
What is SocialFi?
SocialFi is a fundamentally new concept of decentralized finance focused on the combination of social and financial achievements. In other words, by utilizing SocialFi, users have the opportunity to monetize and tokenize their social influence without intermediaries in the form of advertisers, but by directly converting likes, comments, and reposts into digital assets.
Thus, SocialFi, through decentralization and collective management, solves several problems of social platforms of the outdated Web 2.0 generation at once: monopoly, censorship, and uniformity.
Another undoubted advantage of SocialFi is its easy integration with other types of platforms - GameFi and NFT. The interaction of users in different formats within the same metaverse and the exchange of assets between, for example, a social network and an online game increases the potential demand for these assets to the level of ecosystem coins.
SocialFi Investment potential
Although the development of the concept of SocialFi is still at an early stage, it has the potential to significantly affect the trading volume of cryptocurrencies and the use of blockchain technology in general, as well as the relation of ordinary users towards social networks and interaction within them.
Since SocialFi projects have high potential profitability, there has recently been a surge in venture capital funding and interest in them.
For example, the recently announced Binance Smart Chain investment program with a budget of $500 million, mentioned SocialFi as one of the main areas of investment. Solana Ventures, along with Reddit co-founder Alexis Ohanian, also announced $100 million in funding for Web 3.0 social startups. Moreover, the Paradigm venture company has announced the allocation of $ 2.5 billion for startups in the framework of Web 3.0.
Thus, the leading players in the venture capital market are aware of the potential of blockchain technology and the profitability of SocialFi projects, while the influx of venture capital investments leads to the attraction of the masses to the new generation of social networks.
Prospects for the development of the SocialFi market
At the moment, the niche of SocialFi projects is just starting to fill up. Market analysts believe that the emergence of such projects is a natural transition of user interaction into the metaverse paradigm.
For example, the market has already witnessed the examples of such projects as Audius - a decentralized protocol for transferring music; Friends with benefits - a Discord prototype decentralized platform; and the RAC project that provides exclusive access to the RAC DJ content.
At the same time, when choosing a project to participate in, an ordinary investor needs to be aware of its potential to become the link between already familiar technologies and something radically new.
Nowadays the market is used to GameFi projects, so the most rational solution for investors would be to look for those platforms that combine both GameFi and SocialFi concepts. Few such projects are coming up, and most of them are at the stage of Seed rounds or Private Sale.
The most advanced project is Fragma Metaverse. The project is ending a private sale round with less than 5% of FRA tokens left and entering the next stage of public sale.
The project launches its own metaplatform, where Fragma users will be able to create and sell NFT collections, monetize their content and social interactions, become part of the DAO collective management, use the GameFi and SocialFi component, and reward their activity on a Post-to-Earn basis.
Investors need to monitor the appearance of projects on the leading launchpad platforms and evaluate their potential profit. The most rational tools for this would be a technical analysis of the project, an overview of tokenomics, a check-up for allocations in each of the rounds, a count of potential trade turnover, and the number of token holders.