What is SocialFi? Blockchain Social Media Platforms Explained

What is SocialFi? Social media platforms have become an integral part of our lives, and we use them to stay connected with friends and family, share news and experiences, and stay up-to-date on the latest trends. But what if you could use social media to monetize our content? SocialFi and decentralized social media networks are a new paradigm of Blockchain Social Media platforms leveraging Distributed ledger technology to give users ownership of their work as well as make it easier for them to monetize their content. Read on to learn more about SocialFi and Blockchain social media platforms.

There is no question that social media plays a significant role in all of our lives, and its development over the last decade has been, to put it mildly, game-changing. With Web 3.0 just around the horizon, it is vital to take a close look at the platforms for social media and say goodbye to the centralized systems.

Although Facebook, Instagram, Twitter, and YouTube are now practically synonymous with “social media,” this will likely change soon. The technology of blockchain is giving rise to a new generation of social networks that have the potential to be considerably larger and more successful.

These emerging online networks give the traditional forms of social interaction new capabilities. It is possible that data frauds, ignorant algorithm modifications, and needless content filtering may become things of the past. This is because the communities that utilize these new social networks control and operate them. In addition to this, they also carry with them the elements from Decentralized Finance (DeFi), hence the term SocialFi. Tokens represent a user’s social influence on these networks, and users may get immediate monetary rewards from their status as prominent personalities on these platforms.

Moving forward, the proliferation of these new social networks and incorporating SocialFi within them is most likely one of the most effective applications of blockchain technology and might be the driving force behind widespread adoption.

What is SocialFI?

SocialFi is a term that is used to describe two completely different concepts. On one hand, the topic of this article which is Blockchain Social Media platforms. The term SocialFi in this case is derived from the merger of two concepts, Social Media and Decentralized Finance. Hence the term SocialFi. That’s because the next generation of Blockchain Social Media takes some of the ideas born in the Decentralized Finance sector.

For the sake of completeness, SocialFi is also used in the area of Social Financing. Social finance is a way of managing investments that result in financial gains while also having a measurable social and environmental benefit.

Now back to the SocialFi and Blockchain Social Media.

Essentially, SocialFi is the next evolutionary step in blockchain-based social media. It leverages all the benefits of the blockchain while adding Non-Fungible tokens to provide ownership of content, Fungible tokens or crypto for creating an economy within the platform, and other DeFi services such as yield farming, and liquidity provision

Users can own and operate the various social networks that are created on SocialFi, as community tokens allow individuals to participate in issues and make decisions about the project’s future, much like decentralized autonomous organizations (DAOs).

In contrast to traditional social media, where firms maintain all of the data on a central server, SocialFi networks and Blockchain Social Media Platforms distribute the data across a network of nodes, with everyone who helps keep things running being paid. As a result, overall security is enhanced since data breaches are reduced and single points of failure are diminished.

Another major advantage that SocialFi platforms provide over traditional social media is monetary incentives. Users and content providers may receive immediate monetary compensation for publishing and sharing material. Social influence is monetized, which means users are given lucrative bonuses to post high-quality material that will spread.

By providing ownership of content, creators now can have alternative routes to monetize the content. For instance, a very popular blog post or a tweet within a SocialFi platform can be rented to a company for marketing purposes. If these blog posts attract thousands of visitors a month, a company with a related product can lease or buy the rights of this blog post in order to promote its own product and services.

That concept provides benefits to both parties. On one hand, the content creators get one-time compensation in the case of purchase or periodic payments in the case of a lease. On the other hand, the company buys a very valuable post that attracts a lot of traffic in order to promote its own business which will lead to more profits.

To better grasp what SocialFi is and how it may become a mainstream phenomenon in 2022, we must examine the contemporary issues impacting social media and the potential for blockchain technology.

What are the problems with Traditional Social Media Platforms?

Meta’s Facebook and Instagram created behemoths by connecting people with their friends, allowing them to exchange updates, and feeding them with more information and advertisements. The services customize the commercial material in an ever-more-precise manner depending on the data they collect from these interactions and linkages. According to critics such as Facebook whistleblower Frances Haugen, the approach incentivizes the most socially harmful material, producing many comments, likes, and shares.

Ultimately, this situation might be threatening democracy. They say that if the firms cannot manage the data, the whole system will be disrupted, reducing the incentives for spreading disinformation or hate speech. Theoretically, it would guarantee that users do not have to continually return to Facebook only to communicate with their loved ones and offer them control over their personal data.

Furthermore, the user community is totally excluded from critical choices governing the platform’s future. The architecture of contemporary social networks is designed such that users have little influence inside the ecosystem.

What are the benefits of SocialFi?

There are numerous problems that today’s decentralized social media networks face that SocialFi and blockchain social media platforms aim to solve. Some of the include:

1. Allocation of data ownership rights

In conventional social media platforms, the user’s social data is kept on the operator’s server in the form of fields, and the data belongs to the platform. SocialFi, on the other hand, relies on blockchain technology, and the immutable data characteristics greatly assist in solving the problem of user data’s right confirmation.

2. Distributing benefits

Underneath the algorithm system of traditional social media platforms, there is an uneven distribution of interests between users and platforms regarding traffic realization. This is not amenable to protecting the rights and interests of users; SocialFi is a paradigm that allows users to obtain benefits by monetizing their social influence.

3. Confidentiality and safety

Traditional social media platforms require users to provide information about their real identities to create an account, which can easily be stolen from the operator’s backend database. SocialFi, on the other hand, is built on blockchain technology, and the fact that user identity information is contained in an anonymous form is beneficial for protecting users’ privacy and security.

4.  Use & Community Experience

In traditional social media platforms, the enterprises owning the platform decide on the way the data are visualized to the end-user. They use sophisticated algorithms that restructure the data on our screen in the way they decide is best for us. Best for them to be more precise. Sometimes they do so, in order to control our thinking and influence our behavior. With SocialFi and emerging Blockchain Social Media Platforms, the users or developers will be able to create their own experiences, with their own algorithms and tools such that the content is visualized in the desired way.

How SocialFi Revolutionises Social Media?

SocialFi is revolutionizing the landscape of social media, being hailed as a game-changing approach to mixing social media with finance, contributing to developing cutting-edge technologies for future generations. What exactly is SocialFi, and how does it relate to the many social media platforms available today?

Overall, SocialFi is a massive ecosystem that incorporates all of the phenomena that we are familiar with: it is a symbiosis of social networking with blockchain technology, which is consistent with the concept of Web 3.0.

Users in the SocialFi domain stand to gain advantages due to their engagement in social activities, the production of content, participation in DAO governance, the generation of NFTs, communication, entertainment, gaming, and enjoyment.

What is a Social Token?

The most important projects within the SocialFi space are the ones developing the infrastructure and blockchain social media platforms that will enable the creation of the social networks. Another important component is the creation of Social tokens.

Currently, the vast majority of SocialFi’s activities are concentrated on the distribution of tokens, with the ultimate goal being to make these social tokens the central component of the project. In general, social tokens may be divided into three categories, which are as follows:

1. Personal Token

Assuming you already have a following, using personal tokens will make it easier for you to engage in conversation with and stay in touch with your admirers. Simply said, you will be able to build your very own social token, which you will then be able to sell and distribute to the people who follow you.

Personal tokens, for instance, might provide your followers with access to select groups or one-of-a-kind content that you have specifically crafted. All in all, personal tokens allow individuals like you and me who have a personal account, to create a social token and provide some utility to our audience.

2. Community Token

Tokens produced by a particular community are known as community tokens, and they are comparable to the sort of token described above.

Take, for instance, the scenario in which you are a player interested in joining any gaming guild. Participants will make their own tokens and hand them out to other members of this community gaming guild to bring everyone closer together.

Similar to the Personal Token, Community Tokens allow owners of communities to create a utility token that can provide certain benefits to their own community.

3. Social Platform Token

Tokens issued by social networks are referred to as social platform tokens. Social platform tokens are one sort of token. In the not too distant future, users may be able to acquire tokens of this kind through platforms such as Facebook or Twitter. It is even possible to utilize it for community governance, security, and locking purposes.

4. Social Infrastructure Token

That’s not a very common term as usually in SocialFi and Blockchain Social Media you will most frequently encounter the other three types of tokens.

There are initiatives, on the other hand, that aim to establish the foundation for several decentralized social media networks to be built upon. That’s since social media network infrastructure projects such as traditional Layer 1 Smart Contract platforms cannot host them because of their technological constraints.

The creation of such projects’ infrastructure may result in the issuance of a token or cryptocurrency that will be used as the foundation currency on their platform. Such a currency might have similar characteristics to those seen in other major layer 1 blockchain networks.

Is there a Blockchain Social Media Platform?

Whereas the SocialFi platforms are still in their infancy, many initiatives are already showing significant potential, although they are still in their infancy. There are a few projects currently in different phases of development and interact with the SocialFi concept to differing degrees. To ensure that the general public accepts the SocialFi sector, several projects, such as, have been successful in attracting significant financial backing.

1. Decentralized Social (DeSo)

DeSo - Decentralized Social

DeSo or Decentralized Social is an infrastructure project that aims to build the foundation of SocialFi and the next generation of Blockchain Social Media Platforms. DeSo managed to raise $200m in funding from many well-known Venture Capital firms to realize its vision. The list includes a16z, Coinbase Ventures, Sequoia, Winklevoss Capital, Polychain Capital and Pantera Capital.

As of today, there are over 100 other projects running nodes and building apps on DeSo Blockchain infrastructure.

2. Subsocial


Subsocial is a very similar project to Decentralized Social (DeSo). Subsocial aims to built the foundation for SocialFi and Blockchain Social Media within the Polkadot Ecosystem.

Subsocial has built-in features for censorship resistance and monetization methods. Subsocial is currently live on the Kusama Network by winning the 16th parachain slot auction.

3. Torum


Torum is an ecosystem that combines Social, NFT, DeFi, and Metaverse features with the specific intention of bringing cryptocurrency users together. The Web 3.0 ecosystems are constructed on top of a social media platform, which is paired with a yield farming platform for DeFi gamers, an NFT marketplace for crypto artists, and Avatar NFT for aficionados of the Metaverse.

4. Fragma


The Fragma blockchain metaverse is a worldwide, decentralized platform that delivers content producers social mining, GameFi, NFT Marketplace, DAOs, and AR to advertisers. This will boost AD performance and make it simpler for advertisers.

SocialFi – The Key Challenges

Among the many challenges, Blockchain projects have to face there are two that are of vital importance for the success of a SocialFi project.

1. Scalability

Every day, Facebook and other popular social networks generate Petabytes of data. Every minute, hundreds of thousands of comments are posted on Facebook, along with tens of thousands of statuses and posts liked. There are also 293,000 status updates posted every minute on Facebook, according to the company. Today’s blockchain networks cannot sustain this amount of volume.

That’s where infrastructure projects like DeSo come in. DeSo, the blockchain layer being developed for SocialFi applications to be built on, claims it can scale better than most of the existing layer-1 chains because it is designed specifically for SocialFi use cases. They utilize indexing, block size management and sharding to scale the network.

According to DeSo, they can handle 80 posts per second for a four million user base when compared to Twitter’s 6000 posts per second across 300 million users. The block size is all that is required. They may also utilize other methods, such as warp sync and sharding, to boost performance even more.

The ability to validate transactions without the need for all nodes to validate the whole history of transactions is provided by Warp sync. Sharding enables parallel processing, which helps to boost performance by several orders of magnitude. DeSo believes that with these two approaches, the platform should be able to support one billion users.

2. Sustainable Economic models

One of the most common challenges that every blockchain-based project faces including DeFi, GameFi, etc., is creating a sustainable economic model. Call it GameFi, DeFi, PriFi or SocialFi, promising high incentives to the users by printing tokens will not take you anywhere. The majority of the projects fail in the end not because of their tech but because of their unsustainable economic models, which lead to losses to users and investors who eventually abandon the projects.

Considering that we haven’t seen the full extent of SocialFi yet, it is still very early and many projects are still in the experimentation face. Before they can go mainstream, these models must be stress-tested across many market cycles and black swan events.

If you invest in an influencer’s social token so that you may read their posts, you run the danger of seeing them post something harmful. Such types of tokens can be categorized either as Personal or Community tokens. One harmful posting might swiftly result in the social token’s depreciation and create a chain reaction of negative consequences for system participants.

Nowadays creating a token is very straightforward, with SocialFi the creation of a token might even become much easier for content creators, influencers, and the public in general.

Having said that, creating a token just for the purpose of creating a token is meaningless. The token has to serve a purpose, this purpose has to be communicated to the audience, and ideally, this purpose will serve a utility that will lead to a sustainable economic model.

3. Network Effects

According to the online course Economics for Managers, The term “network effect” refers to a situation in which the value of a good, service, or platform is dependent on the number of buyers, sellers, or users who utilize it. The bigger the number of purchasers, sellers, or users involved, the more powerful the network effect becomes—and the greater value generated by the offering.

That’s essential for social networks. If there’s no adoption there won’t be any social network. Users are attracting users. To attract users, SocialFi and Blockchain Social Networks need to provide real value to the user. Real value beyond, censorship resistance, monetization, economic models etc,.

How can you get a regular person to join your social media site? Why should someone leave Facebook, TikTok, Twitter, and other platforms in order to join yours?

It would be difficult for an average user to abandon the platform where all of their relatives, friends, and coworkers are in order to join a network no one is on. There must be something real and genuine for someone to abandon their current platform and join a new one. Something beyond the fancy buzz words used in the decentralized world.

People go where other people are, influencers and businesses go where there’s an audience to capture, marketers, go to platforms where there are people to market their products.

Exploring the Future of SocialFi

Ultimately, the implementation of SocialFi apps all over the digital world has the potential to improve social networking and contribute to the development of more equitable means by which producers may make a lucrative livelihood. Earning, purchasing, and selling NFTs will be easier and safer for users of the decentralized network. This will make it easier for communities and companies to collaborate and assist one another in generating revenues. 

It is anticipated that SocialFi will continue to expand due to its ability to attract content providers and put power back into the hands of users. Users can earn money directly from their participation in social media activities such as commenting and liking posts, and they do not need to be concerned about having their privacy violated or their earnings taken away.


To conclude, SocialFi and Blockchain Social Media Platforms have a lot to offer users in terms of security, privacy, and monetization. These platforms are still in their infancy but have a lot of potential. It will be interesting to see how they evolve over time.

Aris Ioannou
Aris Ioannouhttps://coinavalon.io
Aris created Coinavalon with the purpose of helping the average person navigate the decentralized web. Aris has been passively in the space since 2017 and full time since late 2020. Before Coinavalon, Aris worked as a Business & IT Architect in the financial services sector. Aris holds an MSc in Advanced Computing from Imperial College London, a BSc in Computer Engineering from University of Cyprus and currently pursuing an MBA degree from CIIM.

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