SocialFi forges a nexus between social media and decentralised finance (DeFi). Web3 (decentralized) platforms like SocialFi allow for the creation, management and ownership of social media platforms and the material their users provide.

Developers built this platform to give content creators, social media users and influencers better access to control over their personal information while allowing them the right to express themselves without fear of reprisal. Cryptocurrencies are used for monetisation, while nonfungible tokens for identity management and digital ownership are more common.

Decentralised autonomous organisations (DAOs) adapt to circumvent centralised censoring choices on these platforms because of their development.

Due to recent advancements in blockchain technology, SocialFi’s infrastructure can handle the high throughputs needed for social media interactions.

Challenges Of Web2 Social Media

The average daily time spent on social media is two hours and twenty-seven minutes, according to the Pew Research Center. As a result of this centralised monetisation of attention, interactions, engagement, and data, only a few companies and their stockholders benefit.

Content creators are also subject to censorship on platforms that prevent them from discussing specific topics. Even though these systems are to safeguard the general public from harmful content, a decentralised curation method, if any, would be more in line with Web3 potential.

Digital ownership and the ability to track who owns a piece of content is the third problem that Web2 apps have had to overcome. For artists and creators who post their work online, this is very important. Without digital ownership, piracy might thrive because of inadequate restrictions.

You can’t monetise brand equity on Web2 platforms, which is a significant drawback. A brand that has built itself around an influencer can often generate income in indirect ways. Even though they’ve gained a large following on social media, it doesn’t necessarily equate to money in the bank.

Features Of SocialFi

1. Monetization

Web3 apps have relied on the DAO concept to distribute rewards equitably across all parties involved. In-app utility tokens, such as those used by SocialFi apps, go further.

DeFi and games are full of utility tokens to drive in-app monetary transactions. As part of our SocialFi platform, we have coins representing our third-tier economy. Users can create their tokens and those produced at the application level. Social receipts have made it possible for creators to take control of their economies.

2. Digital Ownership And Identity

The rise of picture-for-proof (PFP) NFTs has resulted in a new form of digital identity. It has become the catchphrase of this $18 billion industry that “I am my ape, and the ape is me. PFP NFTs are collections that NFT owners develop an emotional affinity to, such as Bored Ape Yacht Club, Moonbirds, and CryptoPunk.

The owners of these NFTs take great pride in using them as their Twitter and NFT profile images. Many PFP NFT holders are quick flippers, but others see their NFTs as a part of who they are and what they stand for. The holder and these NFTs form an emotional bond.

NFT, by design, is a form of proof of ownership. Emotional identity is a more abstract idea. Because of this, users can use their NFTs as their profile image and verify their NFT ownership by connecting their wallet to SocialFi.

PFP NFTs not only protect your identity but also grant you special access to select SocialFi communities. For instance, these communities could offer thought leadership, events, or investment previews to their NFT shareholders. It is already in use in Discord groups, but it’s something that SocialFi might also incorporate.

It is also possible for content providers to broadcast their work using NFTs integrated into SocialFi’s platforms. The revenues of an artist’s NFT collection can be shared with the holders of their social tokens if they want to. It gives the artist’s fans an incentive to spread the word, which could increase the NFT collection’s sales.

3. Censorship And Freedom Of Speech

It’s a challenging and ambiguous problem space that most Web2 social media systems have had difficulty navigating. However, we don’t want the global distribution of potentially hazardous content to remain unchecked because of a lack of centralised censorship. There is a delicate equilibrium to be found here.

Platforms like social rely on on-chain data labelling to decentralise curation. On a SocialFi site, all publicly viewable posts are on-chain. Therefore, rules engines can use this on-chain data to parse and swiftly categorise messages depending on the subject matter and the nature of the words used. The nodes in the chain are in charge of selecting the appropriate posts.

As a node, you can block or engage with labels at your discretion. You could take legal action against a node if it participates in or endorses a detrimental post. A central authority or a group within an organisation cannot decide what may and cannot be allowed on the network. When determining what happens, each person is ultimately responsible for their actions.

Potential Challenges SocialFi Must Overcome

1. Sustainable Economic Model

It is maybe the most challenging component of mode DeFi and its derivative business models to come up with economic models that can withstand stress and outliers. Several services, such as games and social, promise exceptionally substantial rewards for their users. However, these incentives have thus far been short-term growth hacks.

SocialFi’s incentives go on test on a modest scale, including all of the features we covered. Before general adoption, these models must be open to several market cycles and black swan events.

2. Scalable Infrastructure

Every day, Facebook creates 4 Petabytes of data. More than 4 million posts get a like every minute, and 136,000 photographs are uploaded every second. Do you think blockchains can handle that kind of volume?

Several existing layer-1 chains claim they can scale better than DeSo, the blockchain layer developed for social apps. Scalability hinges on indexing, block management, warp sync, and sharding.

For example, they claim to be able to process 80 postings per second for a four million user base, compared to Twitter’s 6000 posts per second for 300 million users. You can attain this performance by just increasing the size of your blocks. However, they can also use techniques like warp sync and sharding to boost throughput even further.

Conclusion

Even though infrastructure and the business model are problems, SocialFi platforms have a lot of potential. It is a big step toward creator economy models. Future social networks that use DeFi principles can claim to be robust only after they’ve been through a few rough patches and kept going. That is true for social as well.

Last updated on August 21, 2025