Evolution of SocialFi?

With the furore and clamber across CT for the latest airdrop in crypto reaching fever pitch, has SocialFi moved on from 2016 or is this the latest dApp fad to transfer wealth from the plebs to the elites 

What is SocialFi?

We’ll start by defining SocialFi. SocialFi is a portmanteau of social media and finance. It’s a new age trend in the crypto space that combines the best of both worlds. On the one hand, SocialFi platforms offer the same social features as traditional social media platforms, such as the ability to create and share content, follow and interact with friends, and join groups. On the other hand, SocialFi platforms also allow users to earn rewards in cryptocurrency for their participation. This can be done through a variety of mechanisms, such as:

• Content creation: Users can earn rewards for creating high-quality content, such as blog posts, videos, or images.

• Engagement: Users can earn rewards for engaging with other users' content, such as liking, commenting, or sharing.

• Delegation: Users can earn rewards for delegating their voting power to other users.

• Staking: Users can earn rewards for staking their cryptocurrency on the platform.

Our journey will start in 2016 with a little known blockchain based social media platform, Steemit housed on the Steem blockchain. It’s been through a turbulent time from inception, firstly it was hacked for $85,000 3 months in, within a year it had reduced its workforce by 70% with the main casualty being one of its founders, followed by a hard fork of Steem blockchain to fight off the narcissist intentions of J. Sun following the acquisition of Steemit Inc which held a substantial size of Steem tokens. Only in crypto aye…

Steem as a blockchain was looking to be an all encompassing social defi hub allowing front end dApps to plug into its blockchain where all data would be stored. From crowdfunding to market places, Youtube imitations and Instagram wannabe’s, the only really relevant remaining dApp on the network is Steemit. Cough cough hostile takeover… cough cough abandoned blockchain.

Steemit can be thought of as a love child between Reddit and Medium rewarding users for creating and curating content, here’s your social side. The amount of rewards that a user earns is determined by a number of factors, including the quality of the content, the number of up votes it receives, and the number of Steem Power that the user has. 

All well and good, but the platform was flooded by bots posting low quality blogs, said bots were then up voting and harvesting rewards away from legitimate users. Lets just say I’ve entered the Steemit world for research purposes and there are some “bloggers” making a nice little amount as a side hustle. Came across a 21 part Havana City (That’s Cuba for the one’s at the back who struggle with geography) photo shoot. Yes 21 parts, with approximately 15-20 photos, released daily receiving C.$100 per post. That’s a solid $2,100 just for regurgitating your holiday snaps. Tidy little earner. Or what about the blogger posting interview tips…? Their latest post consisting of 8 of the basic pieces of advice is set to rake in over $600.

Look…this one has stood the test of time, 7 years and it’s still standing. Estimated 600,000 users with over 1 million posts per month for a niche platform, respectable, but hasn’t exactly broken into the mainstream. And I wonder how many “users” are just bots posting generic blogs??? But if you are making money for very little effort, who am I to judge? In fact these might be the brain boxes taking advantage of the little competition out there. Minimum effort for maximum gains.

It would be folly not to look into Hive, the hard fork of Steem, to gauge whether there has been any discernible progression in dApp quality or dare I say adoption. Hive, Hive, Hive so how did we get to this point after 4 years then? Blame J.Sun in short…But is it for the better? Hell yea, anything without his excellency involved, is infinitely better in every aspect by default.

But in all seriousness is it?? Well…not really…. Steemit has morphed seamlessly into Hive.Blog two major differences aesthetics (different colour scheme) and fewer users by a considerable amount. It’s been joined by an array of subject blog posting websites from travel to food. One interesting little addition, is an exercise to earn app called Actifit, be warned though you aren’t going to be making $’s stomping around the park like the good ol’ Stepn days, you’re more likely to see cents rather than dollars. Coupled with multiple video platforms and a “thriving”, tongue firmly in cheek, game to earn section you have the core of Hive’s “buzzing” social ecosystem.

There are many such cases of social blockchains, Elfin and Arbitrum Nova spring to mind. They promised so much and delivered so little that we can’t already access via traditional social media platforms. Let's be completely frank with ourselves, the majority of participants in this landscape are looking for the next cab off the rank to make quick cash and lots of it. Along the way carve out some pseudo social influencer personality adored by thousands and hated by an equal following.

But we will humor the decentralization maxi’s and even fewer number of readers to this blog. The tech believers, the ethic crusaders… I’ll give you this one, traditional social media networks are controlled by centralised, censorship-heavy entities and their shareholders. The real customers of these networks aren’t the users, but the advertisers. 

And lets talk about data. Businesses store their data on a single server, but by using a web of blockchain nodes you can disperse the data eliminating a single point of failure.  

But I guess ultimately you’ll point to decentralized social media as a way of shifting back control to the people that are using the platform and the concept of being able to have just one decentralised profile, like say for instance Lens? But in reality this will only be truly possible in an omnichain world, where you can port your digital identity anywhere and everywhere without the need to create endless login credentials for each. 

So you now have an understanding of what SocialFi is and it’s origins, but I hear you cry… where’s the evolution? Well the latest gambit in this space is Friend tech. Is it any different to the it’s predecessors? Lets take a look.

Friend.tech is a decentralized social network that allows users to tokenize their social influence and following housed on the Base blockchain, founded in by a team of developers who are passionate about creating a more transparent and rewarding social media experience. Sounds familiar right?

Friend.tech users can create profiles, post content, and interact with other users. They can also tokenize their social influence by selling and buying "keys" or shares of themselves to their followers. OK, sounds like a slight twist on the already established concept, with keys giving you access to gated influencer-specific chat rooms, exclusive content, and more. But do these rooms contain any alpha? The straight answer is hell nah. There are multiple key aggregators that are providing this alpha for free, step forward friendbook. There’s nothing really going on in these chat rooms bar personal opinions of anon profiles on the macro outlook of the crypto landscape and the constant ask of “gib next shitcoin play”

But it’s all playing its part in farming points for the anticipated airdrop of the FT token. The amount of rewards/points that a user earns is determined by a number of factors, including the quality of the content, the number of followers, and the number of keys that the user has sold.

Keys have an interesting gamified aspect to them as the price of an individual's key is determined by a price bonding curve is a mathematical concept used to describe the relationship between price and supply of an asset. In the context of Friend.tech, the price bonding curve for keys is used to determine the price of keys based on the total supply of keys.

The price bonding curve for keys on Friend.tech is a quadratic function. This means that the price of keys increases exponentially as the supply of keys decreases. This is designed to incentivize early adopters of Friend.tech and to reward users who hold onto their keys for a long period of time.

We won’t go into the technicalities, but we will say it’s very advantageous to be holding perceived valuable keys early and hang onto them for dear life. Or buy multiples of your own keys…(alpha alert) 

According to a Dune Analytics readily available Friend.tech dashboards, Friend.tech has seen total volume of 33,596 ether, or about $55.5 million, across 1.29 million transactions with unique users topping 80,000, as of August 21, 2023. It’s only been around approx a month and it’s printing millionaires. Does it remind anybody of another SocialFi platform which is now defunct? BitClout anybody? But who are we to stop people from making generational wealth? If you want a laugh, the other half of this rambling duo bought a Delphi analyst key for peanuts and sold it for even less, it’s now worth 100x what he bought it for. I guess some aren’t cut out for the “ponzis”. 

Whilst one of us has abandoned the experiment, the other has been farming away buying every tom, dick and harry’s keys for research purposes. It looks like it’s going to be a long term “project” in crypto terms, 5 months to see how this one plays out, as this is when the FT token drop is due to drop. Anybody want to have a guess as to what's going to happen in 5 months time? I’ll go first, it will be a race to sell your FT keys for maximum profit and the social experiment will come to a crashing end, with all attention being turned back to the traditional social media platforms, where you’ll be greeted with status such as “FT made me a millionaire”, “I was worth 30 million on FT and this is my net worth now”. We are cynical buggers over here as you can tell.

So has SocialFi evolved from its early infancy of Steemit in 2016 to its current iteration Friends.tech. Well it depends on what your definition of evolution is. If it pertains to creating new and innovative ways of capturing liquidity from the market to make a select few a few bucks, then sure. Ve(3,3) turned Ve(Fren, Fren). But a social construct of new age social media masquerading as SocialFi absolutely not. It still lacks an audience, web2 will always be king in this space. All it takes is for them to integrate web3 into their existing infrastructure and we’ll all be calling Elon the true evolutionary of SocialFi.

As always, if you made it this far, we really appreciate you taking the time to read our opinions and we’d be even more grateful if you could give us a follow on all socials. Until next time peeps… Peace and Love