We have recently presented the context of the emergence of social finance (SocialFi). In this post, take a look at what this new DeFi affiliate concept is about and how important it is in social media marketing.
Simply put, we will say that social finance (SocialFi) is the result of a combination of social networks and decentralized finance (DeFi).
Social Finance = Social Media + Decentralized Finance (DeFi)
Which simply means that SocialFi relies on social networks imbued with the principles of decentralization, so dear to Web3. These platforms favor the creation, management of content or even basic platforms by their members.
Also, SocialFi aims to expand applications (Boom Live, Pixie, Mousai, Diamond, DeSo, BETWEEN, etc.) that will result in the creation of content circulating influencers, collaborators driven by the idea of maintaining control over their data or freedom of expression.
Of course, social finance emphasizes the term “finance”, which allows these actors the possibility of monetizing their monitoring, as well as engagement on social networks. And as the death knell of TradFi and Fiat has been heard, SociaFi is using cryptocurrencies to break through, NFTs to maintain control over identity and digital asset management.
And if you’ve ever heard of decentralized autonomous organizations (DAOs), you’ll better understand how SocialFi platforms work. In their ecosystem, centralization has lost its raison d’être, especially in decision-making. With the help of Blockchain, the SocialFi infrastructure has the best weapon for an abundance of interactions.
What is SocialFi made of?
SocialFi rhymes with blockchain, NFT, DeFi, GameFi and Web3. There was no talk of relying on Web2, which only interested social network developers.
If SocialFi quickly gained popularity, it is because it allows the following means.
Montetization through social tokens
In addition to the CAD model, social token or service token in the application make Social-Fi platforms special. economy in the application has always been specific to DeFi and GameFi. By appropriating it, social finance has managed to expand the management of social tokens and their creation to the level of users. This is especially the case with TIME magazine, which, with the development of its Web3 / NFT community, has set up its own social token “TIMEPieces”. The goal behind this token is to “ brings together artists, collectors and fans in a common way with the aim of creating long-term usefulness and value for the community “.
In other words, influencers with any brand capital such as Elon Musk can have their own token. Also, it will be the center of a mini-economy that will vary according to its impact on social media.
If you want to learn more about this mini economy, you should consider the following principles:
- engagement in the creator’s posts will be allowed only to the owners of the creator’s social tokens;
- whoever has the most social tokens will have greater visibility in the eyes of influencers;
- the same for the ability to send a private message (but it will be up to the influencer to establish any threshold);
- artists are free to create a subscription model (premium, classic, etc.) in their social token;
- the user will have to pay in case of engagement (like, share, etc.) with the content of another.
It is very likely that SocialFi will be expensive for participants, if we take into account a few of the above points. But we must also agree that this will raise the level of authenticity of interactions on Web3 social networks, that it will make the monetization of a given brand convenient.
Freedom of expression combined with censorship
This poses a great challenge given the desire to break free from the yoke of Web2 social networks, on the one hand, and the fear of the chaos that reigns on the Internet on the other. Fortunately, there is a form of decentralized censorship on SocialFi platforms. This is facilitated by tagging the data on the chain, which promotes the operation of rule mechanisms that quickly identify content according to its nature. Help from knots The chain is very important in this situation.
Basically, there will be no central body in the SocialFi galaxy. Any form of control will really be in the hands of the individual.
Ownership and digital identity
You are not unknown to NFT ” Picture for proof (PFP) are the source of a new digital identity format. In this category are Bored Ape Yacht Club, CryptoPunk or Moonbirds. They all represent images for which the owners show personal affection to the extent that they use them as a profile photo on Twitter, for example.
Here we can talk about emotional identity, which was once associated with a wallet, confirms ownership of NFT. It opens other doors to the owner, especially the community rich in ideas, experiences, events … that can benefit him.
In addition, SocialFi can make NFT an effective tool for distributing works of art. The fact that he has a group of social token owners, whose creator he is, promises a bigger incentive to sell his collection of NFTs. And if it can, it will turn the original message into a fixed token via established functions on SocialFi platforms.
SocialFi and marketing challenges
As mentioned above, NFTs have the power to influence the entire community. This makes them a significant asset in the eyes of marketing professionals. To sell avatars, GIFs or even videos, it was necessary to attract celebrities. Once Web3 becomes effective, there is no need to challenge them, and pay astronomical sums accordingly. Occasionally, everyone will be able to apply for influencer status that is able to bring brands together with consumers.
Consumer brands will also need details on measuring the impact of community impact through NFT. Similarly, virtual entertainment experiences promoted by influencers are similar to the strategy of choosing big brands in Web3.
This forces these brands to contact influential people rich in experience supported by Web3 and showing more correspondence with its values. In particular, the following will be considered:
- the number of attendees brought to the virtual event;
- number of NFT mints to generate;
It is obvious that the help of a specialized agency or public relations company is necessary in the search for the best possible profile among influencers.
It should also be noted that the success of a virtual event will depend on the clarity of the campaign message. It is therefore up to marketers to ensure its proper management, which must take into account the complexity of SocialFi.
On the operational side, the company’s marketing department needs to expand its staff to effectively align with the Web3 revolution. Of course, automation tools are available to make tasks easier.
Beware, SocialFi has its limitations, or at least the challenges that need to be overcome: the fact that the infrastructure is scalable given the huge data that the social networking platform has to manage. Also, the establishment of a sustainable economic model must not be minimized. By the way, all in all, SocialFi presents itself as an advantage for both companies and influencers. To be closely monitored!
Sources: Cointelegraph; Forbes
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