Recently, significant metamorphoses have been taking place in the cryptocurrency market, with decentralized projects taking over the niche of centralized systems, and users desperately aiming for self-expression using NFTs and Metaverses.
New market concepts have been introduced, as the number of users increased proportionally, with their constant support raising the projects that subsequently occupied liquidity top-charts and trading volume ratings.
However, considering that the DeFi sector has gained significant popularity, it would seem that an obvious mechanism for rewarding content consumers should have been formed by now. It was only recently that the market at large and some advanced projects have started offering users a radically new concept – SocialFi.
What is SocialFi?
SocialFi is a decentralized concept of rewarded social interaction. In other words, SocialFi allows users to monetize and receive rewards for their social activity. The element of decentralization minimizes the regulatory function of the platform, with likes, reposts, and comments turning into real digital assets at the full disposal of users.
Thus, SocialFi replaces outdated social platforms and becomes the leading social concept in the Web 3.0 iteration of the internet. The problems of hyper-centralization of social platforms, monopolization of the market, and diversification of content are thus eliminated.
SocialFi has become a logical advancement from the GameFi concept. If the latter is limited to the monetization of the user’s gaming actions – succinctly expressed by the Play-to-Earn model, then SocialFi organically complements it by adding a new model dubbed Communicate-to-Earn, which can be used both as part of a holistic ecosystem and separately.
Investment prospects in SocialFi
SocialFi has excellent integration properties, so the investment interest in SocialFi projects is growing rapidly. The demand for such projects is on the rise both from individual investors and venture funds.
For example, the Binance Smart Chain investment program with a budget of $500 million dollars focuses on SocialFi as one of the main areas of investment, while Solana Ventures, the most dynamically developing fund, announced the financing of Web 3.0 social startups with an amount totaling $100 million dollars.
Some prominent investors have actually announced SocialFi as a new target for financing, highlighting the high demand for such projects in the market and the willingness of funds to invest in the development of the industry.
SocialFi Market Development
At the moment, there are not that many full-fledged SocialFi projects on the market, leaving immense potential for further development of the sector.
There are several projects at different stages of development and with different levels of integration of the SocialFi concept. Among them is the Auditus project, which uses a decentralized protocol for transferring audio files. Another is Friends with Benefits that took Discord as a basis, and the RAC DJ project, which provides access to exclusive artist content.
However, the most interesting project for investors would be the one that combines an existing GameFi-type concept with SocialFi. 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, would increase the potential demand for assets of such a project to the level of ecosystem coins.
The most advanced project to date is the Fragma Metaverse. It has already raised over $5,000,000 during previous funding rounds and still has less than 5% of native FRA tokens left up for grabs at a private sale, which is coming to an end. Investors are expected to participate in a short-term public sale next with parallel testing of the MVP underway.
The project is launching its own metaverse, where users will be able to monetize content and activity within a decentralized social network. In an online game connected to the same ecosystem, they will be able to promote and develop their characters. Thus, users will be able to leverage both GameFi and SocialFi components, earning on the Communicate-to-Earn model.
Interested investors will be able to see the projects across multiple launchpads in the near future. However, they should analyze selected venues for potential profitability, tokenomics functionality, and the size of allocations.