Original article: “SocialFi: A Blank Canvas for decentralized Social Apps” by Mason Nystrom
Translation: DAOrayaki
The successful social game of the Web3 era will be a social experience with a clear point of view and a platform that leverages the financial power of cryptographic primitives.
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The best social apps make users feel like they’re immersed in a game. Currently, the goal of encrypted social apps is to become a copy of Twitter, Discord, or Instagram, with NFTs, open data, and embedded wallets added.
Undeniably, NFTs with their own usernames, content, and digital assets will be the cornerstone of the next social app. However, if a social app is only imitating existing products, it will not succeed.
Encrypted apps that create new and attractive social experiences should fully leverage their characteristics: financialization. After all, the original killer app of cryptography is still based on internet financial architecture and permissionless capital coordination.
The next killer encrypted social app will make financialization a core component of its user experience. While a world of financialized social media may sound like a dystopia to many, I believe social media is already being financialized in an indirect way. On social media, everyone is participating in what Blockcky McCormick calls the “Great Online Game,” a competition to build social capital and convert it into actual capital. Each time you log in, you choose to participate in this game, whether as an active participant or as a passive consumer enjoying its benefits for entertainment purposes.
By participating in social games and playing well, anyone can build significant social capital. To some extent, social capital has already been made equal and convenient, allowing individuals without qualifications to amplify their voices. Social networks provide more meritocratic mechanisms for talented and ambitious individuals to succeed even if they are obscure.
The way social capital is monetized varies by network. Some tie rewards directly to social capital: for example, YouTube, TikTok, and Spotify pay directly with increasing subscribers, views, and traffic. Other social networks (such as Twitter, Substack, Instagram, Facebook, and Snapchat) provide distribution channels for users and leave monetization decisions to individuals through additional features such as advertising, affiliate marketing, and sponsorships.
In the future, social games and economies will provide users with ownership opportunities and more direct monetization mechanisms built around unique experiences. Decentralized storage protocols like Nostr ensure user ownership and resistance to censorship by allowing users to subscribe, distribute, and incentivize content through Relay. Social media platforms like Damus and long-form content curation platform YakiHonne.com have already implemented these features. Open social graphs like Lens have facilitated over $6.2 million in economic activity through trading and collecting user media NFTs. Similarly, Link3 is a Web3 social platform built on the open social graph Cyberconnect that allows users to purchase and own their social profiles.
Building the Next Great Social Game
It’s hard to predict what the next cryptocurrency social app will look like, but here are some imaginative SocialFi behaviors and experiences:
- Multi-person capital coordination schemes, such as NFT group purchases combined with social experiences, as we’ve seen in experiments like Forum, Lore, and Sail.
- Social games based on permissionless capital coordination through InvestmentDAOs, Juicebox, ConstitutionDAO, and more.
- Federated social experiences within permissionless social networks—permissionless social graphs can have subgroups formed around token-gated interest graphs, on-chain credentials, social finance games, and more.
- Enhancing discovery experiences by providing better platforms for curators to incentivize and monetize.
- Providing on-chain experiences that enhance social status and content, such as Sound.xyz music NFT purchases that require signing and commenting on songs.
- Using new, programmable content, tokenized assets, and creator tokens for novel live streaming formats.
- Dynamic NFTs that can be degraded (e.g., Stepn) or upgraded (e.g., ERC 6551) and provide unique privileges within the network.
- New crypto-economic mechanisms and business models, including on-chain micropayments and competitive minting, such as Stealcam. Platforms may also offer creator rewards tied to in-app economic activity (e.g., permissioning).
Online games for building and monetizing social capital are evolving
Many of the most successful Web2 social media applications were originally purposeful and useful tools or applications that had a specific social experience. Instagram was initially known as Burbn, a location-based check-in service with photo capabilities. The 140-character content format limitation of Twitter was not set by Twitter, but rather due to the platform being built on top of SMS transmission. However, this short message format led to unforeseen user behaviors such as hashtags, retweets, mentions, and @replies. Facebook was originally a closed network geared towards college students, but grew into a global social layer and marketplace, facilitating billions of transactions. In other words, the social experiences of these platforms were initially focused and limited but eventually evolved into larger social platforms.
Similarly, successful social games of the Web3 era will be platforms with a clear point of view for social experiences and utilize the financial power of cryptographic primitives.
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