What is a SocialFi Token? How is it Transforming the Web 3.0 Economy?
The emergence of Decentralized Finance in 2020 has proved to be a revolutionary transformation for the financial world. It has given birth to open finance systems and liquid mining methods. The outcome of this is the advent of a powerful new concept-SocialFi. This amalgamation of Blockchain and social networking is a lucrative track for developers. They are continuously exploring new types of SocialFi Token.
SocialFi is the new economic and technological hot-spot. They perform the important role of rewarding the creators directly for their work. They disrupt the long-standing financial model where social intermediaries such as Instagram used to mediate the relationship between fans and creators. In the former model, creators were not adequately compensated for their work. SocialFi tends to correct that by means of SocialFi token.
SocialFi is a powerful innovation that is driving the future of digital economy. It is creating a free and democratic digital ecosystem for the future generation. It enables creators to gain monetary benefits from their content.
SocialFi consolidates the objectives of Web 3.0. It utilizes Social Token to determine the value of content creators. It uses this value to transfer the monetary control to creators. It therefore, decentralizes the data ownership.
Thanks to Web 3.0 and SocialFi, the data is no longer controlled by big tech companies. It is now in the hands of content creators or social media users. Together these two technologies provide you with a greater degree of freedom on social platforms. They also enhance the utility of the internet.
How SocialFi Works?
SocialFi puts forward a revolutionary solution for the creation, management and ownership of content. It provides creators with complete control over their creations. Creators are now able to monetize this data. It strengthens the creator economy.
Let us take a look at how the SocialFi system operates. The basic idea is to reward the users for participating in decentralized activities such as gaming, communication, NFT minting, etc. Users receive direct monetary benefits for their social value. These transactions are made by means of a SocialFi Token.
Users are rewarded with a SocialFi token for exercising social influence. The higher the social influence of a user, the greater is the amount of SocialFi token that he will receive. This means that you can gain direct monetary benefits by publishing quality content.
Introducing SocialFi Token
A SocialFi Token can be defined as a token which is supported by a user’s personal reputation, brand image or the strength of community. They are built upon the notion that the value of the community will keep on increasing.
Content creators can utilize SocialFi token in two ways. Firstly, they can use them to build a community and reward their fans. Secondly, they can use these tokens to compensate themselves for their content contributions.
Generally, fans tend to buy SocialFi tokens from the creators. However, some artists also reward their loyal fans with these tokens. For instance, an artist called RAC gives away SocialFi tokens from time-to-time.
The value of a SocialFi token depends upon its demand. Since there are a limited number of tokens available, even a slight rise in demand raises their value. As their value continues to rise, a create can use them to monetize.
Types of SocialFi Token
There are many different types of SocialFi tokens. They each perform a different kind of function, Personal token, community token and participation token are the three main categories of SocialFi tokens. Let us discuss each of them in detail.
Personal Token: Personal tokens are created by individual creators to measure the value of different forms of labour. For instance, the potential of crypto entrepreneur Alex Masmej is reflected through SocialFi token $ALEX.
Participation Token: Users Holding these tokens can participate in various group activities such as become a part of the exclusive discord channels of their favourite artist. $SWAGG that backs the SWAGG Network creations is a wonderful example of participation token. It covers both the Forefront as well as the upcoming community products.
Community Token: These tokens are used to manage community memberships. $JAMM is a kind of community SocialFi token. It provides access to the company’s discord channel. It also used to get newsletter and to enjoy other benefits in the Jamm Session landscape.
Difference Between SocialFi Coin and NFT
NFTs are a type of SocialFi Token. The main difference between a SocialFi coin and an NFT is the fungibility. NFTs are non-fungible. It means that each NFT is unique. They have some exclusive characteristics and properties. Therefore, no two NFTs are alike. This is not the case with SocialFi tokens.
SocialFi tokens are fungible. Every SocialFi token has the same value. They are similar to cryptocurrencies in this respect. For instance, if you look at a cryptocurrency such as bitcoin, each bitcoin has the same value. Therefore, they are easily interchangeable.
NFTs, on the other hand, are not easily interchangeable. This is because each of them has a different value. Because of this reason, NFTs cannot be traded easily.
To put it in simple terms, each social token comes with same benefits and privileges. They offer same rights to art or music to all stakeholders. While NFTs, on the other hand, offer unique rights of ownership. This means that there are some unique qualities attached to a particular artwork such as a signature or some other trademark.
How is SocialFi Token Leading the Monetization of Web 3.0
Web 3.0 seeks to break the hegemony of big tech companies in the realm of data control. It aims at establishing a decentralized internet where users control their data. It ensures that only the original content creator can benefit their data. This concept lays the foundation of SocialFi.
SocialFi empowers users to monetize data. It uses their social influence to determine their social value. Based upon this value, it rewards users with SocialFi token. The more time that a user spends on a SocialFi platform, the more SocialFi tokens he earns. In addition to this, users also participate in decision-making by voting on proposals.
All these principles pave the path for a democratic internet which is also the main objective of Web 3.0.
Some Popular SocialFi Apps
As social media continues to get integrated on blockchain, the SocialFi movement is now gaining more steam. Many traditional media firms such as Facebook, Google, etc. are pouring money into Metaverse, social blockchain projects and Web 3.0 based social media.
Today, more and more investors are getting interested in SocialFi projects. This is because SocialFi tends to address some key problems of traditional social networking platforms. Furthermore, the advent of Web 3.0 is said to accelerate the growth of SocialFi. Because of this belief, some innovative SocialFi projects have already made an appearance. These are:
Ultra (UOS) is a blockchain based SocialFi project. It seeks to revolutionize the way content is shared over various social media platforms. It provides users with a one-stop-shop for all social needs. A user can play video games, listen to music, or engage in any other activity. The best part is that the participation over this platform is fully decentralized. However, Ultra is still relatively new to the market. It is just getting started. It currently has a market cap of $340 million. There are high expectations for the social audio app to gain more dominance in the near future.
Steemit (STEEM) has been around for some time now. Even though the project has had multiple issues, yet it is very exciting. Steemit social platform allows users to create blogs within its ecosystem. The interesting part is that all these blogs are decentralized. Therefore, it is very easy to monetize your content. The project currently has a market cap of $122 million and is continuously evolving.
MediaChain is a forthcoming decentralized network. It seeks to establish a network of content creators from across the world. It is hoping to provide a way to users to monetize their data. It hopes to remove intermediaries between fans and creators. However, this SocialFi app is still under development. It may come out soon. Nothing can be said for sure as of now.
Pixie is an innovative platform that supports both Web 2.0 and Web 3.0 platforms. Users can login with account and password in Web 2.0. There is also a private key login available for Web 3.0 users. It encourages users to create quality content by offering monetary incentives.
Pixie rewards social engagements with its own cryptocurrency “PIX.” Users who post high-quality content get more PIX rewards. A user who finds and engages with this content very early also get rewarded.
Pixie uses AI and ML technologies to manage abusive activities. It employs the Energy mechanism to punish abusive social activities. Therefore, Pixie is a futuristic and fun platform where you can earn cryptocurrency. It is leading both GameFi as well as the SocialFi universe.
A SocialFi token is built upon blockchain. It helps a user to monetize their content creations. The basic idea behind the concept is that the value of a community will continuously increase. A SocialFi token is different from NFT in the sense that it is fungible. It means that all SocialFi tokens have the same value. SocialFi is a powerful concept that strengthens the emergence of Web 3.0. Today there are many GameFi and Social Audio apps available that utilize SocialFi token.