NewsFlash Articles Data Fundraising BlockBeats Pro

SocialFi, which is favored by investment institutions, what projects are worth looking forward to?

Read this article in 34 Minutes

From several representative projects, the current development of SocialFi is briefly sorted out, and the method of tapping potential SocialFi projects is discussed.

Original title: "SocialFi favored by investment institutions, what projects are worth looking forward to?" "

Original author: @0xCryptoUni, @SylviaOU1, DeBOx Research Institute

Summary

Finance, entertainment, and social networking are all tracks with huge money-making effects in web2. Defi Summer in 2020 will detonate a round of bull market, and 2021 GameFi in 2010 also made the market even hotter. With the success of DeFi and GameFi, web3 entrepreneurs will naturally think of SocialFi, capital also smells the social potential in web3, and keeps betting on this track. However, SocialFi is still in a very early stage, and there are problems such as insufficient infrastructure, bottlenecks in user growth, and insufficient user stickiness. With the help of several representative projects, this article simply sorts out the current development of SocialFi, hoping to find ways to tap potential SocialFi projects.

SocialFi, as the name suggests, is social + finance, allowing users to earn Token through social behavior. Monetary incentives and the narrative of data ownership can easily attract the attention of web3 users to the SocialFi track. So is SocialFi simply moving social networks to the blockchain?

It is not as easy as imagined. In addition to financial attributes, the difference between SocialFi and traditional web2.0 social platforms is that SocialFi is built on Web3 .0 on the underlying infrastructure. Therefore, the architecture of SocialFi is completely different from that of traditional social platforms. The bottom layer of traditional social platforms is generally a centralized server, and due to the characteristics of decentralization and data privacy requirements of SocialFi, the bottom layer includes decentralized storage, decentralized computing, and decentralized privacy. The middle layer of a traditional social platform is generally a database and various middleware, above which is the application layer. However, SocialFi does not have a standard architecture. What is built on the bottom layer can be a protocol layer, a public chain layer, middleware, or an application layer. layers, this architecture is also known as the Open Social Stack.

1. SocialFi infrastructure

Let’s take a look at the infrastructure layer of SocialFi first. First of all, for decentralized social data, in order to truly guarantee the autonomy and privacy of the data, decentralized storage is necessary. Representative projects on the current decentralized storage track include IPFS, Arweare, etc. However, IPFS and Arweare are not specially designed for SocialFi, so they do not consider the real-time changeability and data query requirements of social data, and are not suitable for the distribution of large data streams. As a result, there have been projects that specifically solve the problem of dynamic storage of decentralized social data, such as Ceramic Network.

Figure 1 Twitter homepage of China Ceramics

Ceramic Network is a decentralized data network that provides computation, state transition and consensus. Ceramic Ceramic Network is a decentralized data network that provides computation, state transition and consensus for all types of data structures stored on decentralized networks. Ceramic provides an appropriate framework for dynamic, decentralized content through stream processing, enabling developers to build with dynamic information without a trusted database server. With the Data Stream Network, information streams and changing files can be stored directly on the decentralized network and updates shared with anyone in the world. Realized the transformation of static data (such as data on Filecoin or arweave) into dynamic data.

It is worth mentioning that Ceramic realizes cross-application data composability through a new abstraction called data model, similar to data Lego. Through this abstract data model, the storage methods of similar applications are unified, and the status of each user on the network can be retrieved. For example, a decentralized Twitter could run on several shared data models: one for users' tweets, one for the social graph, one for private messages, and so on. By adopting the same underlying data model, applications can natively interoperate on the same data.

Figure 2 Ceramic Mesh Function

Financing information: On February 16, 2002, 3Box Lab, the key capital of Ceramic, announced the completion of financing of 30 million US dollars, led by Multicoin Capital and Union Squares Financing information: On February 16, 2022, 3Box Labs, the core developer of Ceramic, announced the completion of a US$30 million Series A financing, led by Multicoin Capital and Union Square Ventures. Including the 2.5 million in the seed round, a total of $32.5 million has been raised.

In addition to Ceramic Network, the infrastructure track also has Tableland, which solves the problem of high cost and small capacity of EVM smart contract storage data. Tableland solves this problem by designing a data layer including on-chain tables and off-chain tables. The on-chain tables include access control logic, and each set of tables is represented by NFT, so that NFT owners can have data control rights.

Second, SocialFi social graph

The biggest feature of social data compared with other data is that, It is a complex network of social relationships, which is called a "social graph". In the traditional web2 world, social data between major social platforms are not interoperable, forming multiple data islands and duplicate social graphs. But in a decentralized world, social data belongs to users, not to any platform. Therefore, for web3 social networking, users should have control over their data and be able to interact with desired applications at any time. In order to express the social data of such web3 users, social graph protocols such as CyberConnect have emerged.

Figure 3 CyberConnect Twitter Homepage

CyberConnect is a decentralized social graph protocol that helps Dapp guide network effects and build personalized social experiences by building web3 social graph infrastructure. With CyberConnect, users can use their digital assets, on-chain identities, and social graphs to roam among different Dapps and games on Web 3.0 without giving up control to any centralized party.

The CyberConnect protocol is publicly accessible, allowing Dapps developers to leverage user connections to extend their existing user base with additional functionality, but only users have full control (add , delete and update connections) own social graph. Rather than being bound to a single blockchain, the protocol supports connections from all blockchains. And the project adopts decentralized governance and Token incentive model, and its Token is CYBER.

CyberConnect uses a tamper-proof data structure, each piece of user-centric data is represented as a data stream, and only the data owner is allowed to update. CyberConnect partnered with Ceramic to release the first version, using Ceramic's variable data flow storage system. Ceramic's blockchain anchor and CyberConnect's custom data fixation service guarantee long-term data retention. Design a user-centered user table, put all social graph information in a user table, and only parties who have obtained the decryption key can read the encrypted data. CyberConnect's social graph data is stored as a one-sided connection, and only the follower list is stored in the user table.

After solving the data storage problem, the data search problem also needs to be solved, so CyberConnect also designed a data indexer. Indexers can easily retrieve follower lists and restore counterpart follower lists.

Figure 4 Link Twitter home page

In addition to the social graph infrastructure, CyberConnect also develops some related social products, such as: CyberChat, a trustless Web3 for all blockchain users .0 chat application, and Link3, an information and link aggregation service based on the CyberConnect social graph protocol. In the personal version, various social platform identities, links, personal data, education and Web3 data on and off the chain can be integrated (Wallet address, NFT, etc.) aggregated into one home page. In September, the new Link3 Event Planner tool was launched, and 128 AMAs were held in less than a month.

Figure 5 Link3 interface

Financing situation:

Seed round $10 million, Multicoin Capital and Sky9 Capital co-led the round, with participation from Animoca Brands, Draper Dragon, Hashed, Zoo Capital, Smrti Lab, and Mask Network.

$15M Series A Funding, co-led by Animoca Brands and Sky9 Capital, Delphi Digital, Protocol Labs, IOSG Ventures, Tribe Capital, GGV Capital, Spartan Group, Amber Group, Polygon Studios and SevenX Ventures also participated.

In addition to Cyberconnect, a representative social graph also includes Lens Protocol, a Web 3.0 social protocol created by the Aave team, which allows anyone to create non- Hosted social data, the user's homepage is Mint as a Profile NFT, and social data such as following, favorites, forwarding, etc. also become NFTs with different attributes. Composability helps developers use Lens to build their own social applications.

Third, SocialFi social credential

In web3, the user’s social behavior is in addition to using social In addition to graphs, there is also a native form of web3, which is the on-chain certificate represented by NFT, such as POAP (Proof of Attendance Protocol, proof of attendance) and OAT (On-chain Achievement Token, proof of achievement). Both are used to indicate that the user has participated in an activity.

Figure 6 Galxe Twitter home page

Currently, the most well-known voucher project is Galxe (formerly known as Project Galaxy). There are a lot of cooperative projects in it, and they have released their own tasks, and the addresses that complete the tasks can get NFT or OAT. The tasks of these projects may be to follow retweets, join Discord, or interact on the chain, learn to use applications, or other custom tasks of the project party. The project party can flexibly choose the type of activity and adjust the difficulty of the task according to its own needs.

Galxe's success at the current stage lies in meeting the needs of users, project parties, and platforms: users get NFT or even Token airdrops, and event project parties get publicity and users For education, the platform side also gains profits and user growth.

After launching BAB in Binance not long ago, Galxe also launched Galxe Passport, which serves as a universal identity certificate for users across various applications in Web3, and emphasizes In order to be able to store identity information securely and anonymously. Applying for a Galxe passport requires KYC certification, and the passport obtained after that will exist in the form of SBT (soul binding) in the wallet. It can be seen that the next step of the project party is to aggregate all the achievements of users on the chain through Galaxy ID to form a more authentic and credible portrait on the chain.

Figure 7 Galaxy Passport

However, this approach has caused a lot of controversy. Binding offline identities with online wallets may violate the anonymity requirements of the web3 world, and there are still risks of loss and fraud. use and other risks, and the centralized collection of KYC is contrary to the autonomy of user data in web3.

Financing situation: In January 2022 Completed $10 million in financing, led by Multicoin Capital and Dragonfly Capital, Spartan Group, Sky9 Capital, Coinbase Ventures, Binance Smart Chain Growth Fund, C-Squared Ventures, Lattice Capital, Mirana Ventures, Folius Ventures, Solana Ventures, Jump Capital, Alameda Research and others participated in the investment. On February 17, 2022, a public sale of 10 million GAL was conducted on CoinList, with a unit price of $1.5.

In addition to Galxe, more representative social credential projects include: POAP, RabbitHole, etc.

Third, SocialFi’s decentralized communication

From the perspective of users, social networking is the most A common need is interaction, so decentralized communication is particularly important. You can open your mobile phone to see if the most commonly used social application in it is WeChat? In the web3 world, addresses represent users, and decentralized communication solves the problem of interaction between addresses. More representative projects, such as Satellite IM, Debox, etc.

Figure 8 Satellit IM Twitter Homepage

Satellite IM is a decentralized peer-to-peer communication platform that protects data privacy. Users can sign, encrypt, Broadcast, search and store without worrying about losing this data.

Satellite IM's initial core desktop application aims to be an alternative to mainstream messaging platforms, allowing people to easily message friends, video chat and quickly and efficiently Send large files efficiently while maintaining control over their own data. Its infrastructure leverages IPFS for decentralized file pinning and storage. Built on an encrypted peer-to-peer network, the platform will support 4K video chat and streaming, lossless audio and 4GB file sharing capabilities. In addition, Satellite IM's platform is open source code, allowing developers to customize or build their own code based on it, so as to continuously improve functions.

Figure 9 Satellite IM Interface

Satellite IM is currently in early access, and its mobile-native app, Uplink, is scheduled for fall 2022.

Financing: On August 11, 2022, $10.5 million in seed round financing has been completed, led by Framework Ventures and Multicoin Capital, Solana Ventures , IDEO CoLab, Hashed and Pioneer Square Labs Ventures participated.

Figure 10 Debox Twitter Homepage

DeBox is a DID-based community management tool that provides many practical functions for the community, and the application interface looks very similar to WeChat. The more eye-catching function is that when a user holds a certain Token, he can join the DAO of the project corresponding to the Token. After entering the community, he will be able to see the user's position ranking based on DID, and when the user sells or transfers the Token After that, it will automatically exit the community (DAO). Since the users in the community are all Token holders, the credibility of the information is increased. The group chat also contains commonly used community management tools, including proposals, voting, finance, capital management, transactions, lottery, contract tools, etc. Debox also launched a flash room + voice service function, similar to Twitter's space, which enriches the chat function and helps the community to attract traffic.

The project plans to use NFT to gather the first batch of seed users, OG users. Then use the practicability of community management tools to attract more communities and KOLs to settle in. In the first phase of the project, 10,000 guardian NFTs, a cute little penguin, were released. The functions of this NFT include:

DEBOX deep governance and PFP exclusive identity; Airdrops from DeBox and other project parties; enjoy the investment income of the DeBox Foundation; unlock advanced features such as DeBox flash rooms;

The second phase of Guardian Eagle NFT will also be released soon, and the functions of NFT include:

Genesis NFT honor; receive DBX airdrop; receive airdrop from Debox Foundation; support pop-up chat space and other functions.

Figure 11 Economic Model of Debox

The project TokenDBX has a total issuance of 1 billion, of which the foundation: 55%. Unlocked linearly over four years. It is used to incubate DeBox ecological projects, and the proceeds of the foundation belong to all DeBox Guardians Pass holders and all unlocked DBX holders.

Financing information: On July 28, 2022, TokenPocket announced that it participated in the seed round of the project, with an unknown amount.

Fourth, SocialFi content distribution

Users' social needs include content distribution in addition to real-time interaction. Different from the traditional web2, the content distribution of web3 can be distributed in a decentralized way, which requires some efforts in the design of the economic model. Representative projects such as BBS network.

Figure 12 BBS Network Twitter Homepage

BBS Network is going to be a decentralized Reddit, which supports content sharing and rewards creators, curators and other stakeholders with its own native Token . Anyone can create a BBS on any topic and run it on their own domain (e.g. member@bbs.domain.com). Each post is effectively an NFT that users can create, buy, sell and collect revenue from the ad space on the posts they own. Revenue generated by the platform is shared among all BBS ecosystem participants in a fully automated, transparent and market-driven manner, advertising revenue is automatically distributed to post publishers, content curators and moderators, financially rewarding making Contributing members and encourage healthy community togetherness.

BBS Network leverages predictive models, enabling community members to promote posts using the reputation they have gained from participating in the BBS and accurately predicting post visits. When promoting a post, users must use the reputation they have earned to predict how many visits the post will get. Accurate predictions gain more reputation, and inaccurate predictions lose reputation. Using predictions of posts to determine potential popularity within a community, providing a unique and manipulation-resistant approach to content curation. In addition, BBS Network also conducts fraud detection through DAO.

BBS Network’s native governance token is BBS, which is used for advertising fee payment and earning income, and 50% of BBS is used as mining rewards , 20% for liquidity provision and staking rewards.

BBS Network's incentive mechanism can make moderators have the willingness to manage the board well, and at this stage there are still continuous content generated every day. However, the growth of users is relatively slow, and there are few high-quality pages.

Figure 13 BBS network interface

Financing information: On December 7, 2021, Binance Labs led a $1.5 million seed round of financing, with DCG (Digital Currency Group), Polychain Capital GPs, Node Capital, NFX and DAO Maker participated.

In addition to BBS Network, content distribution, as the traffic portal of social applications, has given birth to many applications, more representative ones include: creator economy-related Rally, ShowMe, whale, etc.; Orbis, Torum, Deso, etc. to be decentralized Twitter; decentralized content publishing platform mirror; and various X to Earn projects, such as ReadOn, Readem, etc. related to Read to Earn.

Five, write at the end

In short, socialfi is currently in the early stage, no matter the basic There are many problems in the construction of facilities or the number of users and user stickiness. For social networks, there needs to be a process from quantitative change to qualitative change. When the scale of users grows to a critical point of explosion, the network effect will occur. Although one of the great benefits of web3 applications is that the addition of financial attributes can reduce the difficulty of project cold start and give users a reason to enter, but it also brings side effects: the project's survival time is short. Due to the bottleneck in the growth of the number of users, as early participants leave the market for arbitrage, the profit-making effect of latecomers will gradually decrease, the popularity of the project will gradually ebb, and there is a possibility of entering a death spiral. Web3 entrepreneurs are also well aware of the harm brought by this Ponzi attribute, and they are racking their brains to design various complex economic models to prolong the survival time of the project and accumulate users in a healthier way.

For a SocialFi project to be sustainable, it needs people who are really willing to pay for the user’s social behavior, rather than just relying on latecomers to pay. However, because the number of users of web3 is more than an order of magnitude lower than that of web2, advertisers are currently not willing to place advertisements in web3, and the way of paying for knowledge faces the problem of lack of high-quality content. Some SocialFi projects that were very popular in the early days have also fallen silent, such as Monaco.

Socialfi is built on a decentralized network, and the requirements for privacy and security will inevitably limit the development of application availability, which also requires developers to make some trade-offs. How to make users willing to endure gas fees and interaction efficiency for data autonomy and security is a question worth studying.

Although there are many problems in the early stage of SocialFi, capital is still favored, and the reason should be to seize the opportunity. After all, when the scale effect of a SocialFi project is produced, it is even more difficult for other projects to surpass it. You can pay attention to those SocialFi projects that are still deeply cultivating this track in the bear market, constantly optimizing, and carrying out technical iterations. They are gradually accumulating users in the stage of lack of early users, and they are steady and steady, and they are very hopeful that they will usher in an explosion when the next popularity comes.