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What is SocialFi?

Co-written by Raphael Bustamante, James de Jesus, and Gabriel Paningbatan
Key Takeaways
  • Most social media platforms are centralized and their users don’t control their own data. 
  • Social Finance (SocialFi) combines social media and decentralized finance (DeFi) principles to empower users with autonomy over their data and interactions.
  • Web3, is a proposed iteration of the World Wide Web. It’s all about decentralization, openness, and user ownership.
  • Key features of SocialFi include, decentralization, tokenization, monetization, community governance, transparency, and privacy

Unless you’ve been living under a rock for the past 20 years, you’ve probably dabbled in the world of social media. We’re talking about Facebook, YouTube, Instagram, X (aka Twitter), Snapchat, TikTok, Reddit, Tumblr, and the list goes on. These platforms have shaped a generation by allowing their users to create, share, consume content, and connect, all from the comforts of their internet-connected devices!

Here’s the scoop – social media users don’t actually own their data. Ever felt a pang of injustice when your posts get taken down due to “community guidelines”? Whatever content you make on Facebook or X is actually owned by the platforms themselves, not you. Here’s why, the centralized corporations behind these social media platforms collect and monetize user data. Some believe that this model isn’t fair for the users. Fortunately, SocialFi is here to even the playing field!


Social Finance (SocialFi) combines social media and decentralized finance (DeFi) principles to empower users with autonomy over their data and interactions. In contrast to traditional platforms controlled by centralized corporations, SocialFi envisions decentralized social networks where users can protect, manage, and monetize their content freely. Imagine a Facebook where you can post anything, earn money from it, and concerns about account bans are eliminated.

If you’re curious about DeFi, read our full module here

And wait, there’s more! SocialFi operates within a trustless system, eliminating reliance on centralized authorities – it’s all about blockchain technology, the code behind it, and decentralized autonomous organizations (DAOs) that govern the blockchain. We’ll go over DAOs later!

Interested in blockchain? Check out our full module here

SocialFi platforms prioritize user privacy, allowing users to remain anonymous and control their personal information. Transactions within SocialFi platforms integrate seamlessly with DeFi services, eliminating middlemen and associated costs.


SocialFi also adopts and contributes to the overall ethos of Web3. So, what’s this Web3 thing? 

Web3, also known as Web 3 or Web 3.0, is a proposed iteration of the World Wide Web. It’s all about decentralization, openness, and user ownership. Currently, we’re cruising in Web2 which is characterized by centralized platforms and limited user control. The social media we know today such as Facebook, X (Twitter), Instagram, and Tiktok all fall under Web2. 

SocialFi aims to address Web2’s flaws, nudging the internet towards a decentralized future. With innovations like SocialFi and DeFi, Web3 is becoming a reality, promising a more user-centric online experience for all.

Social Media vs SocialFi

Let’s break down the differences between Social Media and SocialFi.

Key Features

Let’s now dive deeper into the key features that make SocialFi a unique experience: 

  • Decentralization: Unlike traditional social media platforms that operate on centralized models controlled by developers and companies, SocialFi returns control to users. This means users have autonomy over the platform and can manage their data according to their preferences.
  • Tokenization: SocialFi networks leverage blockchain technology to represent various assets and aspects of social interactions through digital tokens. This enhances user control and provides a seamless experience. For example, imagine earning “coins” via TikTok, only to have them taken away due to account flags or bans. In SocialFi, tokens earned truly belong to users, ensuring their security and ownership. Some examples of tokens in SocialFi include creator tokens which amount to the value of content created by users, social tokens which signify a user's influence on the platform, and community tokens which represent ownership or voting rights in communities. SocialFi also makes use of non-fungible tokens (NFTs) which are one-of-a-kind digital assets that can act as collectibles or represent digital art. If you’re curious about NFTs, read our full module here
  • Monetization: In SocialFi networks, the decentralized setup makes it incredibly easy for users to earn money from their content. Since users own their data on the network, there’s no need to go through multiple middlemen, saving you from hefty fees. Tokenization plays a big role here. It lets you turn anything you create into a valuable asset that can be bought and sold on the platform. Whether it’s your first post, a meme with a celebrity’s interaction, or early access to your videos for your community, you can tokenize it all. It’s like giving your content a price tag and letting others trade it like currency. The possibilities are endless!
  • Community governance: If SocialFi is so decentralized, does no one make any decisions for the network? Of course not. The majority of SocialFi platforms often utilize DAOs for community-driven decision-making. But who really are these DAOs? These are essentially decision-making bodies that rely on blockchain and community involvement. Think of them like a company’s board of directors, except it's not only a select number of people that get to be heard. DAOs rely on collective governance through voting by token holders. For example, if someone wanted to change the maximum limit of “friends” on a SocialFi network, all users would be able to give their opinion and vote on it through a DAO. If enough people agree on a proposal, DAO executes it through smart contracts, which are self-executing computer programs that run under predetermined conditions. SocialFi networks use DAOs because they offer a democratic and transparent system where every user can get involved. With DAOs, anyone can contribute to the growth of their SocialFi community. 
  • Transparency: With SocialFi being inherently linked to blockchain technology, there’s a high level of transparency. All transactions can be monitored and traced, making it difficult for bad actors to manipulate the system without getting noticed. Most SocialFi networks use open-source code so people can audit them to verify if the network functions as intended. Community forums and the DAO system also promote transparency and ensure that every user stays informed about the happenings within the SocialFi network. 
  • Privacy: SocialFi goes a step further in providing increased privacy compared to traditional social media networks. SocialFi enables users to store their data on decentralized networks, thus reducing reliance on centralized servers. This option can mitigate privacy concerns associated with data breaches. SocialFi users also have more control over their online identities and data, allowing them to decide what information they share and with whom. If you prefer to keep details like your age and nationality, you have options to do so. Some SocialFi networks won’t even collect personal information giving you the freedom to create your own digital identity and interact pseudonymously, adding an extra layer of privacy protection against personal identification. SocialFi lets you be whomever you want! 


Some examples of SocialFi platforms include BitClout, Steemit, and Hive. Try them out and see what fits you!

Now that you’ve got a general grasp of what SocialFi is about, let’s look at the overall relevance of SocialFi as a concept and discuss some risks to look out for.

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