Socialfi Expands Satoshi Nakamoto’s Vision of a Defi System to Social Media, Says Kevin Lu

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According to Kevin Lu, social finance, or “socialfi” — a combination of social media and decentralized finance — is an innovation that extends Satoshi Nakamoto’s vision of a decentralized financial system to social media.

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Although it’s not intended to replace today’s traditional social media platforms, socialfi addresses “significant value gaps in current consumer products,” said Lu, the CEO of Friendzone.

‘Redefining the Creator-Fan Dynamic’

Despite proposing a “disruptive yet inclusive Web3 social industry,” socialfi platforms still face challenges merging “traditional social media’s engagement with blockchain’s unique capabilities.” To overcome these challenges, Lu proposed addressing gaps in areas such as intellectual property management, reward distribution, and gamification.

Meanwhile, in written responses provided to Bitcoin.com News, the Friendzone CEO discussed how socialfi platforms are “redefining the creator-fan dynamic” through so-called micro-economies. These small economies, in turn, enable the creation of entire communities and content platforms. According to Lu, this is a new approach to the “cold start problem” and one that offers “early adopters significant upside.”

In his responses delivered via Telegram, Lu discussed how the adaptive bonding curve can assist socialfi platforms in scaling and the part dynamic non-fungible tokens (NFTs) play. The following are all of Lu’s responses to the questions posed.

Bitcoin.com News (BCN): What is socialfi? Given that many of its principles could be easily replicated by established Web2 social giants on their private servers, why is there a need to put socialfi on the blockchain?

Kevin Lu (KL): Socialfi, a blend of social media and decentralized finance (defi), represents an evolving market space where social interactions meet financial opportunity. This innovation extends Satoshi Nakamoto’s vision of a decentralized financial system to the realm of social media, ensuring that the platform remains open-source, transparent, and accessible to all.

Unlike traditional social giants that operate on censored, permissioned models, socialfi offers a fresh perspective by prioritizing transparency, permissionless access, and equitable rewards distribution among platforms, creators, and users. While socialfi might not replace conventional social media platforms today, it addresses significant value gaps in current consumer products, proposing a disruptive yet inclusive Web3 social industry.

BCN: The network effect has been instrumental in the rapid growth of traditional social platforms. Is it also relevant for Web3 social platforms that offer financial rewards to users? If so, how are socialfi platforms leveraging the network effect to expand their reach beyond Web3-savvy youth and into the general population?

KL: Crypto has a way of enabling network effects through the financialization of different elements in the traditional world that previously wasn’t possible. Network effects are crucial in Web3 social platforms, especially when financial rewards are involved – say, in defi Summer of 2020 when the era of yield farming and liquidity incentives took the storm. They not only help in overcoming the initial cold start problem but can also provide governance rights and valuable feedback to early-stage teams.

With the evolution into ‘points farming’ and other incentive mechanisms, socialfi platforms can foster strong network effects. At Friendzone, we emphasize accessibility, enabling users to interact with Web3 products effortlessly, thereby extending our reach beyond the Web3-savvy youth. Our approach includes simplifying on-chain interactions and leveraging protocol-level account abstraction, making it possible for anyone to engage without prior blockchain knowledge – new users both non-savvy and savvy can create their on-chain social graphs/profiles, interact and transact using social sign-ins such as their email, social media profiles.

This inclusivity, combined with our beta tester incentives, and native reward-sharing model, we are setting the foundation for a robust, incentivized network effect starting with the Web3 savvy extendable to those who are also not as savvy.

BCN: Your project Friendzone claims to be the first Web3 social capital marketplace. Can you explain what it does and how it differs from other Web3 social platforms?

KL: Friendzone pioneers as the first open and permissionless Web3 social capital marketplace, differentiating itself by enabling users to monetize their social graphs and the ability to create an on-chain network that is incentivized through reward sharing. People are able to build their social graph, freely trade into other people’s networks, and purchase a stake in the success of others.

Our platform stands out by addressing the scalability issues and capital intensity found in traditional bonding curves through an adaptive approach that responds to market supply and demand. This innovation ensures an inclusive environment where anyone can participate, regardless of their entry point.

BCN: One of the most significant challenges for Web3 social platforms is combining the engagement found in traditional social media with the unique advantages provided by blockchain technology to empower and cultivate online communities. In your opinion, what is the most effective method to address this challenge?

KL: The key to merging traditional social media’s engagement with blockchain’s unique capabilities is creating win-win scenarios that benefit users, traditional platforms, and the Web3 technology stack. This involves addressing gaps in areas such as intellectual property management, reward distribution, and gamification. By designing systems where all participants see value growth, such as through transparent and equitable reward systems, Web3 social platforms can significantly enhance user engagement and community empowerment.

BCN: What is the adoptive bonding curve and how does it help socialfi platforms scale?

KL: In my previous experience leading growth at Band Protocol, we were one of the first teams to use bonding curves in production to create a relationship between a dataset supply and dataset price in 2019. In short, token bonding curves algorithmically determine a token’s price based on its circulating supply. As more tokens are purchased, the price increases upward, and as tokens are sold or burned from circulation, the price adjusts downward.

Applied to SocialFi, adaptive bonding curves represent a breakthrough that allows for dynamic adjustments based on real-time market conditions. It takes into account market feedback around a profile supply AND demand. This mechanism not only makes participation more inclusive but also enhances scalability and engagement across the platform.

BCN: Web3 socialfi platforms are reportedly offering creators the opportunity to establish “micro-economies.” Could you explain the various components of these micro-economies and the advantages they provide to creators and their respective audiences?

KL: The world of Web3 and socialfi is redefining the creator-fan dynamic by enabling the construction of vibrant micro-economies. With the adaptive bonding curve, we can ensure that regardless of where you’re from or your stature, there’s an opportunity for you in SocialFi.

For creators, the traditional barriers to deeper fan engagement and monetization are dismantled. Traditionally, creators could only dream of such direct and multifaceted support from their followers. In socialfi, you can own a “chip” to support your favorite creator’s profile and get exclusive access to chat channels and, importantly, a stake in the creator’s success through a share of the rewards the creator earns. This model turns every fan into a vested partner in the creator’s journey, incentivizing them to go above and beyond in supporting their success.

The implications of these micro-economies extend far beyond individual success stories. They enable the creation of entire communities, content platforms, or coordinated efforts towards a common goal, all underpinned by an economy that rewards every participant. It’s a new approach to solving the cold start problem, offering early adopters significant upside.

BCN: What are dynamic non-fungible tokens (NFTs) and what role do you see them playing for both socialfi creators and fans?

KL: Dynamic NFTs stand at the cutting edge of the NFT world, revolutionizing how we think about digital ownership and interaction. These aren’t your standard non-fungible tokens; dynamic NFTs have the unique ability to evolve over time. This evolution can reflect changes in an avatar’s appearance in a game, for instance, updating in real-time as the avatar’s gear changes. But the potential extends far beyond gaming avatars.

In the SocialFi ecosystem, dynamic NFTs open up untapped avenues for creators to engage with and reward their community. Imagine a scenario where creators can visually and tangibly acknowledge their fans’ dedication and support. Every action, every interaction of fans becomes visible and verifiable, laying the groundwork for a new form of appreciation – dynamic NFTs.

These dynamic NFTs serve as badges of honor, evolving as fans complete certain actions or quests to support their favorite creators. More than just a static token of appreciation, these badges are soulbound – non-transferrable and intimately tied to the fan’s identity and contributions. This ensures that the accolades remain personal and meaningful, enhancing the bond between creator and fan.

But it doesn’t stop there. These dynamic NFTs can unlock new worlds of interaction and privilege. They could grant access to exclusive content, experiences, or perks that the creator reserves for their most engaged fans. This system doesn’t just recognize top fans; it incentivizes deeper engagement and support, creating a virtuous cycle of appreciation and reward.

What are your thoughts about this interview? Let us know what you think in the comments section below.

Source: news.bitcoin.com.

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