Why SocialFi Hasn’t Taken Off and How It Can Succeed

Posted on by Bruno

Why SocialFi Hasn’t Taken Off and How It Can Succeed

SocialFi aims to revolutionize social media by giving users control over their content, data, and monetization, offering a stake in the massive social media advertising market. However, current SocialFi platforms are underperforming, failing to rival giants like Meta.

What’s Holding SocialFi Back?

Despite enthusiasm from Web3 communities, decentralized social networks struggle to attract and retain mainstream users. Key issues include:

  • Technical Hurdles: Blockchain infrastructure struggles to meet the high-throughput, low-latency demands of social networking.
  • Web2 Competition: SocialFi platforms face competition from Web2 platforms, which invest heavily in user experience and addictive simplicity.
  • Fragmentation: The multichain world has splintered SocialFi into silos, hindering network effects.

Technical Challenges and Solutions

Traditional blockchain infrastructure struggles to handle the volume of transactions required for social media. For example, Ethereum handles only 15-20 transactions per second (TPS), while Solana manages around 5,000 TPS. These speeds are inadequate compared to platforms like TikTok, which sees 25 million daily video uploads.

Solutions involve purpose-built infrastructure designed for social applications. This includes modular blockchain architecture that separates concerns like data availability, execution, and settlement.

Examples:

  • Farcaster moved to Optimism’s layer 2 stack.
  • Lens Protocol is migrating to ZKsync.
  • CyberConnect launched Cyber, its own L1 chain.

The User Experience Problem

Web2 platforms spend billions on research and development to create seamless user experiences. In contrast, SocialFi platforms often confront new users with wallet popups, crypto slang, and variable fees, leading to high abandonment rates.

SocialFi applications need to match the frictionless experience of Web2 while offering unique advantages, such as user ownership and monetization opportunities.

Fragmentation and the Need for Interoperability

The lack of integration between SocialFi platforms creates a fragmented experience. Decentralized identity systems and emerging standards are needed to power portable, composable social graphs, allowing users to move their content, followers, and reputation across different applications.

Purpose-Built Infrastructure: The Key to Scaling SocialFi

Addressing SocialFi’s adoption challenges requires infrastructure designed specifically for social applications. Modular blockchain architecture, which separates data availability, execution, and settlement, is crucial for scaling to billions of users.

This approach mirrors how Web2 scaled, separating data, execution, and storage to handle exponential growth. In Web3, this translates to:

  • Rollups for performance
  • Decentralized storage for media
  • Identity layers like ENS or Lit Protocol

User-Centric Social Networking: The Future of SocialFi

When built on the proper foundation, SocialFi can deliver on its core promise: putting users back at the center of the social networking experience. This includes:

  • True ownership of identity and content
  • Portable social graphs
  • Fair value distribution

True ownership empowers creators to retain control and port audiences across platforms. Programmable money enables new interaction models, such as seamless tipping and automated revenue sharing.

The Potential of SocialFi

SocialFi has the potential to disrupt established social media platforms by offering advantages that Web2 cannot: True ownership, greater control, and innovative monetization models.

By addressing the technical and user experience barriers, Web3 Social can finally achieve mainstream adoption and revolutionize the social networking landscape.

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