SocialFi is the new buzzword in the Web3 world, here’s what we know about it

The blockchain-based Web3 sector is full of buzzwords, and the latest to rise to the top of the heap is called SocialFi. Consisting of two words – social and finance – SocialFi is a category of the Web3 sector that brings together social networks and decentralized finance (DeFi). Essentially, the concept of SocialFi is to bridge the gap that exists between existing social networking platforms and Web3. The sector has seen growth particularly in the US, Canada, Germany, France, the UK, China and India.

SocialFi apps allow users to earn rewards for posting high-quality content while offering them more control over their data and the content they post on social media. These are Barterchain, SocialTrader, ChatMint and Troop Finance it is reported among some popular SocialFi apps available for use.

SocialFi applications are also called DAOs or Decentralized Autonomous Organizations. These platforms and protocols are not controlled by a single entity, in fact decisions on how to grow these platforms are made based on what their community wants. This protects apps from censorship-related crackdowns, giving users more control over their right to free speech and expression.

Apps that fall under the SocialFi category come with their native in-app utility tokens. These tokens can be used by creators to monetize the engagement of their posts through social media. Instead of a company making money from engagement with content on the platform, SocialFi’s apps, or DAOs, allow creators to earn capital from their posts and content. Rewards are usually crypto-based.

According to CoinGecko, the total market capitalization of SocialFi tokens as of May 9 stood at $5.28 billion (roughly Rs. 44,091 crore). SocialFi’s growth season is now around the corner, “vying for attention,” a recent research report published by K33 Studies says.

In the report, blockchain analyst David Zimmerman noted that SocialFi platform Friend.tech’s recent airdrop of the $FRIEND token was “the most anticipated SocialFi airdrop to date.”

The report, published in K33 Research, also said: “The market is always hungry for the next premium product. Fantasy Top is positioning itself for this by running a series of incentive competitions.” Fantasy Top allows users to buy/sell virtual cards to trade on Twitter/X accounts and use them to compete in tournaments.

SocialFi’s market size is projected to grow from $2 billion (approx. Rs. 16,702 crore) to $20 billion (approx. Rs. 1,67,022 crore) in the next few years. Digital engineering and IT company Sistango said in a research report last year that the SocialFi category of Web3 apps has already seen 14 million users, of which five million are active.