SocialFi: A Bear Market Past-time?
A look into the current state of SocialFi. Has the narrative waned?
Capital is shifting from SocialFi to more traditional crypto investments. Despite SocialFi's innovative concepts like Friendtech's bonding curves for creator access, users are cashing out for the incoming bull run. Notably, Vombatus_eth's key sell-off and movements into New Bitcoin City highlight this trend. With fractionalized keys and diverse payment options, platforms like NBC are growing, but it's unclear if the bull market surge will sustain SocialFi's user activity compared to the previous market lull.
Note: This post is for educational purposes only and should not be construed as financial advice. Always conduct your own research and due diligence before making any decisions related to the content provided herein.
Has the SocialFi wave died?
The biggest FT whales are dumping to and rotating elsewhere.
Most are pulling out to deploy into coins to catch the bull szn pamp.
Here's a look into the Current State of SocialFi
With the recent bullishness over the 8-day window for BTC/ETH spot ETF approvals, we saw a surge in stablecoin mcap, activation of sidelined capital, bullposting and euphoria all across CT.
It seems SocialFi was the bear market past-time...
What is SocialFi?
In short, SocialFi uses blockchain to monetize social interactions.
SocialFi platforms use avenues built on top of crypto infrastructure, allowing content creators to cash in on their influence and users to earn rewards for scrolling.
Friendtech
Friendtech allows users to buy and sell tokenized “keys” that provide access to group chats with the creators behind X accounts.
The key prices are subject to bonding curves that make keys far more expensive the more they are purchased.
This setup allows users to essentially place bets on creators — early buyers can sell for big mark-ups if their keys ascend the bonding curve.
As we can see the leftmost part of the curve is the most profitable buying range at the moment, but this part is monopolized by bots, forming a revenue form similar to “MEV.”
Other projects like Tomo are trying to decrease the rate of the curve
This change, however, is not particularly innovative, and a smoother price curve is a double-edged sword for forks. On the one hand, FT provides a benchmark value, and it is reasonable for the price of the same player’s key on a copycat platform to be lower than FT itself.
A lower price will bring better acceptance and greater user capacity.
But on the other hand, a smoother curve means a poorer wealth effect, which is one of the key factors attracting hundreds of thousands of users to FT.
Over the last few days, many prominent users, including NFT influencer Vombatus_eth, whose key was formerly the most expensive on the platform, sold 176 of his own keys for over 850 ETH ($1.5M)
And seems to have been moved on New Bitcoin City
New Bitcoin City
NewBitcoinCity uses a fractionalized key system where you can buy keys in as little as 0.1 denominations.
Instead of needing 1 whole key of your favorite influencer, the influencer can setup a threshold (lower or higher) that is required to access your content and DM you.
So, you don’t need to pay potentially thousands of dollars to gain access to the top influencers, with NBC you can do it for a fraction of the price.
NBC has seen around $1M in inflows over the past day, pushing its TVL above $3M, according to DeFillama.
NBC takes native $BTC, but it also takes $AVAX on Avalanche and $ETH from both Ethereum mainnet and Base.
It does not require deposits or e-mail use, considering that a lot of FT users have gotten simswapped and hacked.
Friendtech led the narrative, essentially inventing the foundation of “Fi” in “SocialFi” by connecting asset issuance and trading to complete the final closed loop of SocialFi.
Introducing an innovative background technology
For FT and most copycats, Keys represent the personal brand or reputation of KOLs, but this does not mean SocialFi is limited to this.
An example could be Chainchat
That leverages your wallet address instead of your Twitter account using this bonding curve👇
Fantech
Other projects trying to reduce the volatility by adding liquidity like Fantech
Whose fee distribution includes 1% in liquidity, which helps keep the price of keys more stable.
Even if it is still based on FT, shows how any asset can be loaded into Keys, and extend the concept of tokenized assets into social media.
Web2 Concepts in SocialFi
Songtech is trying with Spotify but it does not seem to be getting PMF.
Showtime_xyz has launched its music artist market.
Other noteworthy SocialFi protocols worth mentioning
Friendzygg_
PostTechSoFi
cipher_cores
Now that the bullmarket euphoria is back, anything goes, but we might not see peak user activity in SocialFi platforms as compared peak market boredom.
The above are simply my 2cents on SocialFi and it’s current state. Let me know what you think.
That's all I have for you!
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