Financialization is becoming the core user experience of SocialFi

Successful social games in the Web3 era will be platforms with a clearly defined social experience and leveraging the financial power of cryptographic primitives.

**Written by: **Mason Nystrom

Compile: DKT

Successful social games in the Web3 era will be platforms with a clearly defined social experience and leveraging the financial power of cryptographic primitives.

The best social apps are those that allow users to feel like an immersive game. The current goal of encrypted social applications is to strive to be a replica of Twitter, Discord or Instagram, but with NFT, open data and built-in wallets.

It is undeniable that NFT with its own username, content and digital assets will become the cornerstone of the next social application. However, ** social applications will not be successful if they simply mimic existing products. **

Crypto apps that build new and engaging social experiences should capitalize on one characteristic: financialization. After all, crypto’s original killer app remains internet-based financial architecture and permissionless coordination of capital.

The next killer crypto social app will have financialization as a core component of its user experience. While a world of social media financialization may sound like a dystopia to many, I think social media is already financializing in indirect ways. On social media, everyone is participating in what Packy McCormick calls the “Great Online Game,” a competition to build social capital and turn it into real capital. Every time you log in, choose to play this game, either as an active participant or as a passive consumer enjoying its benefits as entertainment.

By playing social games well, anyone can build significant social capital. To a certain extent, social capital has equalized and facilitated, enabling individuals from unqualified backgrounds to amplify their voices. Social networking provides a more merit-oriented mechanism for talented and eager individuals to achieve success in obscurity.

The means of monetizing social capital vary from network to network. Some of these tie compensation directly to social capital: YouTube, TikTok, and Spotify, for example, pay users directly as their subscribers, views, and traffic grow. Other social networks such as Twitter, Substack, Instagram, Facebook, and Snapchat provide means for users to distribute and leave monetization at the discretion of the individual through additional features such as advertising, affiliate marketing, and sponsorships.

The future of social games and economies will provide users with ownership opportunities and more immediate monetization mechanisms built around unique experiences. Decentralized storage protocols such as Nostr, users subscribe, distribute and incentivize content through Relay, guaranteeing user ownership and resistance to censorship. Currently social media Damus and long content curator media YakiHonne.com have achieved the above functions. Open social graphs like Lens have already facilitated over $6.2 million in economic activity through trading and collecting NFTs of user media. Similarly, Link3 is a Web3 social platform built on the open social graph Cyberconnect, enabling users to buy and own their social profiles.

Building the next great social game

It's hard to predict what the next cryptocurrency social app will look like, but here are some imaginative SocialFi actions and experiences:

• Multi-person capital coordination schemes, such as NFT's group buying combined with social experience, as we have seen in experiments such as Forum, Lore and Sail.
• Social games based on permissionless capital coordination through InvestmentDAOs, Juicebox, ConstitutionDAO, and more.
• Federated social experiences within permissionless social networks - permissionless social graphs can have subgroups formed based on token-gated interest graphs, on-chain credentials, social financial games.
• Enhance the discovery experience by providing curators with better platform incentives and monetization tools.
• An on-chain experience that provides social status and enhanced content (e.g. Sound.xyz music NFT purchases require signatures and reviews of songs).
• A new live streaming delivery format utilizing programmable content, tokenized assets and creator tokens.
• Dynamic NFTs that can be downgraded (such as Stepn) or upgraded (such as ERC 6551) and provide unique privileges in the network.
• New cryptoeconomic mechanisms and business models, including on-chain micropayments and competitive minting, such as Stealcam. Platforms can also offer creator rewards tied to in-app economic activity such as licensing.

The game of building and monetizing social capital online is evolving

Many of the most successful Web2 social media applications started as useful tools or applications with a specific purpose, with a specific social experience. Originally known as Burbn, Instagram is a location-based check-in service with a photo feature. Twitter's original 140-character content format limit was not set by Twitter, but because the platform was built on the transmission of text messages. However, this short message format resulted in unexpected user behaviors such as threads, retweets, hashtags, and @replies. Facebook began as a closed network exclusively for college students, but grew into a global social layer and marketplace that facilitated billions in transactions. In other words, the social experiences of these platforms started out as focused and limited, but eventually evolved into larger social platforms.

Similarly, successful social games in the Web3 era will be platforms with a clearly defined social experience and leveraging the financial power of cryptographic primitives.