What Is SocialFi and Why Does It Matter? 

Prison Professors Masterclass Digital Economy: Lesson 12: Binance BNB

Lesson 24: What Is SocialFi and Why Does It Matter?

Lesson Intro:

The world’s largest crypto exchange, Binance, entered into a collaboration agreement with our nonprofit, the Prison Professors Charitable Corporation. With this collaboration, we’re able to provide justice-impacted people with a great resource they can use to learn about cryptocurrency, decentralized finance (DeFi), Web3.0, Artificial Intelligence, and other topics that relate to the digital economy. The agreement is part of our nonprofit’s ongoing efforts to help people prepare for success after prison.

Some people have access to our videos, others do not. If a staff member in your prison will authorize videos, invite them to contact Prison Professors for information on how we can send DVDs with additional educational materials to help people learn–and potentially an in-person presentation in your facility.

Each lesson includes critical thinking questions and a glossary. We encourage participants to use these lessons, and to memorialize their learning path by building a profile on Prison Professors Talent. More information on how to build a personal profile at the end of this workbook.

24. What Is SocialFi and Why Does It Matter?


  • SocialFi combines the principles of decentralized finance with social media. It empowers content creators by giving them control over their data and allowing them to directly interact with their users.
  • Core features include tokenized social capital, blockchain-based data storage, and governance via decentralized autonomous organizations (DAOs).
  • To gain mass adoption, SocialFi platforms must overcome two major challenges – scalability and economic sustainability.
  • The overarching promise of SocialFi is a more transparent, equitable, and user-centric digital social media landscape.

Web3 and Social Media

At its core, Web3 aims to return data ownership and sovereignty to users instead of centralized corporations. This shift in ideology has already impacted sectors such as cross-border payments and finance. However, this shift from Web2 to Web3 could be game-changing in social media. Imagine a social media platform where users:

  • Have greater control over their data with a central organization acting as a mediator.
  • Can save fees since they don’t need an intermediary to process transactions.

These ideas are the roots of SocialFi – the “Web3 version” of a social networking platform.

What Is SocialFi?

SocialFi is a portmanteau of “social media” and “finance”. The basic principle is to allow users to interact with each other on a social media platform, wherein the interactions themselves are monetized. Think of how Patreon works. As a content creator, you can restrict access to your content to paying users. SocialFi users work on the same principles except for one significant difference – content creators can directly interact with their users without going through a centralized intermediary. Here are some elements of a SocialFi platform:

  • Digital ownership of exclusive content is determined by NFTs.
  • Decentralized autonomous organizations (DAOs) are responsible for protocol governance.

SocialFi vs DeSoc

SocialFi and Decentralized Social Networks (DeSoc) certainly share many commonalities, but they diverge on a key point. SocialFi centers on monetizing social interactions, much like the difference between Patreon and Instagram. While both platforms host content and engage audiences, the primary intent behind each is distinct: one emphasizes monetary transactions, and the other social connections.

Why Is SocialFi Needed?

Social media has profoundly changed how we communicate, share, and monetize our interactions. However, current Web2 platforms fall short of truly empowering individuals. They centralize control, dilute individual brand value, and raise questions about censorship, privacy, and data monetization.

SocialFi is deeply entrenched in the core values and principles of Web3. It redefines online social interactions by introducing social tokens tied to individual brand value. No longer are users passive participants in a platform’s revenue model; instead, they can tangibly monetize their influence, engagements, and content. This tokenization shifts the balance of power, placing control and value in the hands of individual contributors rather than centralized entities. “Social Capital” is no longer an abstract metric. With social tokens, your social capital can now be actually calculated and worked with.

SocialFi bridges the gap between personal branding, content creation, and commerce in a decentralized digital age. It promises a more equitable, transparent, and empowering social ecosystem where individuals are recognized, rewarded, and have agency over their online presence and interactions.

Beyond monetization, SocialFi addresses the ongoing tension between freedom of speech and censorship. By promoting decentralized curation, content moderation becomes a collective responsibility, democratizing the process and reducing potential biases of centralized systems.

Trending SocialFi Projects

Let’s go through some popular SocialFi projects.

  • Friend.tech (BASE)
    • Friend.tech is a novel decentralized app on Base, enabling creators to capitalize on their content through social tokens. The unique “Keys” system, symbolic of shares, offers exclusive access to a creator’s private chats and other unique perks. As Friend.tech evolves, it promises to revolutionize creator-community interactions, though due diligence is essential given its nascent stage. Friend.tech can be considered the biggest SocialFi project currently, purely based on the amount of hype they have generated.
  • Stars Arena (Avalanche)
    • Stars Arena, a Web3 platform on the Avalanche network, allows users to monetize their content by linking their X accounts and trading via AVAX. Being a Friend.tech fork, Stars Arena also lets influencers monetize their fan base by offering exclusive content. Despite its rising popularity, Stars Arena hasn’t been without challenges. An exploit earlier this week resulted in a $3,000,000 loss, though the issue has reportedly been addressed. 

What Are the Benefits of SocialFi?

Here are some of the pros of SocialFi.

  • Decentralized storage: All data in SocialFi is stored on the blockchain. This ensures that your data won’t get misused by a centralized entity. This significantly reduces risks associated with personal data leakage and potential misuse.
  • Token rewards: Both content creators and regular users can earn token rewards for engagement and content sharing.
  • Tokenizing attention: Users are incentivized to produce high-quality content that generates attention and interactions.
  • Content ownership: Users retain ownership rights to their content, addressing concerns about losing rights to materials they upload. 
  • Deplatforming protection: Since governance is handled by a DAO, there are fewer concerns of sudden deplatforming due to the whims of a single entity.
  • Freedom of speech: By mitigating censorship concerns, SocialFi platforms can become vital tools for upholding freedom of expression and data protection.

What Are the Challenges of SocialFi?

Here are some obstacles that could prevent the mass adoption of SocialFi applications.

  1. Scalability
    • Social media platforms like Facebook and X have invested millions of dollars in servers and databases that could handle humongous amounts of data. Facebook deals with millions of comments, statuses, and photo uploads, generating about 4 Petabytes of data daily. So, how can Web3 social media applications handle this much data without centralized intervention? To tackle this issue, developers are experimenting with various scalability techniques like sharding and off-chain storage.
  2. Sustainability
    • To gain a large amount of users, SocialFi platforms have offered tantalizing token rewards, which are unsustainable in the long run. While the idea of tokenizing social capital is highly innovative, the fact remains that the value of these tokens is still linked to the influencer’s actions. For example, a negative post by an influencer could tank the value of their associated social tokens, potentially creating a negative feedback loop.

Closing Thoughts 

SocialFi represents a transformative shift in the social media landscape, merging the principles of decentralized finance with social networking. At its heart, it seeks to empower users, giving them control over their data, ensuring true content ownership, and providing avenues for direct monetization without intermediaries. While platforms like Friend.tech and Stars Arena are pioneering this movement, the journey has challenges. Scalability concerns in the decentralized domain and the sustainability of the economic models are pertinent issues. Nonetheless, SocialFi’s promise of a more equitable and transparent digital social space where users can genuinely capitalize on their social capital signals an exciting evolution in how we perceive and engage in online social interactions.

Further Reading

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Critical Thinking

  1. How might the decentralization principles of SocialFi impact traditional social media platforms’ control over user data and content? Discuss the potential benefits and drawbacks of this shift.
  2. What challenges do scalability and sustainability present for the adoption of SocialFi platforms, and how could developers address these issues to ensure long-term viability?
  3. In what ways can tokenizing social interactions and content ownership empower individuals, and how might this change the dynamics of online communities and personal branding?
  4. Considering the balance between freedom of speech and censorship, how could decentralized content moderation through DAOs improve or complicate the process of maintaining respectful and safe online environments?
  5. How do the economic models of SocialFi platforms like Friend.tech and Stars Arena create opportunities and risks for content creators and users? Reflect on the potential economic and social implications of these models.

Advocacy Initiative:

We encourage participants to begin memorializing the ways they are using time in prison to prepare for success upon release. I encourage participants to create a personal profile by:

  1. Writing a simple biography
  2. Writing a daily journal to show all that you’re learning
  3. Writing book reports that memorialize the books you read
  4. Writing a release plan to show the ways you’re preparing for success upon release

These strategies helped me immensely once I got out. By using my time wisely inside, I was able to raise capital, build businesses, and succeed in ways that few people would think are possible for someone who served multiple decades in prison. Anyone can do the same—if they prepare first.

If you’d like to follow in the same footsteps, I encourage you to begin building your personal profile. Get started by sending an email message to our team at:

Prison Professors Talent
[email protected]
32565 Golden Lantern, B-1026
Dana Point, CA 92629

Our interns will accept your email invite. You may then send the interns a message such as:

Dear Interns,  

My name is xxx, and I am in prison. I would like to begin showing the strategies I am using to prepare for success upon release. Please send me a Release Plan Workbook, and any other books that will help me prepare for the job market. After receiving those workbooks, I will begin building my profile to show others how I am using my time inside to prepare for success outside.  


  • Algorithm (noun): A step-by-step procedure or formula for solving a problem or performing a task.
  • Bitcoin (noun): A decentralized digital currency that uses cryptography for secure transactions on a blockchain.
  • Block (noun): A unit of data containing transaction information, which is added to a blockchain.
  • Blockchain (noun): A decentralized digital ledger that securely records transaction data across many specialized computers on the network.
  • Collision (noun): The occurrence when two different inputs produce the same hash output.
  • Cryptographic Hash Function (noun): A hash function that uses cryptographic techniques to ensure data integrity and security.
  • Data Integrity (noun): The accuracy and consistency of data over its lifecycle.
  • Deterministic (adjective): Producing the same output from the same input every time.
  • Hash (noun): The fixed-size output generated from input data using a hash function.
  • Hash Function (noun): A mathematical formula that converts input data into a fixed-size output (hash).
  • Hash Rate (noun): The measure of computational power used in cryptocurrency mining.
  • Immutability (noun): The characteristic of being unchangeable once recorded.
  • Merkle Tree (noun): A data structure used in blockchain to efficiently verify the integrity of data.
  • Mining (noun): The process of performing complex calculations to validate transactions and add them to a blockchain.
  • One-way Function (noun): A function that is easy to compute in one direction but difficult to reverse.
  • Output Size (noun): The fixed size of the hash produced by a specific hash function.
  • Preimage (noun): The original input data that is hashed to produce a specific hash.
  • Resistance (noun): The difficulty of performing a certain action, such as reversing a hash function.
  • SHA-256 (noun): A cryptographic hash function that produces a 256-bit hash, used in Bitcoin.
  • Zero (noun): The leading character in a hash that meets the difficulty criteria in Bitcoin mining.

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