SocialFi, web3, and UX: Cracking the trillion dollar creator economy

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SocialFi is an initiative from the web3 industry to solve the problem of monetizing digital content that affects millions of talented content creators worldwide.

From the perspective of everyday users, it can be hard to see creators struggling. However, despite producing quality content on a daily basis, the overwhelming majority are not making any money. Over the last few years, many SocialFi projects have been launched that aim to solve this monetization part by rewarding every digital interaction for both creators and users. Unfortunately, most seem to miss the mark by leaning too heavily on aspects of decentralization instead of providing real-world solutions to existing problems.

The mass interest in this space had its roots during the pandemic lockdowns. As the idea of ​​building a passion-based career became more mainstream, the future of social monetization was catapulted into a new phase of growth. This was also a time when the crypto industry was experiencing a massive influx of retail investors and industry narratives shifted toward building pragmatic, real-world solutions. This led to significant progress in the SocialFi movement, and much has been accomplished since then in terms of on-chain innovation, tokenized community management, the integration of NFTs, and other DeFi products that truly bridge the gaps around creative monetization and user rewards.

Yet, as an industry that claims to be the future of the trillion-dollar creative and freelance economy, SocialFi tokens have a modest market cap of just over $2 billion. This shows that the industry has a long way to go to establish itself in a global financial ecosystem. Compare that to the market cap of DeFi (around $70 billion) or even NFTs (around $62 billion), and it’s clear that SocialFi has a long way to go.

Fortunately, there are signs that SocialFi platforms and the utility tokens that support them have a bright future. This is evident in the significant number of new users eager to join a newly launched SocialFi platform. Of course, many of these users are only there for the free rewards, but whether they like it or not, this is the current norm for web3.

Benefits of SocialFi

To capitalize on this early user traction, developers at SocialFi must be honest with themselves when designing a product. The truth is that very few content creators care about (or benefit from) decentralized content ownership or on-chain proof of IP rights. Despite this being a widely marketed USP on web3, it only benefits the top 1% of famous content creators in the world.

What about the masses? What USP will win their attention and loyalty? The answer lies in the solution to how SocialFi platforms can finally gain market share from Big Tech platforms, and at the heart of that is building hybrid ecosystems. This means combining blockchain features (like tokenization) with non-blockchain architecture to provide an intuitive and seamless user experience for the masses.

While DeFi and blockchain technologies have several clear benefits and values, mass adoption will not happen if web2 users have to overcome the web3 wall of creating a digital wallet, storing a 20-word starter sentence, and interacting with an unfamiliar user experience. If creating an account is harder than starting an Instagram account, you have already lost 95% of potential users. From a user experience perspective, people cannot be held back by the intimidating web3 gates.

Appealing to the masses

Winners in this space will focus on narrative that resonates with the masses, building a community of real creators, empowering them with web3 education, and implementing real-world token utility into a seamless user experience. This is the formula for SocialFi’s success.

There’s no doubt that the SocialFi community is grappling with these challenges, and 2024 remains a critical year for projects in this space. The current wave of innovation is the most exciting, as projects are introducing user-centric features that focus on user experience and enhance the value that traditional platforms already create for the creative community. Tokens are important, but they should exist as a secondary driver of growth and not just as a medium to enhance the user experience. This awareness will shape the industry moving forward.

Dave Catudal

Lyvely co-founder Dave Catudal is a successful entrepreneur in the technology and wellness space with an extensive background in product innovation and e-commerce. Known as the founder of several successful wellness startups, Dave is building the future of SocialFi at Lyvely, integrating aspects of web3 to deliver transparent monetization and engagement tools for the creative and freelance economy. Dave previously founded one of the fastest growing D2C health supplement brands in the GCC region. He also holds a patent for the best-selling fitness tool and online program in the US.