At DWF Ventures, we are optimistic about the future of SocialFi, despite the challenges that lie ahead. Earlier, we elaborated on the potential of SocialFi for solving the flaws of popular social networks created in the Web2 era. In addition, we covered the decentralised social networks (DeSoc) and the corresponding protocols, specifically Lens Protocol and Farcaster.
The launch of FriendTech in 2023 was a turning point for the development of the SocialFi sector. By 2024, the pace of innovation in this space had been expedited, with many new breakout applications emerging and changing the way social interactions and financial incentives intertwine. DWF Ventures analysed some of the top candidates for disrupting SocialFi in the next months.
What is SocialFi?
SocialFi, a term combining “social” and “finance,” connects users within the blockchain ecosystem by merging community engagement with financial incentives. SocialFi protocols often drive user activity through mechanisms such as speculation and rewards.
Broadly, SocialFi projects can be categorised into those driven by financial incentives, those focused on delivering utility, and those centered on infrastructure development. Each category plays a unique role in the ecosystem, but financially-driven protocols like FriendTech have gained particular attention due to their explosive growth.
Financially-Driven Protocols
Financially-driven protocols like FriendTech have gained particular attention due to their popularity. FriendTech exemplifies a component of economic incentives in social interaction by allowing creators to monetise their content and earn a share of the platform’s fees. Its success in 2023 and continued momentum in 2024 were largely due to innovative techniques such as points systems, bonding curves, and referral mechanisms.
These approaches not only fueled virality but also encouraged retention among users. By 2024, FriendTech had solidified its place in the SocialFi landscape, with approximately 20,000 key holders actively engaging daily. This level of activity demonstrated the potential of SocialFi protocols to create sustainable ecosystems that go beyond traditional social platforms.
A notable example from 2024 was Fantasy Top, which added a gamified dimension to SocialFi through features like cards and tournaments. Launched in May 2024, Fantasy Top outperformed expectations, generating over $10.29 million in fees within its first ten days, compared to FriendTech’s $4.22 million over the same timeframe. Both platforms illustrated the ability of SocialFi to not only drive user adoption but also generate substantial revenue.
Utility-Driven SocialFi Protocols
In particular, utility-driven SocialFi protocols stand out for their focus on accessibility and functional value. Unlike financially-driven models, these protocols typically require less upfront capital and prioritise user-centric use cases.
For instance, beyond crypto-enabled use cases like token-gated chats and identity verification, we are excited about protocols challenging traditional platforms. A notable example is Infomon, which decentralises algorithms through a gamified experience. Users interact with AI pets that train their personal algorithms by “feeding” them tweets. This innovative approach surfaces better content for each user, reduces noise, and boosts visibility for small creators.
Similarly, 0xPPL redefines the “social” experience for crypto natives by merging traditional social aspects with on-chain data, presented in an intuitive social feed. This unique blend enhances readability and makes on-chain actions more accessible, creating a bridge between decentralised technology and familiar user experiences.
Infrastructure-Driven Protocols
Infrastructure forms the backbone of the SocialFi ecosystem, enabling seamless interactions and fostering growth. Protocols like Farcaster and Lens Protocol have laid the groundwork for development in the SocialFi space. For example, Farcaster’s “Frames” feature, launched in February 2024, captured the attention of the crypto community with over 20,000 daily active users shortly after launch. These frameworks have enabled the creation of enhanced use cases and inspired a new wave of builders.
As the number of SocialFi networks grows, interoperability has become increasingly important. Tools like Tako Protocol’s SDK enable builders to achieve cross-network content curation and monetisation. Other crypto projects such as Jamfrens are leveraging Tako to create creative, social-network-agnostic applications that further enrich the ecosystem.
Challenges and Future Outlook
Despite its limited success, the SocialFi sector faced significant challenges in 2024. A key issue was the increasing barriers to entry as user bases grew. While initial accessibility drove adoption, rising costs for new participants often deterred long-term engagement. Additionally, users remained hyper-focused on airdrops and short-term rewards, prioritising immediate returns over the platform's intrinsic value. This speculative behavior raises questions about sustainability and whether financial incentives alone could maintain user interest.
The future of SocialFi will depend on its ability to address these challenges. Sustained growth will require a shift from speculative models toward ecosystems that deliver tangible utility and lasting value. We anticipate the rise of more diverse applications blending social functionality with innovative financial incentives, along with strategies aimed at fostering long-term engagement and retention.
Conclusion
New user-faced protocols like FriendTech and Fantasy Top showcased the immense potential of SocialFi in 2024, while utility and infrastructure-driven projects, including Infomon and Farcaster, highlighted the importance of accessibility and interoperability for a new generation of social networking solutions.
The focus of SocialFi is expected to shift toward the building of ecosystems that balance financial incentives with long-term value, paving the way for a more robust and inclusive future in blockchain-based social networks and its interactions.
At DWF Ventures, we remain enthusiastic about SocialFi. If you’re working on something interesting in this space, connect with DWF Ventures to discuss potential opportunities.