AMA Recap: SocialFi, What’s Now & Next
SocialFi has taken the spotlight in Q2 and Q3, witnessing a surge in users; however, there’s been a noticeable decline in user activity over the past month. Social media platforms have revolutionized the internet as we know it today, yet its centralized nature creates some drawbacks. On the other hand, SocialFi platforms attempt to empower content creators by giving them control over their data, and allowing them to directly interact with their user.
To gain mass adoption, SocialFi platforms will need to overcome two challenges - scalability and economic sustainability. As scalability solutions are becoming more available, how are SocialFi platforms creating tooling that enable content creation and connections, and how do they plan on monetizing for long term growth?
We hosted an AMA to discuss this with Binance Labs portfolio and Incubation S6 founders: Ryan L., Co-Founder & CTO of CyberConnect; Stella, Co-Founder of NFPrompt; and Kane, CEO of QnA3, and Lauren C., Founder of CryptoCafe. To listen to the full discussion on SocialFi: What’s Now & Next, click here, or have a look at a snippet of our conversation below.
Capturing users and continuing the SocialFi narrative
Ryan, CyberConnect: We haven’t seen hype in the crypto space around any projects like we did recently with SocialFi projects for a while. It's an interesting social experiment and exciting to see projects finding the intersection between connecting with people, and monetization which falls under our thesis. I think when people look for utilities from any social app, it's either their social status, so they get utility from being connected to people and get a higher social status, or then it's the financial utility. So many of the users I see on SocialFi platforms are really just seeking financial returns, and providing the value of a social network may not really come to their consideration.
At CyberConnect, we take a more conservative approach or what we think hopefully, should be a long term approach when we design our product and as well as our protocol. We have a product called Link3 that's been connecting users, specifically Web3 professionals and we give them the opportunity to network, think of it as a Web3 LinkedIn. We don't charge on a service basis but we do charge on like a premium status with the option to either opt in for a free name or the compiled name.
Web2 does have a larger user base but we’ve seen that the average spending of Web3 users’ is higher than what could have been for them on an ads-based social network. Traditional financial services users cost $50-100 to acquire but their equivalent self on Web3 social is maybe $10-20. We've seen some early signs with Cyber Connect's users on ID, where the user pays about $10 and with the wallet that we are building, we've seen traction where those users start to use more financial services with the addition of incentives that aim to lower user acquisition costs.
We’re now launching a wallet utilizing ERC-4333 account abstraction that serves as a better way to onboard Web2 users with less friction. Our approach is to bring these users on to Web3 through a social app, while also exploring other applications within Web3. You can think of it as an education for more users to understand the mechanism for trading, and even connecting with people.
Capturing creators with easy-to-use tooling to connect with fans
Stella, NFPrompt: Observing the momentum that was built up in the sector, we think it proves a few things with top influencers as key strategy. From an influencer perspective, which is similar to what NFP offers where we connect creators and influencers together, we think influencers are really great at bootstrapping a platform and they can be leveraged directly.
The other thing we've observed is that influencers have a real pain point and the need to interact with their fans in a very simple and intimate way. Successful applications have provided tools that are very easy to get influencers directly connected with their fans. So it saves them from all the pain of issuing their own tokens, and the tedious operations they would have to go through. At NFP we aim to provide very easy to use tools for influencers and creators to provide their community members more value over time.
The other thing to mention is around SocialFi keys, which is a use case similar to NFT Passes where we essentially see platforms enabling users to buy and sell club membership NFTs with a bonding pricing curve. This is different from normal NFTs where sellers have to wait for a buyer to get liquidity. We view it as an innovative way to help creators, collectors, and influencers to get more liquidity on the platform.
Tiering & access controls for enhanced services
Kane, QnA3: Our educational platform goes beyond simply asking and answering questions. We aim for our users to earn more by applying the knowledge gained by our platform. That's why we have introduced the social trading feature. We are integrating a Telegram bot into our Telegram group, allowing users to engage in trading directly through the bot in which you can purchase any token by our bot in your group. We also have an Ambassador program to encourage our user platform as an ambassador to directly reach users and grow their influence. Our Ambassador program rewards you by expanding your network by offering credits for introducing our products and asking engaging questions with earned credits for both the referrer and referee.
At QnA3, access controls enable us to provide a tailored experience to users. On our education platform a standard lifetime user is able to ask up to 1,000 questions at no cost. This cap is generally adequate for individual users however, users and organizations who oversee large communities have needs that far exceed this quota.
In these cases we offer specialized subscription plans for power users. This premium offering will not only provide them with an extended quota of questions on our platform, but also include enhanced features such as the ability to integrate our service onto their Telegram groups. This tiered structure ensures that individual users continue to enjoy free access and larger community leaders or organizations are able to access services based on their usage needs. It's a balanced approach that aligns with our commitments to accessibility and scalability.
Stella, NFPrompt: Tiering for access to different levels of services is a very common business practice in Web2 and Web3. From the early stages of launching NFP, we already see different user cohorts emerging such as we saw top creators that create more than 10 NFTs every day, and also long tailed creators that create once a month. We've started defining different tiers within the platform to recognize different cohorts of creators so that we can actually provide them different services and they get different benefits as being part of those tiered groups.
One example is a role called Profit, where all the first prize winners of each theme campaign are part of that group that will have early access to product testing product features. It’s a very good social group for folks to interact and help each other with prompt engineering and creations as well. We also have a different cohort called Arty Talent which are users that win prizes 2 to 9 in each of the theme campaigns that are posted for different creation contests - they have different tiers of benefits.
Looking forward, we want to bring more tiered access for creators and KOLs directly onto the NFP platform. We’re seeing KOLs want to monetize their influence with a lot of the exclusive content and creations that they can share, while their members and fans also want to invest early on those communities so that they can be invested in the success of the creator. Introducing more tiers can also enable KOLs to be more invested in the success of the overall NFP platform.
Exploring monetization for SocialFi platforms
Stella, NFPrompt: We have three different types of revenue and ways to monetize. The primary way is to monetize from the brand campaigns which are essentially coming from projects or clients, from a marketing perspective. We also monetize from our users through collecting mint fees and transaction fees. Although we do believe that because we want to dramatically lower the barriers to make sure this is as easy and simple for our users to use, so they can monetize at the same time.
We want to use the utilities and value that we provide to our brands to monetize, and then use that to supercharge the creation process. Talking a bit more on the campaign side, if you’re a Web3 project or Web2 brand, you can easily promote your project on our platform in the form of theme campaigns. So this is a place where users can engage in creating your logos or your content that best represent your brand. With these campaigns, in the past few months our users have created 10,000 artworks for over 40 projects, bringing value by enabling brands to be closer to their actual users and co-create their brand images. Through this process an NFP charges a platform fee for those projects to host the theme campaigns, and the price of the campaign itself is then redistributed back to participants of the campaign. We think that there is real value that we can provide in the Web3 forum to our users through marketing and other ways to make sure that users are engaging and having fun, and we're providing actual utilities and values to those brands.
Kane, QnA3: As previously mentioned, we offer users a premium offering which enables the ability for communities to integrate our trading assistant functions in the form of a Telegram bot onto any Telegram group.
We’re also in discussion with various projects to explore advertising services, particularly through a format we call Sponsored Questions during our opBNB AirDrop campaign with the criteria based on providing questions related to opBNB. We’ve sparked interest from several projects who reached out to us with the intention of using guided questions for promotional purposes. This approach not only generates revenue for our platform but also offers an efficient marketing channel for our partners. Through such mutually beneficial collaborations, we are able to provide valuable content to our users while diversifying our income sources.
The above is a snippet of our conversation with CyberConnect, NFPrompt, QnA3 and CryptoCafe. Check out the recording for the full discussion: Twitter Spaces
Disclaimer: The content on this article has been prepared solely for informative purposes and should not be the basis for making investment decisions or be construed as a recommendation to engage in investment transactions or be taken to suggest an investment strategy in respect of any financial instruments or the issuers thereof.