Playing with coins is about playing with attention, and crypto products are gradually leaning towards SocialFi

Author: MASON NYSTROM

Compiled by: Deep Tide TechFlow

The internet is a market of attention, and the competition for attention is rapidly intensifying. Cryptocurrency has brought a new chapter to the attention economy by providing a more efficient mechanism for valuing attention through ownable attention assets (such as content, social graphs, memes, algorithms, and platform social activities).

However, cryptocurrency not only changes the value of attention but also has the potential to change the ownership of that value.

In 2016, Tim Wu introduced the concept of "attention merchants," describing how publishers and platforms profit from users' attention. Cryptocurrency opens a new avenue for users to become their own attention merchants, reclaiming the value of attention by owning attention assets.

The most notable example of this trend is in SocialFi (social finance), where users can own attention traffic from assets like memecoins, influencer access keys, and content. By allowing users to directly participate in attention-based assets, SocialFi platforms challenge the traditional power structures of the attention economy, transforming users from passive consumers into active participants, becoming the new attention merchants.

The Frontier of SocialFi

SocialFi is gradually becoming an important category within Web3. Cryptocurrency social networks like Farcaster are rapidly developing, with daily active users exceeding 75,000. Telegram bots that combine group messaging and transactions facilitated billions of dollars in transaction volume. Meanwhile, information markets are evolving towards financialized social graphs (such as Twitter's Trends.market, Fantasy.top, and Farcaster's Swaye, Perl, Arrina).

While not all social platforms come with financial incentives, SocialFi represents an evolution from indirectly assessing social capital to more efficiently evaluating social and attention assets. As a socio-economic technology, cryptocurrency enables social applications to add other financialized elements (such as asset trading) or integrate financial primitives natively at the application layer (like Friendtech binding curves). The SocialFi trend is driven by consumers' strong demand for owning and trading attention assets. Users choose to spend time on applications that can generate income based on their attention or enhance their social entertainment experience through financial games.

For example, Fantasy is a fantasy sports trading card game and information market built on the X (formerly Twitter) social graph. Fantasy allows creators to monetize their social media presence while enabling players to earn rewards based on their intuition and understanding of certain social accounts. Elsewhere, new social networks like Friendtech, Unlonley, and Sanko allow creators to directly monetize their social interactions through chat access passes. This benefits early users who purchase access passes, rewarding them for allocating attention to undervalued creators and communities.

The core benefit of new information markets and social networks is that creators and users are now attention merchants, owning attention assets within these applications and monetizing attention through their usage.

Many applications have responded to users' desires to embed commerce and finance into social experiences:

• Messaging → Trading within messages

• Gaming → Ownable assets and real-money in-game economies

• Social → Ownable social graphs, channels, content, and platforms

• Memes → Scene coins and derivative meme assets

• Information markets → New markets for social entertainment, influencers, and social capital

• Exchanges → Issuing new protocols based on social and attention assets

Over the past year, the SocialFi ecosystem has rapidly grown, with attention asset exchanges (such as memecoin protocols), PvP (player versus player) social games, new forms of information markets, and financialized social network companies emerging in large numbers. The driving force behind this expansion is the maturation of crypto infrastructure in terms of scalability and usability, supporting new types of consumer experiences (like mobile PWAs), cheaper transactions (like L2), and faster application iteration cycles enabled by improved development tools (such as account abstraction and wallet-as-a-service tools).

Social Networks

Social networks can be broadly categorized into two types and their respective creator monetization models: one-way and two-way.

• One-way networks are platforms where there is a one-sided relationship between creators and fans. This one-sided relationship often comes with direct monetization models, such as subscriptions (e.g., Substack, OnlyFans, Patreon) or sharing direct advertising revenue with creators (e.g., YouTube, TikTok).

• Two-way networks are platforms where there is a two-sided relationship between creators and fans (e.g., Twitter, Reddit, Facebook, Snapchat). Two-way social networks allow users to monetize by spreading content rather than restricting its dissemination, such as through token-gated access (e.g., influencer-gated chats). Web2 two-way networks like Twitter and LinkedIn have historically made it more difficult for creators to directly monetize their influence. Instead, creators have had to adopt strategies such as affiliate programs, directing users to other monetized sites (e.g., Twitter → Substack), or promotional campaigns.

By redefining users as new attention merchants, SocialFi provides a variety of new monetization options for both types of social networks. One-way networks enable creators to further monetize their top-tier audiences through tokenized content, influencer access, time-limited rewards, or social status. One-way networks like Drakula and Friendtech have tokenized content and creators, allowing top creators to earn revenue from transaction volume. Sofamon showcases an example of a token model where users can gradually purchase an aesthetic item (like avatar clothing) until they own the entire item, which they can then wear.

Web3 social networks offer new monetization options. For instance, monetization of usernames and namespaces can generate revenue for valuable namespaces that scale to millions of users. Additionally, two-way social networks can better leverage in-app transactions. This can manifest as markets within social networks, channel storefronts, or in-app games.

The key difference between Web3 two-way networks and Web2 social networks is the new attention merchants—users and creators—who will be able to profit more from their activities. For example, imagine if moderators of Reddit subreddits could own their channels, earning revenue based on the ads they display or earning a share of the revenue from transactions through their channels due to the communities they manage.

PvP Social Games

With the maturation of consumer infrastructure, PvP (player versus player) social games are entering a new phase of development. Notably, a wave of "Survivor"-style competition games has emerged, such as Crypto The Game and Blessed Burgers, offering users a new digital-native and highly social gaming experience to earn rewards. Other applications, like Rug.fun or PvPWorld, provide game-theory strategy games where users can collaborate with others to win prizes. In contrast, in Web2, most mobile games monetize attention through traditional advertising or offer users the option to pay to skip cooldown periods. Game developers now have new business models, with social games becoming more like content, where developers release multiple short-term applications that provide shortened gaming cycles, allowing users to earn significant rewards during participation before moving on to the next game.

New types of social games should focus on the following optimizations: multiple winners, which can increase engagement; easy-to-learn games that make ordinary users feel they have a high chance of winning; and social interaction, which further enhances the virality of these games. These proposed game dynamics have more incentive consistency than web3 games, which have historically leaned towards pay-to-win types or farm-first rather than fun-first games.

New Markets and Exchanges

The primary use cases for cryptocurrency revolve around market creation, particularly issuing new asset classes, on-chain existing assets, or expanding access to digital-native assets.

• Information markets—Information markets like Polymarket have the potential to establish more efficient political markets and support the creation of new event markets based on real-world events, culture, and commerce.

• Attention exchanges—Publishing platforms like Pump and Ape.store allow users to create new assets (like memecoins) based on the characteristic of attention. Elsewhere, Sofaman tokenizes status and culture by allowing users to create a Telegram-based digital avatar and sell branded clothing on a binding curve.

• Telegram bots—Telegram bots bring markets and social finance games into the messaging experience, providing users with a more convenient experience.

• Points and pre-token—Points have long been an effective incentive strategy for teams testing user behavior and trying dynamic incentives. Points markets like Michi and WhalesMarket and pre-token markets like Aevo can help create more efficient token markets.

Multiple sub-trends are driving the creation of new markets and exchanges. First, the verticalization of social and financial platforms is increasing, driving these applications to issue new types of assets. Second, increased ownership of on-chain activities by users, through earning points, tips, and tokens, expands the range of assets users can interact with, encouraging the creation of new trading venues. Finally, users now interact with assets like memecoins, feeling a greater sense of autonomy. Similar to real-world cultural assets like sneakers or music, users feel a sense of control over the popularity and potential appreciation of these cultural assets, as the value foundation of these assets (users' attention) is controlled by the end consumers.

Built for a New Generation of Attention Merchants

The social space is undergoing a paradigm shift, with the relationship between users, creators, and attention being redefined. At the core of these trends is that users and creators are no longer merely supply and demand sides of the attention economy but can become merchants of their own attention.

Designing new financial or social infrastructure is challenging enough, let alone integrating the advantages of both into a unified experience. However, those early social finance tools, toys, and games that can quickly experiment, test new consumer behaviors, and capture emerging behaviors and preferences will lead the development of the next generation of SocialFi networks and applications.