Digging Deeper
Regular readers will note that I have been somewhat fascinated, even distracted by the concept and potential of SocialFi within the WEB3 space. The multiple advantages of a decentralized and monetized WEB3 alternative are attractive. However, securing a piece of the SocialFi pie is a lot easier said than done. Much of this is a result of being early. This technology is just getting started.
I utilize several WEB3 platforms daily. The most popular being Hive, INLEO, and more recently, Grill. Hive-based platforms and communities are relatively well established but are still light years away from where they could be, regarding adoption, efficiency, and market cap valuations. SocialFi, as a Category on CoinGecko is up 9.6% today with a market cap of $2.26 billion.
Relative to the entire Crypto market cap, this is tiny. The market cap of Solana alone is approximately 35X larger than the SocialFi sector. This really puts things into perspective regarding the growth possibilities within this niche. Essentially, SocialFi needs to become more than just a niche sector. It needs to infiltrate the online world, much like legacy social media platforms have done since they were introduced.
Time
This will take time, and possibly, much trial and error. A good model comes down to good tokenomics, ease of use, and accessible and frictionless income generation. Some models do not work and are never going to work. The Creator Economy is just that… an economy, it has to operate and provide opportunities like any other economy. Without an actual economic model, it stands little chance.
The Hive economic model is not perfect but one of the most effective models I have seen. Its longevity is evidence of this truth. However, there is always room for improvement, even tweaking. This is an angle layer 2s like INLEO is experimenting with. As I mentioned, it’s a case of trial and error. One of the latest developments on INLEO is that of a referral program.
This is a trusted and proven model within WEB2. The dynamics and efficiency of a referral system are unaffected by a WEB3 approach. In this particular instance, WEB2 and WEB3 are very much alike. As always, a healthy user retention level is the greatest hurdle to overcome. This is a common challenge, even amongst the most effective and successful referral programs. I have seen this over many years of observation and implementation.
Any referral base will over time secure a remnant. Many will fall away and many will become increasingly inconsistent in their contributions. This is not pessimism, but rather factual data. The average referral base will usually secure anywhere from 6% to 10% of its users. This is over a long-term view. Initially, this number can fluctuate and even produce a referral activity rate of 50% or higher.
Essentially, those who succeed at building strong referral bases never quit. It’s an ongoing challenge! A viable WEB3 opportunity with a strong and lucrative referral model can achieve great success. Creating win/win dynamics within a business model is key. When the platform as an entity, as well as the users as individuals both benefit, you have a winning recipe. Removing barriers to entry helps to improve the recipe.
Final Thoughts
I have spent much time over the past week researching various platforms and models. SocialFi is yet to blossom as a Crypto sector and appropriate positioning and adoption are crucial. It’s an exciting element of WEB3, an expression I am quite actively engaged in. There is truly so much untapped potential within this space. Hopefully, we will begin seeing some encouraging developments within the space. Enjoy the weekend and I will see you next time!
Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.