Internet is a marketplace of attention, where competition for attention is intensifying rapidly. Cryptocurrency has ushered in a new era of attention economy by offering more efficient mechanisms to assess attention value through ownable attention assets such as content, social graphs, memes, algorithms, and platform interactions.
Cryptocurrency not only changes the value of attention but also aims to redefine its ownership. In 2016, Tim Wu introduced the concept of “attention merchant,” describing how publishers and platforms profit from users’ attention. Cryptocurrency opens a new avenue for users to become their own attention merchants by owning attention assets to reclaim the value of their attention.
A prominent example of this trend is seen in SocialFi (Social Finance), where users can own attention flows of assets like memecoins, influencer access tokens, and content. By involving users directly in attention-based assets, SocialFi challenges traditional power structures of attention economy, transforming users from passive consumers into active participants and new attention merchants.
SocialFi’s forefront is gradually becoming a significant category within Web3. Emerging encrypted social networks like Farcaster boast over 75,000 daily active users, facilitating transactions worth billions through Telegram bots combining group messaging and trading. Meanwhile, information markets are evolving towards financializing social graphs (e.g., Trends.market on Twitter, 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 efficient evaluation of social and attention assets. As a socio-economic technology, cryptocurrency enables social apps to add financial elements (e.g., asset trading) or integrate financial primitives locally within applications (e.g., Friendtech’s bonding curves). The SocialFi trend is driven by consumer demand to own and trade attention assets, enhancing social entertainment experiences through financial games or earning income based on attention spent.
Many applications have responded to users’ desire to embed commercial and financial aspects into social experiences:
– Messaging → Trading within messages
– Gaming → Ownable assets and in-game economies
– Social → Ownable social graphs, channels, content, and platforms
– Memes → Scene coins and derivative meme assets
– Information markets → New markets for entertainment, influencers, and social capital
Over the past year, the SocialFi ecosystem has expanded rapidly with attention asset exchanges (e.g., memecoin protocols), PvP (Player vs. Player) social games, new forms of information markets, and financialized social network companies. This expansion is driven by matured cryptocurrency infrastructure in scalability, availability, supporting new consumer experiences (e.g., mobile PWAs), cheaper transactions (e.g., L2), and faster application iteration cycles through improved development tools (e.g., account abstractions and wallet-as-a-service tools).
Social networks can be broadly categorized into two types with their respective creator monetization models: unidirectional and bidirectional. Unidirectional networks have one-sided relationships between creators and fans, often monetized directly through subscriptions (e.g., Substack, OnlyFans, Patreon) or revenue sharing from direct advertisements (e.g., YouTube, TikTok). Bidirectional networks like Twitter and Reddit allow creators to monetize through content propagation rather than restricting it, such as through token-gated access (e.g., influencer-gated chats). Web2 bidirectional networks historically made it harder for creators to directly monetize their influence, necessitating strategies like affiliate programs, guiding users to other monetized platforms (e.g., Twitter → Substack), or promotional campaigns.
By redefining users as new attention merchants, SocialFi offers multiple new monetization options for both types of social networks. Unidirectional networks empower creators to further monetize their top-tier audiences through tokenized content, influencer access, limited-time rewards, or social status. Platforms like Drakula and Friendtech tokenize content and creators respectively, enabling top creators to earn from transaction volumes. Sofamon exemplifies a token model where users progressively purchase aesthetic items (e.g., avatar clothing), eventually owning and wearing them.
Web3 social networks provide new monetization avenues, such as monetizing usernames and namespaces, generating revenue for valuable namespaces expanded to millions of users. Additionally, bidirectional social networks can better utilize in-app transactions, manifesting as in-network markets, channel storefronts, or in-app games.
Key differences between Web3 bidirectional networks and Web2 social networks lie in new attention merchants—users and creators—being better able to profit from their activities. For instance, imagine Reddit subreddit moderators owning their channels, earning revenue from displayed ads or earning a portion of transactions through their channels due to community management.
With matured consumer infrastructure, PvP social games are seeing new prospects. Notably, Survivor-style competitive games such as Crypto The Game and Blessed Burgers offer users new digital-native and highly social gaming experiences to earn rewards. Other apps like Rug.fun or PvPWorld provide game theory strategy games where users collaborate to win prizes. In contrast, most mobile games in Web2 monetize attention through traditional ads or offer users payment options to skip cooldown periods. Game developers now have new business models where social games resemble content more, releasing multiple short-term applications with abbreviated gameplay cycles where users can earn significant rewards for participation before moving on to the next game.
New types of social games should optimize for multiple winners, increasing engagement; easy-to-pick-up gameplay, making average users feel they have a high chance of winning; and social interaction, further enhancing the spread of these games. These proposed game dynamics are more incentive-consistent than Web3 games, historically biased towards pay-to-win or farming-first rather than fun-first games.
Major cryptocurrency applications revolve around market creation, particularly issuing new asset categories, on-chain existing assets, or expanding access to digital-native assets.
Information markets like Polymarket have potential to create more efficient political markets, supporting new event markets based on real-world events, culture, and business.
Attention exchanges like Pump and Ape.store enable users to create new assets based on attention as a trait. Elsewhere, Sofaman tokenizes status and culture by allowing users to create a Telegram-based digital avatar and sell branded clothing on bonding curves.
Telegram bots bring markets and social finance games into messaging experiences, providing users with more convenient experiences.
Points and pre-tokens have long been effective incentive strategies for 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.
Several sub-trends are driving the creation of new markets and exchanges. Firstly, there’s verticalization of social and financial platforms, promoting these apps to issue new types of assets. Secondly, users gain ownership of on-chain activities, expanding the range of assets users can interact with by earning points, tips, and tokens, encouraging the creation of new trading venues. Finally, users now interact with assets like memecoins, feeling greater control akin to real-world cultural assets such as sneakers or music, as the value basis of these assets (user attention) is controlled by end consumers.
The social sector is undergoing a paradigm shift where relationships between users, creators, and attention are being redefined. At the core of these trends is the transformation of users and creators from mere supply-demand agents in the attention economy to becoming their own attention merchants.
Designing new financial or social infrastructures is challenging enough, let alone integrating the strengths of both into a unified experience. However, those who can rapidly experiment, test new consumer behaviors, and capture emerging behaviors and preferences will lead the development of the next generation of SocialFi networks and applications.
