With the rise of encrypted social platforms and financial gaming, the way they are built is constantly evolving. We can expect to see more projects in the future that are focused on verticalization, aiming to provide users with a more seamless and comprehensive experience, thus giving birth to new consumer behaviors based on attention assets or social assets. While not all web3 social experiences are related to finance, the blockchain infrastructure that supports these crypto consumer applications can integrate new token incentive behaviors and digitally native assets into social experiences.
The existing SocialFi stack consists of four core layers:
– Discovery Layer: Users discover items they want to purchase.
– Execution Layer: The buying and selling of assets.
– Liquidity Layer: The place where assets are stored and pooled.
– Asset Issuance Layer: The creation of assets.
Currently, this stack is quite fragmented, with user discovery and social experiences disconnected from execution (such as transactions), liquidity, and asset issuance. However, as the SocialFi space expands, various applications will continue to focus on verticalized attention and marketplaces in order to have better control over users’ social experiences and the liquidity of attention assets.
SocialFi application developers need to have multiple layers of the SocialFi stack to build defensive protocols. Attention asset trading (i.e., execution) and issuance are the commoditized layers of the stack – token issuance is becoming easier, and execution can be added anywhere with attention. Owning the discovery or liquidity layers will become increasingly important as these are defensible layers with strong network effects.
In SocialFi, most applications choose between two verticalization approaches:
1. Trade-first approach: Build a trading platform or marketplace where users can trade attention assets (e.g., Meme), and then evolve into a social/discovery platform.
2. Social/discovery-first approach: Build a social platform first, gradually incorporating financial elements. Make consumers/attention merchants key stakeholders of the platform.
Trade-first approach:
Any social network or discovery platform faces significant challenges in today’s competitive attention market: guiding new social networks, inspiring new consumer behaviors, and maintaining user engagement. Given these obstacles, the trade-first approach is usually easier to launch because users’ interest in speculation helps overcome these challenges. However, this approach faces more competition as trading platforms are easier to launch compared to social networks, and social networks retain many advantages once they reach a certain user density.
From a trade-first approach perspective, the deep verticalization of the SocialFi stack has proven to be effective as these applications have built-in attention trading functionality. For example, Friendtech has become one of the most vertically integrated SocialFi applications, controlling the entire stack. The app not only serves as the hub for user discovery and exclusive trading but also utilizes a native financial element called a “bonding curve” to issue assets with Friendtech-specific features.
Some newer SocialFi protocols have also achieved vertical integration of the stack. Platforms like Pump and Ape Store, which are meme issuance and discovery platforms, allow users to easily deploy memes on bonding curves. This allows users to directly purchase tokens from the bonding curve without having to wait for liquidity to be injected into decentralized exchanges or liquidity pools. While some Pump-initiated meme trades and discoveries can take place on other platforms like Dexscreener and Twitter, Pump still provides a unique social discovery and trading platform for its newly released tokens.
Social/discovery-first approach:
Historically, social-first SocialFi approaches have found success through social platforms like Twitter, Farcaster, and Telegram, as well as market terminals like Dexscreener and Coingecko. Many of these applications have attempted to move downstream in the stack by offering token trading functionality but have not fully focused on providing a customized proprietary trading experience.
Telegram is an exception, as it has successfully integrated social and financial experiences. However, the user experience of Telegram is limited, and there is still demand in the market for an experience more similar to Robinhood, which provides a seamless trading interface, convenient registration process, and retail-friendly features like commission-free trading. Moreover, new primitives like Farcaster frames and open actions on Mirror further facilitate new financial transactions within these social-first networks.
Final thoughts: Stay opinionated
Builders can create engaging social financial games and networks by understanding the impact of monetization and financialization on their applications through unique approaches. The trade-first approach is easier because it does not necessarily require creating new consumer behaviors – people already want to trade attention. However, historically, the social-first approach has been successful because it controls users’ attention, not just the transactions themselves. The primary goal of the social-first approach is to iterate quickly, test new consumer behaviors and social financial dynamics until users show their preferences, which could develop into large-scale social networks. I believe the most successful applications will be those that have a strong stance and vertically integrate design, creating liquidity markets for new assets or inspiring new consumer behaviors in other ways.
Original article link: [Source](https://mp.weixin.qq.com/s/34d3wZJZcWQnKs0O8Dfi5w)
