Translation: Blockchain in Vernacular
The internet is a marketplace for attention, and competition for attention is growing exponentially. Cryptocurrency represents a new chapter in the attention economy story, providing a mechanism to more efficiently value attention through ownable attention assets in content, social graphs, memes, algorithms, and platform social activity.
But cryptocurrency not only changes how attention is valued, it also has the potential to change to whom the value of attention belongs.
In 2016, Tim Wu introduced the term “attention merchants” to refer to the way publishers and later platforms exploit users’ attention for profit. Cryptocurrencies create a path for users to become their own attention merchants, reclaiming the value of our attention by owning attention assets.
The most notable example of this trend is in SocialFi, where users are able to own attention streams for assets such as meme coins, influencer access keys, content, and more. By creating avenues for users to interact directly with attention-based assets, the SocialFi platform challenges the traditional power dynamics of the attention economy, transforming users from passive consumers to active participants—the new attention merchants.
1. SocialFi Frontier
SocialFi is becoming a defining category in web3. Crypto social networks like Farcaster are gaining momentum, with over 75k DAUs (daily active users). Telegram bots combine group messaging and trading, facilitating billions of dollars in volume. Information markets are now moving in the direction of the financialized social graph, such as Twitter (i.e. Trends.market, Fantasy.top) and Farcaster (i.e. Swaye, Perl, Arrina).
While not all social platforms will come with financial incentives, SocialFi represents an evolution of social from indirectly valuing social capital to more effectively valuing social and attention-based assets. As a socio-economic technology, crypto enables social applications to add other financialized elements (such as asset trading) or integrate financial primitives natively into the application layer (such as Friendtech bonding curves). The SocialFi trend is driven by consumers' desire to own and trade attention assets. Users choose to spend their time in applications that allow them to earn money based on their attention, or play financial games to enhance the social entertainment experience.
For example, there is Fantasy, a fantasy sports trading card game and information marketplace built on top of the X (formerly Twitter) social graph. Fantasy allows creators to make money from their social media presence while enabling players to be rewarded based on their instincts and knowledge of certain social accounts. Elsewhere, new social networks like Friendtech, Unlonley, and Sanko allow creators to monetize their social interactions directly through chat access passes. This benefits users who purchase access passes in advance, thereby rewarding them for allocating attention to undervalued creators and groups.
The core benefit of the new information marketplaces and social networks is that creators and users are now attention merchants, owning attention assets in these applications and monetizing attention through application usage.
Many apps have responded to users’ desire to embed commerce and finance into their social experiences:
Messaging → Transactions and Transactions within Messages
Games → Ownable assets and in-game economies based on real moneyTM
Social → Ownable social graphs, channels, content, and platforms
Meme→Scene Coin and Derivative Meme Assets
Information markets for social-based entertainment, influencers and social capital → new markets
Exchanges → New protocols for issuing social and attention-based assets
Over the past year, the SocialFi ecosystem has grown rapidly, with a surge in companies that exchange attention assets (e.g., the Memecoin protocol), PvP (player-versus-player) social games, new forms of information markets, and financialized social networks. The driving force behind this expansion is the maturation of crypto infrastructure on the two vectors of scalability and usability, which supports new types of consumer experiences (e.g., mobile PWAs), cheaper transactions (e.g., L2s), and faster application iteration cycles through improved developer tooling (i.e., account abstraction and wallet-as-a-service tools).
2. Social Networks
Social networks can be roughly divided into two subgroups with their respective creator monetization models: parasocial and two-way.
Parasocial networks are platforms where there is a one-sided relationship between creators and fans. This one-sided relationship is often coupled with a direct monetization model, such as subscriptions (i.e. Substack, OnlyFans, Patreon) or through a direct cut of ad revenue for the creator (i.e. YouTube, TikTok).
On the other end of the spectrum are two-sided networks, where there is a two-way relationship between creators and fans (i.e. Twitter, Reddit, Facebook, Snapchat). Two-sided social networks allow users to monetize their reach, thereby encouraging reach rather than limiting it, as is the case with token-gated access (e.g. influencer gated chats). Web2 two-sided networks like Twitter and LinkedIn have historically made it more challenging for creators to monetize their influence directly. Instead, creators have had to resort to strategies like affiliate programs, directing users to other monetization sites (e.g. Twitter → Substack), or promotional campaigns.
By reimagining users as new merchants of attention, SocialFi enables a variety of new monetization options for both types of social networks. Parasocial networks offer creators the ability to further monetize the top percentile of their audience through tokenized content, influencer access, ephemeral benefits (e.g., limited-time rewards), or social status. Parasocial networks Drakula and Friendtech tokenize content and creators, respectively, enabling top creators to earn revenue from transaction volume. Sofamon showcased an example of a token model where individuals can slowly purchase aesthetic goods (e.g., avatar clothing) until they own an entire item, which they can then wear.
Web3 social networks offer new options for monetization. One example is username and namespace monetization, which can generate revenue for valuable namespaces that can scale to millions of users. Elsewhere, two-way social networks can better leverage in-app transactions. This could take the form of in-social network marketplaces, channel storefronts, or in-app games.
The main difference between web3 dual-log networks and web2 social networks is that new attention merchants (users and creators) will be able to better monetize their activities. For example, imagine if Reddit subreddit moderators could own their channel, earn revenue based on the ads they display, or earn a piece of the transactions made through their channel due to the community they curate.
3. PvP social games
As consumer infrastructure matures, it opens up a new frontier of PvP (player versus player) social gaming. Most notably, a wave of survivor-style tournaments — including Crypto The Game, Blessed Burgers, and others — have emerged, providing users with new digitally native and highly social gaming experiences for valuable prize pools. Other apps, like Rug.fun or PvPWorld, offer game theory strategy games where users coordinate with others to win prizes.
In stark contrast to web2, most mobile games monetize attention through traditional advertising or offer users ways to pay to play games (e.g., users don’t have to wait for a cool-down period). Game developers now have new business models, social games are similar to content, and developers release multiple ephemeral applications that offer shorter game cycles and users can earn significant rewards for participation before moving on to the next game.
New social games should be optimized for:
Multiple winners, thus increasing engagement;
Games that are easy to play and where the average user feels they have a high chance of winning;
Social interaction, which further enhances the virality of these games.
These proposed game dynamics are more incentive-aligned than web3 gaming, which has historically tended toward pay-to-win type games or farm-first vs. fun-first games.
4. New markets and exchanges
The dominant use cases for cryptocurrencies revolve around market creation, specifically issuing new asset classes, bringing existing assets on-chain, or expanding access to digitally native assets.
Information Markets – Information marketplaces like Polymarket have the potential to create more effective political markets and support the creation of new types of event markets based on real-world events, culture, and commerce.
Attention Exchange – Launchpads like Pump and Ape.store allow users to create new assets (like memecoins) based on one quality: attention. Elsewhere, Sofaman tokenizes status and culture by enabling users to create a Telegram-based digital avatar that sells branded clothing on a bonding curve.
Telegram Bots – Telegram bots bring markets and social finance games into the messaging experience and provide a more convenient experience for users
Points and Pre-Tokens – Points have been an effective incentive strategy for teams to test user behavior and experiment with dynamic incentives. Points marketplaces like Michi and WhalesMarket and pre-token marketplaces like Aevo can help create more efficient token markets.
Several sub-trends are spurring the creation of new markets and exchanges.
First, the increased verticalization of social and financial platforms is driving the issuance of new types of assets by these applications.
Second, increasing user ownership of on-chain activity by earning points, tips, and tokens is increasing the surface area of assets that users interact with, thereby encouraging the creation of new trading venues.
Finally, users are now interacting with assets like memecoins where they feel a greater sense of autonomy. Similar to real-world cultural assets like sneakers or music, users have a sense of perceived control over the popularity and potential appreciation of these culturally based assets because the fundamental metric that gives the asset value (user attention) is controlled by the end consumer.
5. Create for new merchants
Social media is undergoing a paradigm shift where the dynamics between users, creators, and attention are being redefined. Central to these trends is a shift from users and creators being the supply and demand sides of the attention economy to being able to become merchants of their own attention.
Granted, it’s hard to design new financial or social primitives, let alone primitives that blend the best of both into a unified experience. Early social financial tools, toys, and games will become the next era of SocialFi networks and apps that accelerate experimentation, test new consumer behaviors, and capitalize on consumers’ emerging behaviors and revealed preferences.
