Social Finance (SocialFi) is the hottest narrative in crypto right now with all of them confirming an airdrop for users after a certain period.
According to DefiLlama, there are already over 2 dozen of them and new ones are popping up almost every other week.
The hype around these platforms is mostly fueled by the promise of airdrops rather than their “social” aspect.
But which ones will survive after they have distributed the airdrops and mercenary investors probably move on to the next shining thing?
That’s the question I will try to answer in this post.
To do that, we’ll look at the two most significant factors that affect their survival:
- Utility: What are people using these platforms for, and will they continue using them after the airdrop?
- Revenue: Are they generating enough revenue to keep them afloat and even do an airdrop?
The answers to these questions will give you a good idea of which of the current and incoming SocialFi platforms will continue to be relevant even after their airdrop.
Utility of SocialFi platforms
1. Exclusive access
The major utility of SocialFi platforms are private chat rooms and exclusive or gated content. Owning the Key or Shares of someone gives you direct access to their private chat room and exclusive or holders-only content.
But currently, only a very few high-profile users are providing valuable content or alpha in their private chat rooms to make holding their Shares or Keys beyond the airdrop worth it.
And even then, they’re only active on one or two of the top SocialFi platforms like Friendtech, New Bitcoin City, Tomo, Stars Arena, etc.
So, close to the airdrop date and after the airdrop has been distributed, there will be massive sales of Shares.
Only the users sharing valuable content or alpha in their private chats will continue to be actively traded and retain their value.
Prices of everyone’s Share will drop significantly compared to their ATH as liquidity gets pulled out of SocialFi into the next hot narrative.
Also, considering that many of the users are purely airdrop farmers, the number of active users on all platforms will drop significantly as there’s nothing for them to leech off of.
So…
- only a few users’ Shares will maintain their value and continue to be traded after the airdrops.
- only the top platforms (maybe the top 5) will continue to see a tangible number of active users to stay relevant or sustainable after the airdrop.
- we’ll still have several platforms coexisting but most of them will not be worth much because of too few active users.
My bet is mainly on Friendtech and NBC.
However, I will continue to explore the others and see what unique features or products they offer. Also, I think different users will find different uses for the various platforms based on their unique needs.
2. Revenue
SocialFi platforms generate revenue from a share of the trading fees or tax on all users’ Keys or Shares.
On Friendtech it’s 5% of every buy and sell, 2% on Stars Arena, 5% on Posttech, and on NBC, it’s 2%.
Without sufficient trading volume, the platform will not be able to generate enough revenue to make it profitable or sustainable.
Before the airdrops, trading volume will be relatively high as people will trade to farm airdrop points. But that will not be the case afterwards.
So, some (if not most) of the SocialFi platforms will die a natural death due to low to zero revenue. And that brings us to the ultimate question.
Which SocialFi platforms will survive after the airdrop
The SocialFi platforms that will survive and continue to be relevant after their airdrop are those with solid utility.
1. Friendtech (FT)
Friendtech is the market leader with a solid first-mover advantage. It controls over 90% of the entire SoccialFi TVL and hosts the largest number of elite chat rooms.
Many big influencers have built a solid community and network on the platform that will continue to function even after the airdrop.
2. New Bitcoin City (NBC)
NBC is the best SocialFi platform in terms of functionality and features. And it’s second only to FT, in terms of TVL.
You have your inner circle which is exclusively for Key holders, public post feeds, in-app games, gifting and trading features, etc.
There’s so much social activity on NBC in addition to having almost all the top accounts on FT being equally active on the platform.
The team is constantly building and shipping new cool and interesting features and generates revenue from multiple sources.
No other SocialFi platform is even close to building as good and fast as NBC, and I’m confident they’ll continue to flourish and be profitable long after their airdrop.
Because people are using it for more than just trading each other’s Keys. There’s a whole economy being built on the platform that I think will only continue to grow.
It offers the best of all the worlds of SocialFi.
3. The others
1. Tomo
Tomo is the FT of the Linea chain with a sleek UI/UX and cool features. It’s the second largest SocialFi platform in terms of TVL.
It has been growing steadily in both userbase and TVL and is a strong challenger of FT and NBC. I think this one will cook but probably not as much as FT and NBC.
It has the full support of the Linea chain team, but after the epic failure of Stars Arena, support from the chain is no longer worth much.
2. Posttech (PT)
Nobody is using Posttech beyond airdrop farmers and spammers. There are no quality chat rooms and the social aspect is also zero. It’s pure speculation and airdrop farming there. I doubt it will survive after the airdrop.
3. Stars Arena (SA)
Stars Arena was a beautiful thing that was ruined by the team with their gross incompetence in every aspect of the project. It will require a complete overhaul of the team to make a comeback.
I hope it rises from the ashes. Otherwise, may the souls of our lost AVAX on the platform rest in peace.
As for the many others listed on DefiLlama, it’s a try-your-luck game. Many of them may not be able to do an airdrop or even survive beyond a few months.
Conclusion
For Friendtech and NBC, I strongly believe they will see an increase in both TVL and new users after a successful airdrop.
It will be similar to Arbitrum airdrop when the chain gained new users and TVL increased in the weeks and months after the airdrop.
