1.3 SocialFi’s Growth Potential

The paradigm shift from Web2.0 to Web3.0 also gave birth to the development of SocialFi, which is also a direction that many people are optimistic about - social networking is the fundamental need of Web3.0. SocialFi, refers to social finance. From a literal point of view, it can be considered as a combination of Social+Finance, or even Social+DeFi, which essentially refers to the organic combination of social and finance on the blockchain. SocialFi is characterized by decentralization, openness and user control.

In the social platform of the Web 3.0 era, people will have absolute control over their social data, which is a decentralized way of socializing. SocialFi products are the products that based on the underlying infrastructure of Web 3.0, starting from people's needs for 'decentralized social' or 'decentralized finance' (DeFi), and integrate the two needs together.The combination of decentralized social networking and finance can break the platform monopoly, eliminate single-point risks, and create new business models and product categories in the wave of the global digital economic system.

（1） There is a huge user gowth potential in web3.0

According to the report of 2022, as of April 2022, there are 5.32 billion mobile users worldwide, 5 billion Internet users, and 4.65 billion active social media users. Active social media users accounted for 58.7% of the global population, with an annual growth rate of 7.5%, higher than the 4.1% growth rate of Internet users and the 1.7% growth rate of mobile users. New research from GWI shows that global internet users now spend an average of 6 hours and 53 minutes a day online. Socializing is a fundamental need of almost every user whether it is in the era of Web 2.0 or Web 3.0. As for web3.0, it is only the beginning. As the technology of web3.0 matures and users gradually migrate from the old platform, there is huge room for growth. According to industry statistics, encryption technology has made great progress in the past two years, and the number of users has reached 300 million in 2021. With the continuous development and improvement of technology, it is expected that 1 billion users will enter the Web 3.0 industry by 2022.

（2） Web3.0 applications are constantly being upgraded, and social networking is a necessary component.

Now, the number of web3.0 projects and applications are very small, and most of them are still working on infrastructures such as identity, or primary technology. There are no comprehensive social applications that can be used at present. The focus of each platform is different, and web3.0 also needs to develop together. In the process of transitioning from Web2.0 to Web3.0, Internet users need to build some middleware to gradually migrate from simple to complex. Decentralized opinion posting and personal display have become Web3.0 components that need to be explored and developed in the next step. Through the history of the development of the Internet, we can also clearly see that social networking is a fundamental need for Internet users.

（3）SocialFi hits the pain point of traditional social networking in Web3.0.

SocialFi will break two types of monopolies, one is the monopoly of traditional social platform giants on content creators - content creators can only get a small part of the economic profits; Another one is major social influencer’s monopoly over ordinary content creators.

The open and transparent conduct of all economic activities is the premise of the establishment of SocialFi, which can lead to more ways of playing and models.