- Creator coins turned friendships into trades—bots and speculators ran the show, not real users.
- Complex wallets, gas fees, and chains scared off everyday users used to simple apps.
- The tech lives on, but apps fail when money comes before real human connection.
SocialFi, once hailed as the future of social media, faces a dramatic collapse by early 2026. Platforms like Friend.tech, RLY, CYBER, DESO, and DEGEN now struggle or vanish entirely. Tokens linked to these networks have lost between 90% and 99% of their value.
According to Our Crypto Talk, the collapse stems from speculative capital, bot farming, and short-term trading dominating communities. When incentives dried up, user engagement evaporated almost overnight.
The promise of SocialFi was seductive. It merged Web2 frustrations with crypto’s ownership ethos. Instead of giving attention to advertisers, creators could earn directly. Social graphs would become economic assets, and users would finally control value.
Venture capital poured in, while crypto Twitter celebrated the idea. However, SocialFi assumed money would improve social behavior—a fatal miscalculation. Vitalik Buterin warned that monetizing social interactions distorts culture and collapses communities.
Speculation Hijacked Social Interactions
SocialFi’s first-generation design monetized individuals, not platforms. Access tokens and creator coins made relationships financial instruments. Users focused on trading and pumping reputations rather than sharing content or forming bonds.
Early traction appeared strong, with daily volumes hitting eight figures and thousands of daily active users. However, most activity came from bots, speculators, and traders. Genuine community engagement never developed, and once financial incentives slowed, users left.
Moreover, platforms failed to solve usability challenges. Wallets, gas fees, and chain selection created onboarding friction. Users accustomed to effortless Web2 apps like Twitter or Bluesky resisted SocialFi’s complexity. Network effects compounded the problem. People joined apps where their friends already were. Incentives temporarily attracted attention, but SocialFi never captured real social graphs.
Infrastructure Survives While Apps Die
Interestingly, decentralized infrastructure like wallets, identity layers, and social primitives continues to persist. Farcaster’s recent pivot and acquisition illustrate this. Dan Romero emphasized that infrastructure remains functional, while apps built on top fail without proper social design.
SocialFi conflated infrastructure creation with product adoption, accelerating its decline. Future iterations will likely separate money from social interactions, offering optional monetization and invisible wallets.
SocialFi failed because it treated human connections like financial assets. Vitalik pointed out that crypto should enable social tools, not take over them. Future platforms will focus on social interaction first and financial features second, allowing communities to develop naturally.
