Why Pricing Social Interaction Is Doomed to Fail?

Original author: Anderl

Translation: Saoirse, Foresight News

In recent years, the development of Substack has been truly surprising. What really makes creators want to stay on this platform is not what it actively does, but what it deliberately chooses not to do.

Substack doesn't fill your page with various interaction data and algorithmic feeds, nor does it turn every content interaction into a deliberate performance. Every time you open the interface, it's a clean, pure creative space; you can meet creators with similar or opposing views, and find communities you want to engage with or can ignore at will. In today's era of overflowing short-form content with increasingly short lifecycles, Substack has chosen a slow track, slowly building trust-based connections between creators and readers.

This sense of restraint is extremely scarce in the vast majority of current social networks. As long as you step out of your fixed perspective and look at other platforms, you will see this more clearly.

Most social platforms today feel oppressive: pages are filled with all kinds of data like likes, reposts, play counts, and pinned replies. These metrics collectively determine what content appears in your feed. The platform has already defined the entire value of the content, leaving users with very little space for their own interpretation. Users have gradually changed from participants to spectators of a performance. When platforms excessively pursue data optimization and pile up metrics, the medium itself will gradually move towards self-consumption.

In this article, the author delves into this viewpoint and provides more relevant examples. He uses McLuhan's hot and cold media theory to explain three things: why SocialFi collectively collapsed, why NFT culture quietly dissipated, and how those platforms that can truly operate long-term manage the balance – allowing capital to enter without letting it consume the entire ecosystem.

Let's get into the main text.

In 1964, McLuhan wrote a phrase that has been so overused it has lost its original depth: The medium is the message.

Today, this phrase seems like a trendy slogan printed on canvas bags, but if you strip away the cliché interpretation and use it as a practical analytical framework, you'll find it extremely valuable, especially in helping us understand: why have all attempts in recent years to deeply integrate social networks with finance ultimately failed step by step?

McLuhan's true viewpoint is more specific and profound than the popular stereotypical interpretation: every medium reshapes its user, not based on the content it delivers, but on the form of the signals it emits.

A medium that can transmit complete, high-definition, mature signals will shape users into passive receivers; whereas a medium that can only transmit fragmented, incomplete signals forces users to actively fill in the information gaps, turning them into active participants in the process.

McLuhan defined the former as hot media and the latter as cool media.

Print is a hot medium – the content of the book is completely finalized; radio is a hot medium – the program content is already produced; a live lecture is a hot medium – the speaker fully controls the information output.

In contrast, cool media: a phone call is a cool medium – relying only on limited voice information, the listener needs to mentally fill in the context; a comic strip is a cool medium – the spaces in the images require the viewer's brain to complete the visual details; in McLuhan's analysis, early television was also a cool medium – with very low resolution in the early days, viewers needed to continuously and actively reconstruct the image information. He also proposed a controversial point: this is why television is more addictive than film.

We don't need to dwell on these somewhat outdated specific examples; the core logic is key: the hot or cool nature of a medium determines the user's behavioral pattern.

Hot media breeds passive consumption, cool media breeds active participation. The most crucial point: hot and cool media cannot be forcibly converted into each other; once deliberately tampered with, the essential nature of the medium will be completely altered.

What does all this have to do with social networks?

Using McLuhan's theory to define it: the vast majority of what we now call social media are essentially cool media.

A tweet, a picture without context, a like – these are all fragmented pieces of information, not complete signals in themselves. Their meaning can only be formed through the participation, replies, reposts, and threaded discussions of others. A post with zero interaction is almost worthless; while a post that receives thousands of replies, even if the original text remains unchanged, generates entirely new connotations. This is a typical characteristic of cool media: the content itself is incomplete, and its value needs to be supplemented and given meaning through user participation and interaction.

This also determines the underlying logic of social networks: they have never been simply content distribution tools, but rather interaction engines centered on participation, even though they look like content platforms on the surface.

Platforms that understood this, even if they had never encountered McLuhan's theory, have thrived; while those that tried to professionalize participation, push finalized complete content to users, and turn users into passive recipients, have gradually become marginalized.

Interestingly, when people try to overlay an economic and financial logic onto social platforms that are inherently cool media, problems arise – this is the backdrop for the emergence of SocialFi.

What did SocialFi originally aim to do?

The vision of SocialFi was theoretically perfect: social capital itself has real economic value; users continuously create social value, yet the dividends are entirely harvested by the platform.

If social behavior could be directly integrated into the market trading system, ordinary people who create value could capture their own returns. Every follow relationship becomes an equity share, every post becomes a tradable asset, and every social connection has a clear price tag.

Theoretically, this would form a social network with its own economic system: personal reputation has a market price, and creators can immediately reap the benefits of the attention they generate.

At the end of 2023, with the explosion of Friend.tech, this logic seemed momentarily viable. People bought and sold social keys from each other, with the initial pricing of influencer accounts often reaching thousands of dollars; the interface looked like a social network, but its inner workings were indistinguishable from a securities trading account.

Soon after, a wave of similar projects emerged, all with similar mechanics: social stamps, private communities, social tokens, attention trading markets, on-chain creator economies... Various business plans flooded the scene.

But quickly, the entire track collapsed.

Friend.tech's heat faded, and none of the subsequent follower projects achieved scale; token prices plummeted with no chance of recovery. By 2024, SocialFi had become an awkward term within the crypto circle, and entrepreneurs no longer mentioned it in new project roadshows.

The mainstream explanation is: it was just a speculative cycle. People came for profit and left when there was no profit to be made.

This statement isn't wrong, but it's too superficial. The speculative cycle can't explain why the underlying social participation completely collapsed: people didn't just stop trading keys, they also stopped posting, browsing, and being active. As the financial frenzy faded, the social ecosystem also completely died.

Where was the root cause?

Deconstructing the Essence with McLuhan's Theory

The deeper truth is: the failure of SocialFi was never about speculation; speculation was just a symptom, not the cause. The entire track was built from its inception on a fatal misunderstanding of its own media nature.

Social networks are inherently cool media: their value comes from users participating to complete the meaning of signals. Social behavior is fragmented, its meaning ambiguous, accumulating value gradually over time. What SocialFi did was directly replace the underlying social signals with a highly deterministic signal: real-time price.

Once you attach a real-time, visible, freely tradable price tag to a follow action or a post, you are not simply adding an economic layer to a social medium; you are directly replacing the medium itself. The originally ambiguous and open-ended social behavior becomes a completely finalized financial signal with no room for interpretation: a follow no longer carries social emotion and identification, but is equivalent only to its specific dollar price at that moment.

When the signal is completely solidified, the user's rational behavior is no longer to participate and interact, but becomes asset allocation and profit-seeking.

This also explains the nature of Friend.tech: it was fundamentally never a social network; it was just a miniature personal reputation price terminal disguised as a social interface. Users appeared to be posting and socializing, but were actually engaged in trading games the whole time. The social vocabulary was just a facade; the core was entirely financial behavior.

Once the financial market turned – prices stopped rising, arbitrage opportunities disappeared, speculative profits declined – there was no underlying native social ecosystem to support it. From the moment of its birth, the financial attribute had already consumed the social attribute.

This is precisely the outcome predicted by McLuhan's theory: hot signals cannot coexist with cool media; they will simply replace them directly.

When an ambiguous, open social behavior requiring participatory interpretation also comes with a market price that is globally visible and updated in real-time, the price will always dominate – because it is the most certain and unambiguous signal on the page.

The mistake of early SocialFi designers was: they thought they were building a platform of 'underlying social interaction + overlaying economy,' but they were actually creating a product of 'financial market + social skin.'

The track collapsed not because of rampant speculation, but because the platform had quietly transformed from a cool medium into a hot medium, while still calling itself a social network with cool media properties.

Not Just Crypto, This Logic Applies More Broadly

Don't treat this merely as a post-mortem for a niche product track. This logic is universal and can also explain common dilemmas in platform development over the past decades.

Once a cool medium is overheated, it will perish. This is not a metaphor, but a recurring pattern of failure.

Many platforms start as cool media with low information density, centered on participation. However, they continuously add various features, gradually increasing the certainty of information: verified account badges, public full interaction data, creator funds settled based on play counts, precise algorithmic rankings... Individually, these features seem harmless or even enhance the experience, but collectively, they cause the platform to slowly drift from cool to hot.

As media signals become increasingly finalized and standardized, user mentality shifts from participatory creation to deliberate performance. They become addicted to data metrics and eventually churn completely – because there is no longer any white space left for users to interpret and participate in creation.

This is why many platforms that seemed irreplaceable at their peak become hollow and weak within just a few years: they abandoned the cool media attributes that created their value.

Twitter around 2012 was a classic cool medium; the Twitter of today has long become a hot medium.

This attribute drift has no single responsible party; it's the natural tendency of all data metrics, commercialization, and product optimization: the pursuit of precision, quantifiability, and high efficiency is inherently 'heating up' cool media, and such media should not be over-optimized.

SocialFi compressed this decades-long slow drift into a rapid evolution of just a few months. From its inception, it carried the hottest signal – real-time market pricing – bypassing the necessary stage of building a cool media ecosystem. Lacking native social depth for support, it was born a hot medium; and hot media without a traffic moat are destined to perish extremely quickly.

The Way Forward: Points of Capital Condensation

If you agree with this logic, a question arises: is the integration of social participation and capital doomed from the start?

The answer is no. There is another path completely overlooked by early SocialFi: preserve the overall cool property of the medium, allowing capital to condense and settle only at specific points, rather than permeating every single social behavior.

This inspiration comes from a physical phenomenon: a fluid remains gaseous overall but condenses into droplets only under specific local conditions. The droplet is not the gas, and the gas is not changed by the droplet; they coexist. The key lies in controlling the location and boundary of condensation.

Cool media platforms can follow the same logic: the underlying system maintains cool media properties, with most social behaviors remaining fragmented, ambiguous, and dependent on user participation for co-creation. Only at predetermined specific nodes does capital condense from the social ecosystem, forming fixed touchpoints with financial value.

The key is: these capital touchpoints are only local intensifications within the medium, not the medium itself, and the rest of the ecosystem remains completely in its native state.

The platforms that have quietly run successful models far exceeding SocialFi understand this well: Substack is a cool medium for text creation, with fragmented, continuously updated content. Its value is co-created through reader replies, reposts, and citations; capital condenses only at the subscription point.

Subscription is a clear hot signal, a fixed recurring fee, but it exists as a long-term contract, not a real-time short-term trade. It doesn't pollute the entire creative ecosystem with continuous pricing. You don't see a real-time tradable stock price for each article. The medium maintains its cool property, and capital only circulates within the subscription loop.

The same applies to Bandcamp for music, Wikipedia for charitable donations, Patreon for creator empowerment. These platforms instinctively identified the right point of capital condensation, allowing capital to enter orderly without heating up the entire cool media ecosystem. They never force a price on every single social action, understanding a core principle: the underlying layer must retain its cool media attributes for the platform to continuously accumulate appeal.

This is the core insight that SocialFi missed. Capital and cool media are not incompatible, but they must follow rules: capital must be localized, low-frequency, and appropriately illiquid, structurally isolated from the vast majority of social behaviors. It can only condense at specific points, not flood the entire space.

Once you try to assign asset value to every daily social behavior, you are essentially replacing the social medium itself with a financial market. And a financial market can never generate the unique value of a cool medium: its ambiguity, its white space, its gradual accumulation, and its unique value co-created through user participation.

Future Directions

A new wave of projects has already silently understood this logic. Even if they don't explicitly use the hot/cold theory, they follow the same principles and are beginning to form stable development paradigms: the foundation is social and cultural content, where value slowly accumulates through user participation.

If we were to summarize the core lesson from SocialFi's collapse in one sentence, it would be: Liquidity equals heat.

Injecting ubiquitous liquidity into a cool medium doesn't make it more efficient; it completely changes the medium's nature, causing it to lose its original core value.

The truly worthwhile product direction for the future has never been 'how to price every social behavior,' but rather the more difficult and precise proposition: how to find the precise location for capital condensation without destroying the underlying cool media ecosystem.

This track remains almost entirely unexplored. SocialFi was too busy breaking down all social behaviors into market transactions, missing the most critical sense of proportion. The next wave of truly sustainable projects will inevitably be those who truly understand McLuhan, know how to respect the properties of cool media, and refrain from randomly heating the entire ecosystem.

NFT: A More Typical Supporting Case

If SocialFi is a failed example of a 'born-hot medium disguised as a cool social medium,' then NFT provides an even more profound warning: it shows how a classic cool media practice that has lasted for centuries can be rapidly heated up and completely destroyed in a short period.

Collecting is one of humanity's oldest cool media practices. Browsing vinyl record stores, lingering in antique shops, trading cards between classes, displaying stamp collections offline... The object of collection itself carries only half the value; the other half comes from human participation and identification, years of gradual accumulation, the stories behind the items, and the shared resonance and exchange among enthusiasts.

The value of collectibles is inherently fuzzy, context-dependent, and varies from person to person. This is not a flaw, but the core charm of collecting that elevates it from a purely transactional hobby to a cultural pursuit.

The early NFTs of 2020 to early 2021 still retained this cool media characteristic: CryptoPunks was initially just a fun niche activity within the crypto circle, with no clear price quotations; its value came from the consensus of the community culture, not from market prices. The same applied to early Art Blocks art pieces.

At that time, there were dedicated forums and Discord communities where collectors shared stories about their pieces, exchanged aesthetic insights, and built a shared culture. Collecting was a pure act of community participation, and the meaning of the items needed to be co-created by the community.

Then, as trading platforms matured, the process of media heating accelerated dramatically, becoming an extreme case study for the industry: OpenSea made floor prices fully public; rarity tools quantified every trait into a numerical score; real-time price charts made every collection look like a stock market index; sniper bots eliminated human reaction time; wash trading volume became a status symbol.

Individually, these features seem like reasonable market optimizations; collectively, they pushed collecting, a cool medium, completely into a hot medium at an unprecedented speed in history.

The outcome perfectly aligns with McLuhan's prediction: collectors became traders, traders became bot operators, and the bots reduced the value of items to a single floor price number. Once prices dropped, all the cultural connotations and sense of community vanished without a trace.

The early collecting communities didn't mature into deeper cultural circles; they dissipated instantly as the market trend reversed. Genuine collectors don't leave when prices fall; they continue to discuss, collect, and pursue their passion. The mass exodus from communities after the NFT crash proves that there were no real collectors there, only speculators disguised as players. When the music stopped, the disguise faded away.

Compared to SocialFi, NFT is a more poignant media case: SocialFi was a new track born for the hot media route, and its failure can be attributed to its novelty and rampant speculation. However, NFT destroyed a mature cool media practice that had survived for millennia, through wars and changing times, dismantling its underlying logic in just thirty months.

The medium itself could have operated for a long