Article Author: Anderl
Article Translation: Block unicorn
Preface
As a writer, Substack's development over the past few years has pleasantly surprised me. What has truly kept me around is not so much what it does, but rather what it refrains from doing. Substack doesn't clutter my screen with various interaction metrics or algorithmic noise, nor does it turn every interaction into a performance. Every time I open it, I see a blank writing space, where I can discover people with viewpoints similar or contrary to mine, and some communities I may or may not want to participate in. In this era of short-form content and even shorter lifecycles, platforms like Substack have chosen a path of gradually building trust between creators and readers.
This restraint is extremely rare in most social networks. When you step back and examine other platforms, this phenomenon becomes even more evident.
I find that most social media platforms are suffocatingly filled with various metrics like likes, shares, views, and promoted replies. All these factors collectively determine the content you see in your feed. The platform has already decided the meaning of the content, so you have no right to make any decisions. You stop interacting and start performing. Ultimately, over-optimization consumes the medium itself.
In today's article, Anderl presents a similar viewpoint and provides more appropriate examples. He uses McLuhan's "hot and cool media" theoretical framework to explain why SocialFi collapsed, why NFT culture died, and why truly successful platforms understand how to introduce capital without letting it take control.
The Medium
A sentence McLuhan wrote in 1964 has been quoted so often that it has lost much of its original meaning: "The medium is the message." Today, it sounds like a slogan printed on a tote bag. But if you stop and read it as a valid diagnostic method rather than a catchphrase, it's useful, especially for those trying to understand why so many recent attempts to fuse social networks with finance have slowly ended in failure.
McLuhan's actual argument is more narrow and peculiar than this slogan suggests. He believed that every medium reshapes the people who use it, not through the content it transmits, but through the form of the signals it transmits. A medium that delivers complete, high-resolution signals turns users into receivers. A medium that delivers incomplete, low-resolution signals forces users to fill in the gaps, turning them into participants in the process. He called the former "hot" and the latter "cool."
Print is hot because the content on the page is fully written. Radio is hot because the broadcast is fully produced. A lecture is hot because the speaker controls the message. In contrast, a telephone call is cool because the voice alone carries too little information; the listener must construct the missing context. Cartoons are cool because the brain completes the drawing. In McLuhan's analysis, television was cool because early signals had such low resolution that viewing required constant active reconstruction. He controversially suggested this was precisely why television was more addictive than film.
What matters here is not the outdated specific examples but the underlying argument. The temperature of the medium determines what kind of behavior it generates. Hot media promote consumption; cool media promote participation. And crucially for what's to come, you cannot turn one medium into the other without changing its nature.
What Does This Have to Do with Social Networks?
In McLuhan's terms, what we call social media today is mostly "cool." A tweet is a fragment. A photo without context is a fragment. A "like" is a fragment. These are not complete signals. Their meaning only emerges through the participation of others—replies, retweets, discussions, and associations. A post with no interaction is almost nothing. A post with two thousand replies becomes something else entirely, even if its original content remains unchanged. This is the classic feature of a "cool" medium as McLuhan described it: the work arrives incomplete and is only finished through use.
This also explains why social networks feel the way they do: they are not content distribution systems but engagement engines that just happen to look like content on the surface. Platforms that understood this, even without reading McLuhan, have thrived. And most platforms that tried to professionalize the participation process and deliver finished information to passive consumers have ended up marginalized.
What's interesting is what happens when someone tries to add economics to a cool medium. This is precisely the context in which SocialFi emerged.
What Was SocialFi Trying to Do?
SocialFi's vision looked wonderful on paper. The argument was that social capital is real economic value. People constantly create social capital, but platforms capture it all. If we could directly bring social actions to market, the people actually creating value could profit from it. Every follow becomes an equity stake, every post becomes a tradable asset, every interaction has its price. In theory, this would eventually result in a platform that is both a social network and an economy, where reputation is tradable and creators are rewarded in real time for the attention they create.
For a few weeks in late 2023, it looked like this model might actually become a new space with the rise of Friend.tech. People bought and sold each other's keys. Some influencers could even launch their tokens with starting prices in the thousands of dollars. Its interface looked like a social network and operated like a securities account. Other projects quickly emerged, each promising to implement the same logic in slightly different ways. Stamps, chat rooms requiring keys, social tokens, attention markets, and on-chain creator economies flooded the pitch decks.
Then the entire space collapsed. Friend.tech faded away. Most follow-up projects failed to gain traction. Token prices plummeted and never recovered. By 2024, SocialFi had become a slightly awkward term that founders would avoid in their next pitch deck.
The standard explanation is that it was a speculative cycle; people participated to profit and left when the profits stopped. That's not wrong, but it's shallow. Speculative cycles don't explain why engagement plummeted. People didn't just stop trading keys; they stopped posting, reading, and participating. Social activity died just as much as financial activity did. Why?
A McLuhanite Read
A deeper analysis is that SocialFi didn't fail because of speculation. Speculation was a symptom, not the cause. The problem was that the entire social network industry was built on a misreading of its own medium.
Social networks are a cool medium. Their value lies in the fact that participation itself constitutes a signal, and meaning accumulates through repeated, low-resolution acts whose significance only emerges over time. SocialFi took this medium and replaced its constitutive signals—social acts—with a high-resolution signal: price.
When you give a follow or a post a real-time, visible, tradable price, you're not adding an economic layer on top of social media; you're changing the medium itself. The new creation is a fully explicit signal with no gaps left to fill. A follow is no longer ambiguous; it represents a specific monetary amount at that moment. Once the signal is that explicit, the rational response is no longer participation but allocation.
This is why Friend.tech was not, by its internal logic, a social network. It was more like a micro-reputation Bloomberg Terminal wearing the costume of a social network. Users weren't posting; they were trading. That the trades happened to be on each other's identities didn't make the activity social; it made it financial activity wearing a social costume. Once the financial dynamics shifted (prices stopped rising, obvious arbitrage opportunities disappeared, speculative profits vanished), there was no underlying cool social medium left to fall back on. The social layer had been consumed by the financial layer at birth.
This is precisely what McLuhan predicted. Hot signals and cool media cannot coexist; one replaces the other. If one of the properties of an act is its real-time, publicly visible, current market price, you cannot have a fragmentary, ambiguous, participation-driven act. Price wins. It always wins because it's more explicit than any other information on the screen.
The early architects of SocialFi thought they were building a social network with an economic layer underneath. In fact, they built a market wearing a social costume. The space didn't fail because of excess speculation; it failed because it had quietly become a hot medium while still being marketed as a cool one.
Why Isn't This Just About Crypto?
It's easy to read this article as a deep dive into a niche product category. But the same logic applies more broadly; it explains a pattern in platform history that goes back decades.
Cool media die when they get too hot. This is not a metaphor; it's a recurring failure mode. Platforms that start as low-resolution engagement engines tend, over time, to add features that raise their own resolution. Verified accounts, public interaction metrics, pay-per-view creator funds, algorithmic rankings that precisely show how a post performed. These additions, individually, seem harmless or even helpful. But collectively, they chart a slow thermal drift from cool to hot. The medium becomes clearer, the signals more complete, and eventually, users shift from participation to performance, from performance to consuming performance metrics, and then gradually drop out entirely because there's nothing left to fill in.
This is why platforms that seem unstoppable at their peak of user engagement often feel hollow years later. They've drifted away from what created the value in the first place. Twitter around 2012 was cool; Twitter around 2024 is mostly hot. This shift isn't anyone's fault; it's the natural consequence of every metric, every monetization model, and every product team seeking to increase signal clarity. Hot is what happens when you apply optimization to a medium that wasn't meant to be optimized.
SocialFi reproduced the same trend on fast-forward, compressing a decade into months. It started with the hottest possible signal—real-time market price—skipping the entire cooling period where a medium first gains traction. It had nothing to shed. It was born hot and died fast because hot media without a transmission moat die quickly.
A Way Out: Condensation Points
If this diagnosis is accepted, an obvious question follows: Does this mean any attempt to fuse social engagement with capital is doomed?
No, because there is a third option that early social finance entirely missed. You can keep the medium cool and let capital aggregate at specific points within the medium, rather than dissolving capital into the medium itself.
This analogy borrows from physics. In a fluid that exists mostly as a gas, there are specific local conditions under which droplets form. The droplets are not the gas, and the gas is not the droplets. The two coexist, and what's interesting is the geometry of the region where condensation occurs. Most of the medium remains in its original state, while a few points become dense, liquid, and capable of bearing load.
Cool media work similarly. The underlying substrate remains "cool." Most actions in the medium remain low-resolution, ambiguous, and participation-dependent. But at specific moments, capital can condense out of the social substrate into something real, economically grounded, and materially impactful. The key is that these condensation points are not the medium itself; they are locally intensified parts inside the medium. The rest of the medium remains unchanged.
I think this is the right way to read certain platforms that have operated quietly while SocialFi failed. Substack is a cool writing platform. The writing itself is fragmentary, continuous, cumulative, and completed by readers through replies, shares, and citations. Capital concentrates at one specific point: recurring subscriptions. This subscription is a hot signal, an explicit recurring price, but its structure is a long-term commitment rather than spot trading, meaning it doesn't pollute the rest of the platform with constant price discovery. You don't see real-time tradable prices for single articles. The platform stays cool; capital aggregates at the subscription point.
Bandcamp does the same for music. Wikipedia does it through donations rather than charging per edit. Patreon does it for creators. These platforms have all found the condensation point where capital can enter without heating the entire medium. None of them tried to price every single social act. They all understood that only by keeping the platform "cool" could it continue to generate gravity.
The lesson SocialFi missed is that capital and cool media can be compatible, but only under specific conditions. Capital must be localized, infrequent, illiquid in the right way, and structurally separated from most social acts. It has to act as a condensation, not a saturation. Once you try to make every act capitalizable, you replace the social medium with an economy. And economies cannot produce the kind of accumulating, ambiguous, participation-driven meaning that cool media create.
What Comes Next?
A generation of projects has quietly groped toward this model, often without naming it in these terms, and it's slowly stabilizing. They tend to share characteristics. The base layer is a social or cultural artifact whose meaning accumulates through participation.
If there is a single-sentence takeaway from the SocialFi collapse, it's this: liquidity is heat. Adding it to a cool medium doesn't make the medium more efficient; it changes the medium so it can no longer do what it was meant to do.
Therefore, the truly interesting design space isn't about how to price every social act; it's the harder, more specific question: How can capital condense inside a stable mechanism without disturbing it? This question has hardly been asked. SocialFi failed to ask it because it was busy making everything marketable. The next wave that actually works might be the one that takes McLuhan seriously and preserves as much of the medium's nature as possible.
The More Canonical Case: NFTs
If SocialFi shows what happens when you build a hot medium and call it social, NFTs show something more instructive. They show what happens when you take a medium that has run for centuries, originally very cool, and heat it up in real time.
Collecting is one of the oldest forms of "cool" media. Whether sifting through record stacks, wandering antique shops, swapping Pokemon cards on the schoolyard, or showing off stamp collections at club gatherings, the objects themselves only carry half the meaning. The other half comes from participation, recognition, slow accumulation over years, stories attached to specific pieces, and the moment of connection when you discover you own something someone else is looking for. The value of a collection is low-resolution, ambiguous, and context-dependent. But this is not a bug. It's the very mechanism that makes collecting a cultural practice rather than a simple transaction.
The early NFT wave in 2020 and early 2021 still retained some of this logic. CryptoPunks started as an in-joke among crypto insiders, ambiguous in meaning, deriving value more from shared culture than price. Early Art Blocks drops had similar characteristics. There were forums, Discord channels where people discussed individual pieces, shared stories, and built community. Collecting was fun, but the works themselves weren't complete; they needed participation to generate meaning.
Then the markets matured, and the thermal drift set in to a degree that could be its own case study. OpenSea made floor prices visible. Rarity tools quantified every trait into numerical scores. Real-time charts made every collection look like a stock ticker. Sniping bots made human reaction times irrelevant. Wash trading became a status symbol. These features, individually, were reasonable market optimizations. But together, they pushed the medium from cool to hot at an unprecedented speed.
The result matched McLuhan's prediction almost eerily. Collectors became traders; traders became bot operators. Bot operators reduced the meaning of a collection to a floor price, which, when it broke, erased everything. The communities that formed around early collections didn't evolve into richer cultural forms; they dissolved the moment markets stopped moving. That's not how collectors behave. Collectors stay when prices fall; they keep talking, trading, and tending their collections. What NFTs experienced post-crash wasn't a mass exodus of collectors; it was proof that there were never many real collectors to begin with. What remained were market participants pretending to be collectors, and when the market closed, the pretense fell away.
This is a more vivid illustration of the medium thesis than SocialFi. SocialFi was a new medium born hot. So its failure could be blamed on novelty or speculative cycles. NFTs took a medium that had run for centuries, through wars, tech revolutions, and fashion changes, and destroyed its mechanism within thirty months. The medium was working fine; the platform killed it; not by neglect, but by endless optimization. Each step made the experience more precise, more measurable, more efficient. But it also made the collecting slightly less valuable, until at some point, there was nothing left to collect.
The warning is that thermal drift doesn't happen slowly. It can happen on the timescale of product cycles, especially if the platform layer is built by people who don't realize they're in a cool environment. They're always tempted to add new metrics, leaderboards, and real-time price feeds. Each addition makes the platform slightly hotter, individually harmless. But cumulatively, they end up making the practice the platform was meant to host impossible.
