Article Author: Anderl
Article Translation: Block unicorn
Preface
As a writer, I've been pleasantly surprised by Substack's evolution over the past few years. What kept me there wasn't so much what it did, but what it didn't do. Substack doesn't flood my screen with engagement metrics or algorithmic noise, nor does it turn every interaction into a performance. Every time I open it, I see a blank writing space, people I can agree or disagree with, and communities I might or might not want to participate in. In an era of short content and even shorter life cycles, a platform like Substack chose a path of gradually building trust between creators and readers.
This kind of restraint is incredibly rare on most social networks. When you step back and look at other platforms, the phenomenon becomes even more evident.
I find that most social media platforms are suffocatingly filled with metrics: likes, shares, views, promoted replies. All these factors combine to determine what appears in your feed. The platform has already decided what the content means, so you have no say in the matter. You are no longer engaging; you are performing. Ultimately, over-optimization consumes the medium itself.
In today's article, Anderl makes a similar point and offers more fitting examples. Using McLuhan's theoretical framework of "hot and cool media," he explains why SocialFi collapsed, why NFT culture died, and why truly successful platforms understand how to introduce capital without being controlled by it.
Medium
A line McLuhan wrote in 1964 has been quoted so often it has lost much of its original meaning: "The medium is the message." Today, it sounds like a slogan on a tote bag. But if you pause and read it as a valid diagnostic tool rather than a catchphrase, it becomes useful, especially for those trying to understand why recent attempts to fuse social networks with finance have ended in slow failure.
McLuhan's actual argument was narrower and more peculiar than what this slogan suggests. He believed each medium reshapes the people who use it, not through the content it carries, but through the form of the signal it delivers. A medium that transmits complete, high-resolution signals turns users into receivers. One that transmits 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 content is fully produced. A lecture is hot because the speaker controls the message. In contrast, a phone call is cool because the voice alone conveys too little information; the listener must construct the missing context. Cartoons are cool because the brain can complete the drawing. In McLuhan's analysis, television was cool because the early signal resolution was too low, requiring constant active reconstruction by the viewer. He controversially argued that this is why television is more addictive than film.
What matters here is not the outdated specific examples, but the underlying argument. The temperature of a medium determines the kind of behavior it generates. Hot media promote consumption; cool media promote participation. And crucial for what follows: you cannot convert one medium into the other without changing the nature of the medium itself.
How Does This Relate to Social Networks?
In McLuhan's terms, what we call social media today is largely "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 participation, replies, retweets, discussions, and connections by others. A post without interaction is almost nothing. A post with two thousand replies becomes something entirely different, even if its original content remains unchanged. This is the classic characteristic of a "cool" medium in McLuhan's analysis: the work appears incomplete and is only finalized through use.
This also explains why social networks feel the way they do: they are not content distribution systems, but engagement engines, merely appearing as content on the surface. Platforms that understood this have flourished, even without reading McLuhan. Most platforms that attempted to professionalize the engagement process and serve finished information to passive consumers have ended up marginalized.
What's interesting is what happens when someone tries to add an economic dimension to a cool medium. This is the context in which SocialFi emerged.
What Did SocialFi Attempt to Do?
The vision of SocialFi looked great on paper. The thesis was that social capital is genuine economic value. People constantly create social capital, but platforms capture it all. If we could bring social actions directly to market, those who create real value could profit. Every follow becomes an equity, every post a tradable asset, every interaction priced. In theory, the result would be a platform that is both a social network and an economy, where reputation can be traded and creators are rewarded in real time for the attention they generate.
For a few weeks in late 2023, the emergence of Friend.tech made this model seem like it might actually become a thing. People bought and sold each other's keys. Some influencers even sold tokens with opening bids in the thousands of dollars. Its interface looked like a social network and functioned like a securities account. Other projects quickly emerged, each promising the same logic with slight variations. Stamps, chatrooms requiring registration, social tokens, attention markets, and on-chain creator economies filled the promotional brochures.
Then the entire sector collapsed. Friend.tech faded away. Most follow-ups 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 make money and left when the profits stopped. While not wrong, this is shallow. Speculative cycles don't explain why participation plummeted. People didn't just stop trading keys; they stopped posting, reading, and engaging. Social activity died as much as financial activity. Why?
McLuhan's Take
A deeper analysis is that SocialFi's failure wasn't due to speculation. Speculation was a symptom, not the cause. The problem was that the entire enterprise of social networks was built on a misreading of its own medium.
Social networks are a cool medium. Their value lies in the fact that engagement itself is the signal, and meaning accumulates through repeated, low-resolution actions whose significance only emerges over time. SocialFi took this medium and replaced its constitutive signal—social action—with a high-resolution signal: price.
When you give a "follow" or a post a real-time, visible, tradable price, you are not adding an economic layer to social media; you are changing the medium itself. What results is a fully explicit signal with no gaps left to fill. A "follow" carries no ambiguity; it represents a specific monetary amount at that moment. Once the signal is so explicit, the rational response is no longer engagement, but allocation.
This is why Friend.tech, by its internal logic, was not a social network. It was more like a micro-reputation Bloomberg terminal masquerading as a social network. Users weren't posting; they were trading. The fact that they were trading in each other's identities didn't make the activity social; it made it financial activity wrapped in a social shell. Once the financial dynamics shifted (prices stopped rising, obvious arbitrage opportunities disappeared, speculative profits dried up), there was no underlying social medium to fall back on. The social layer was consumed by the financial one at birth.
This is exactly what McLuhan would have predicted. Hot signals cannot coexist with a cool medium; they replace it. If one of the properties of an action is its real-time, visible-to-all current market price, you cannot have a partial, ambiguous, participation-driven action. Price wins. It always wins because it is more explicit than anything else on the screen.
The early architects of SocialFi thought they were building a social network with an economy underneath. What they built was a market with a social skin. The failure of the sector wasn't due to excessive speculation; it was because it had quietly become a hot medium while still being promoted as a cool one.
Why This Isn't Just About Cryptocurrency
It's easy to read this as a deep dive into a niche product category. But the same logic applies more broadly, explaining a pattern in platform history that dates back decades.
Cool media die when they become too hot. This is not a metaphor; it's a recurring failure mode. Platforms that start as low-resolution engagement engines tend to add features over time that increase their resolution: verified accounts, visible engagement metrics, pay-per-view creator funds, algorithmic rankings that precisely show how a post performed. Each addition seems harmless, even beneficial. But cumulatively, they describe a slow thermal drift from cool to hot. The medium becomes clearer, the signal more complete, and eventually, users shift from participation to performance, from performance to consuming performance metrics, and then drift away entirely because there are no more gaps to fill.
This is why platforms that seem unstoppable at their peak of user engagement often feel hollow a few years later. They have drifted away from what created 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 outcome of all the metrics, all the monetization models, and all the product teams pushing for signal clarity. Hot is what optimization looks like when applied to a medium that didn't need optimizing.
SocialFi just fast-forwarded the same trend, compressing a decade into a few months. It started with the hottest possible signal—real-time market price—skipping the entire cool phase where the medium first gained traction. It had nothing to fall away from. It was hot from day one and died quickly, because hot media without a viral moat die quickly.
The Way Out: Condensation Points
If one accepts this diagnosis, an obvious question follows: Does this mean any attempt to fuse social engagement with capital is doomed to fail?
No, because there is a third option that early social finance entirely overlooked. You can keep the medium cool and let capital aggregate at specific points within the medium, rather than dissolving capital into the medium itself.
The metaphor is borrowed from physics. In a fluid that exists mostly as a gas, there are specific local conditions under which droplets form. The droplet is not the gas, and the gas is not the droplet. They coexist, and what's interesting is the geometry of where condensation occurs. The bulk of the medium remains its original state, while a few points become dense, liquid, and capable of carrying loads.
Cool media work similarly. The underlying substrate stays cool. Most actions within the medium remain low-resolution, ambiguous, and participation-dependent. But at certain specific moments, capital can condense out of the social substrate into something real, financially grounded, and impactful. The key is that these condensation points are not the medium itself; they are locally intensified moments within the medium. The rest of the medium remains unchanged.
I think this is the correct way to read certain platforms that quietly operate where SocialFi failed. Substack is a cool writing platform. The writing itself is fragmented, continuous, accumulative, and completed by readers who reply, forward, and reference articles. Capital concentrates at a specific point: a recurring subscription. This subscription is a hot signal, an explicit recurring price, but it's structured as a long-term commitment rather than a spot trade, 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 concentrates at the subscription point.
Bandcamp does the same for music. Wikipedia does it through donations, not per-edit fees. Patreon does it for creators. All these platforms have skillfully found condensation points where capital can enter without heating the entire medium. None tried to price every social action. They all understood that only by keeping the platform cool can it keep generating gravitational pull.
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 ways, and structurally separate from the bulk of social actions. It must condense, not saturate. Once you try to make every action capitalizable, you have replaced the social medium with an economy. And economies don't generate the kind of accumulative, ambiguous, participation-driven meaning that cool media create.
What Comes Next?
A generation of projects has quietly figured out this pattern, often without naming it in these terms, and it's stabilizing. They tend to share characteristics. The base layer is a social or cultural output whose meaning accumulates through participation.
If there is a one-line summary of the lesson from the SocialFi collapse, it might be 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 doing.
Therefore, the interesting design space is not how to price every social action, but the harder, more specific question: how can capital condense inside a stable mechanism without perturbing that mechanism? Almost no one is asking this. SocialFi didn't ask it because it was busy marketizing everything. The next wave that truly works might be the one that takes McLuhan seriously and keeps the medium as cool as possible.
NFTs: An Even Clearer Case
If SocialFi shows what happens when you build a hot medium and call it social, NFTs reveal something even more instructive. They show what happens when you take a medium that has worked for centuries by being very cool, and heat it up in real time.
Collecting is one of the oldest "cool" media forms. Whether it's flipping through records, browsing an antique store, trading Pokémon cards on the schoolyard, or showing a stamp collection at a club gathering, the objects themselves carry only half the meaning. The other half comes from participation, recognition, slow accumulation over years, stories associated with particular pieces, and the discovery of shared ownership with others. The value of a collection is low-resolution, ambiguous, and context-dependent. This is not a bug. It's the mechanism that makes collecting a cultural practice, not a mere transaction.
The early wave of NFTs in 2020 and early 2021 still retained some of this logic. CryptoPunks started as an in-joke among crypto people, ambiguous in meaning, with value derived 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 communities. Collecting was fun, but the work itself wasn't complete; it required participation to gain meaning.
Then the market matured, and the thermal drift set in, deep enough to be a case study on its own. OpenSea made floor prices clearly visible. Rarity tools quantified every trait into numerical scores. Real-time charts made every collection look like a stock ticker. Sniper bots made human reaction times irrelevant. Wash trading became a status symbol. Each of these features, in isolation, was a reasonable market optimization. But together, they pushed the medium from cool to hot at an unprecedented pace.
The outcome aligned almost perfectly with McLuhan's prediction. Collectors became traders, traders became bot operators. Bot operators reduced the meaning of a collection to a floor price, and when that floor broke, there was nothing left. Communities that formed around early collections didn't evolve into richer cultural forms; they dissipated the moment the market stopped moving. This is not collector behavior. Collectors stay when prices fall; they keep talking, trading, and curating. What happened to NFT communities after the crash wasn't an exodus of collectors; it was proof that there were hardly any real collectors left. Only market participants posing as collectors remained, and when the market shut down, so did the masquerade.
This illustrates the medium thesis more vividly than SocialFi. SocialFi was a new medium that came out hot. Its failure could therefore be blamed on novelty or speculation cycles. NFTs took a medium that had worked for centuries, survived wars, technological revolutions, and fads, and destroyed its mechanism within thirty months. The medium worked; the platform killed it; not by neglect, but by endless optimization. Every step made the experience more precise, more measurable, more efficient. But also made collecting slightly less valuable, until at some point, there was nothing left to collect.
The warning sign is that thermal drift doesn't happen slowly. It can happen on product-cycle timelines, especially when the platform layer is built by people who fail to realize they are in a cool environment. They are always tempted to add new metrics, leaderboards, and real-time price information. Each addition slightly raises the platform's temperature, seemingly harmless in isolation. But cumulatively, they eventually cause the very practice the platform was meant to host to disappear.
