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What Is Friend.Tech? Decentralised Social Media App Dubbed ‘Dead’ Despite Making Waves Amid Scrutiny

Published August 28, 2023 1:03 PM
Teuta Franjkovic
Published August 28, 2023 1:03 PM
Key Takeaways
  • Friend.tech introduced its beta version on Coinbase’s layer-2 Base.
  • After launch, it surpassed Uniswap and Bitcoin network.
  • It generated over $1 million in fees within 24 hours.
  • By week’s end, its earnings plummeted by over 70% from peak.
  • Users daily additions dramatically dropped by 80%.

Less than three weeks after its debut, critics have already dubbed the decentralized social network Friend.tech “dead”. This is due to a sudden decline in important indicators including activity, inflows, and volume.

On August 11, Friend.tech’s buzzy beta version was released on Coinbase’s layer-2 Base. A week later, on August 19, it outperformed Uniswap and Bitcoin networks with fees exceeding $1 million  in a single day.

But since then, its prices have plummeted. According to DefiLlama , daily fees peaked on August 21 at $1.7 million before falling by 87% to about $215,000 on August 26.

Transactions Collapsed as Community Reacted

According to Dune Analytics statistics , transactions on Friend.tech likewise decreased by over 90% from their peak of over 525,000 on August 21 to just over 51,000 on August 27. This led many users on X (Twitter) to post condolences for the network.

With the platform allegedly taking a 5% cut, Friend.tech centers around the purchase and sale of ‘keys’ that allow buyers to send private messages to sellers.

Crypto and non-crypto influencers have shown interest into it, such as UpOnly podcast presenter Cobie , YouTuber Faze Banks , and the Russian protest group Pussy Riot.

Coinbase Payments Risk Manager Lisandro Rodriguez on Aug. 27 that the platform is “dead” as a result of “greed and poor execution.” 

Along with the fees reduction, the number of buyers and sellers has plummeted as well.

According to Dune statistics , on August 27, there were only 10,000 buyers and 7,800 sellers, notably down from the peak of over 58,000 buyers and 27,000 sellers on August 21.

Dune indicates inflows  have likewise plummeted from the high of $16.8 million on August 21. On August 27, Friend.tech reported roughly $1.6 million, a drop of nearly 90.5%. A downward trend followd the August 21 protocol influx high.

What Is Friend.Tech?

Friend.tech is a hot new social media project that gave digital asset traders some much-needed summertime excitement. Basically, itโ€™s a blockchain-based platform that enables users to purchase and trade digital tokens associated to their preferred X (formerly Twitter) influencers. These tokens serve as a conduit for connecting with other backers in specific group chats.

The idea behind Friend.tech is that personalities on platforms like X have a disproportionate impact on new cryptocurrency firms’ success or failure, making them a lucrative target for monetization.

With the likes of Aave’s Lens Protocol and Twitter co-founder Jack Dorsey’s BlueSky among many to have launched in the past year, social media is also a highly fought area of development in cryptocurrency.

But as of right now, Friend.tech appears to be suffering from the same speculative craze that frequently follows new cryptocurrency ventures, making it more analogous to Dogecoin than a dynamic social networking platform.

Even VCs are unsure  as to whether every idea needs a certain amount of speculation to succeed in the current market.

According  to Simon Taylor, head of strategy at fraud prevention startup Sardine, ownership is a trait for the nature of cryptocurrencies. It’s a substitute for the advertising business model that fueled the tech titan.

โ€œThe upside is more privacy and potentially a share in growth. The risk is speculative games,โ€ he stated .

Teething Issues

Friend.tech operates on Coinbase’s new blockchain network Base, a chain that has been inundated with token scams since its introduction.

Its rapid success shines amid the chain. Due to a sudden surge caused by trading bots capitalizing on Friend.tech’s soaring value, Base briefly outpaced Ethereum in transactions per second.

The app attracts content producers from platforms like OnlyFans, offering similar private access and premium content. Yet, Friend.tech faces issues in its brief existence.

Friend.tech makers renamed  the influencer tokens, formerly known as “shares,” to “keys” on Monday in an effort to distinguish them from securities regulations after alert lawyers noticed  a potential overlap with the current crackdown on such assets by US regulators.

The lack of a privacy policy on Friend.tech, a fundamental requirement for any platform in the current day, has also caused criticism from traders.

Past Performance

Some have compared  the friend.tech concept, which only gives founders a portion of token transactions so they have no incentive to remain after the initial sale, to nonfungible tokens.

The promise of ongoing royalties for creators from NFTs, a major selling point, often remains unfulfilled, and sometimes even restricted.

According to data from CryptoSlam , global NFT sales at the beginning of this month were down more than 95% from the industry’s peak of $288 million in January 2022.

Similar to BitClout’s  past efforts in 2021, where they gathered around $170 million from users and investors before facing legal issues and renaming, the concept of tokenizing well-known crypto personalities isn’t new.

Ultimately, friend.tech faces a core challenge seen in crypto: providing value beyond speculation for user engagement. Trader leaderboards, token price charts, and tools aiding financial manipulation are being developed by others alongside friend.tech.


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