Friend.tech continues to be popular, but doubts cannot hide the market's enthusiasm

On August 10, the Friend.tech invitation beta version was launched, and the trading volume on the first day exceeded 4,400 ETH (approximately US$8.1 million), becoming another hit after the Base chain’s previous BALD project.

Since the BALD project owner ran away not long ago, many community members can't help but be naturally immune to Friend.tech. Since the first day of the project's birth, there have been constant doubts about it, calling it the next Ponzi. However, judging from the performance of Friend.Tech in recent days, this SocialFi DApp seems to be becoming more and more popular and has a great momentum to go viral.

As of the time of posting, the total transaction volume of Friend.tech has exceeded 30,000 ETH, and the protocol fee in the past 24 hours has reached 1.68 million US dollars, surpassing Lido and Tron to rank second, second only to Ethereum. Some people have used MEV bot to conduct arbitrage transactions, and the money-making effect has also attracted constant discussion among users in and outside Shanghai on social media.

Friend.tech continues to blossom

Only ten days after its launch, Friend.tech has already set new highs in project chain data, becoming the new favorite of the Base network.

According to DefiLlama data, Friend.tech generated more than $1.68 million in blockchain fees in the past 24 hours, successfully surpassing other well-known blockchain projects such as Lido, Uniswap, Tron, and ranking only behind Ethereum.

As Friend.tech continues to spread in the crypto community, the number of unique users interacting with the app has more than doubled in the last two days, from approximately 31,500 on August 18 to more than 69,587, according to Dune Analytics data.

Friend.tech’s popularity has continued to grow, with some well-known non-crypto figures joining the social media DApp, such as Y Combinator founder Garry Tan, NBA player Grayson Allen, and professional gamer Faze Banks.

Reasons for popularity

In the sluggish bear market, the occasional emergence of a popular crypto application is enough to attract investors' attention. Among them, the investment of Paradigm, a leading crypto investment institution, helped Friend.tech gain a foothold in its early days, and the well-known crypto data analysis website Coingecko added a friend.tech-related token section, which to a certain extent represented recognition of the project.

However, a project that can stand out is more likely to be due to its own product mechanism design that caters to market demand. Specifically, Friend.tech can become popular mainly due to the following reasons:

1. Exquisite entry threshold design

Although Friend.tech has certain thresholds for registration and login, it simplifies the process and difficulty in the SocialFi link.

Friend.tech DApp requires a third-party invitation code to log in, and needs to be logged in through Google Mail or Apple ID, and then needs to be linked to a personal X account. The last step, which is also the basis for buying and selling social account stocks, is to deposit at least 0.01 ETH in the given contract address to the Base chain. In other words, the basic cost of using this product is about 17 U.

However, Friend.tech has simplified the economic mechanism in the design of X to Earn. Social media KOLs can directly "issue" personal tokens, and all transactions are priced in ETH instead of other currencies, which directly improves the efficiency of users buying and selling financial products bound to trading projects.

2. Early Earning Effect

As of now, the Friend.tech project is still in its early growth stage. The product has been open for a short time and its functions are not yet complete. Project co-founder Racer said that they initially made the application public to start load testing, but they did not expect it to become popular and spread quickly.

The SocialFi mechanism designed by the project is that users obtain chat privileges by buying and selling other users' "stocks". In this process, the price of user "stocks" will increase with the number of transactions. Therefore, for early users, both the initial entry capital threshold and the cost of purchasing celebrity "stocks" are relatively low.

The biggest beneficiaries of this mechanism are obviously KOLs on social media, so we can see their unremitting promotion activities. Ordinary users can also resell their shares and earn profits.

From the Friend.tech DApp, we can see that the number of holders of the top KOL "stocks" of the app is not too large, with the highest number being only 152. In addition, the highest selling price of the "stocks" in just 10 days was around 2 ETH.

3. Airdrop Interaction Expectations

In mid-August, SEI and CyberConnect were launched on Binance, but the airdrop reward setting made a group of freeloaders cry out that they were being cheated, so users who expected to profit from airdrops began to focus more on popular high-quality projects.

Friend.tech has previously announced that it will airdrop bonus points to app testers. The points will be distributed every Friday and will have special uses. Over the next six months, 100 million points will be distributed.

Although the project officials have not specified the purpose of the points, the airdrop hint is already very obvious, and the way to obtain points is also very simple, just use Friend.tech.

In addition, since Friend.tech is deployed on the Base chain, and the L2 network has officially stated that it will not airdrop tokens, the high-quality projects on its chain have become the biggest airdrop targets.

Therefore, as Friend.tech becomes more and more popular, the platform users are supplemented by the freeloaders, and the project has formed a snowball effect.

Controversy continues

Although Friend.tech continues to set new records in terms of data, and its community popularity and network influence are increasing, various doubts have never stopped since its inception.

First, in terms of data security, Friend.tech requires users to use their personal Google or Apple ID to log in on the login interface, and then must link to the X account to proceed to the next step. For individual users, this is undoubtedly handing over their personal information to a third party.

Recently, the on-chain data monitoring platform Spot on Chain stated that Friend.tech had data leaks through the API, and that shares could be bought and sold from the contract without an invitation code. In addition, SlowMist founder Yu Xian also posted that the friend.tech wallet addresses corresponding to more than 100,000 Twitter accounts were leaked.

Secondly, on the project's business model, cryptocurrency commentator @Yazan said that this business model will fail because of its poor pricing model, which can be severely manipulated due to the concept of shares.

Other institutional analysts also said that although Friend.tech's popularity has increased, the hype may be short-lived.

The biggest controversy comes from the fact that Friend.tech is an application that goes against the spirit of Web3 encryption. It not only collects users’ Twitter accounts and social relationship information, but also only well-known KOLs and early participants benefit from it.

Although 5% of each transaction will be earned by the user, the "stocks" of platform users are rarely sought after. The only way to earn the difference in the next transaction is to buy KOL "stocks" at a high price, but this undoubtedly involves investment risks.

Therefore, some U.S. securities practitioners said that since the project model looks similar to the stock market, it is likely to soon attract SEC intervention and supervision.

In addition, the Friend.tech product itself is also very mysterious. Whether you log in to its official website or app, you cannot get any product information, that is, there is currently no product introduction, official documentation, etc.

Regarding the above controversy, Friend.tech co-founder Racer said that the project is only a test version and it is inevitable that there are shortcomings. Now they are focusing on expanding the project's infrastructure, fixing errors, and setting basic policies for the website. As for how to maintain Friend.tech's growth or protect it from increasingly serious legal problems, they need to wait until the website stabilizes first.

Regarding the data leak, Friend.tech officials said in a statement that the so-called data leak was just someone grabbing its already public API, showing the connection between the public wallet address and the public X (formerly Twitter) username. Therefore, for this question, it is like saying that someone attacked by viewing the user's public information on X.

In addition, in order to avoid a strong association between the "Shares" in Friend.tech and the "stock" attributes in the traditional securities market, the project officials have renamed "Shares" to "Keys", and explained that "Keys" better reflect the role of an in-app item used to unlock the user chat room.

Although these doubting and controversial voices are getting louder and louder, they do not seem to have stopped Friend.tech's progress and the popularity among Chinese and foreign community members. The most obvious thing is that Friend.tech's transaction volume, number of active users, discussion level and other data are increasing day by day.

Conclusion

From the current community point of view, the majority of people are not optimistic about the Friend.tech model. In particular, there has been a failure case of BitClout, a decentralized social product that is very similar to Friend.tech, so some people expect that the hype cycle of Friend.tech will end within a month.

However, the continued popularity of Friend.tech shows that its product potential and commercial value have not yet been fully tapped. Especially as an exploratory application of Web3 social networking, with relatively low entry and investment thresholds, users may wish to give it a try.