Social media is a cornerstone of modern life; it connects us and enables seamless information sharing across societies and industries, including crypto. Yet, it’s plagued by complexities, including data breaches, opaque algorithms, censorship, prioritizing profits over user experience, and a lack of user control. Most of these issues stem from its centralized model of operations.
Enter FriendTech, an attempt to address these issues by leveraging blockchain technology. Its bold proposition – what if users truly owned their social capital and creators could directly monetize their influence?
In this article, we explore FriendTech’s story, its rise and fall, and new attempts at getting it right and making a comeback. We examine whether it has the potential to gain widespread acceptance and become the new normal in the social media space.
What is FriendTech and How Does It Work
FriendTech is a decentralized social media platform built on Coinbase’s Layer 2 network, Base. Its unique approach lies in tokenizing social influence and enabling creators to monetize their impact directly. The platform was created by a pseudonymous duo, Racer and Shrimp, who have worked on similar projects in the past.
The platform allows creators to issue tradable “Keys” representing their influence. Fans can buy these Keys for access to exclusive content or private chats. Creators, meanwhile, have a new way to monetize their audience by offering their followers a more direct and personalized experience.
FriendTech operates as a Progressive Web App (PWA) accessible through a browser-enabled mobile app. Users manage profiles and a non-custodial wallet, holding the private keys to their “FriendTech” assets. Each user has a set of Keys, which others seeking access and interaction can purchase. They engage with creators whose Keys they possess, either through chat interactions or by exploring popular creators
Once a user completes their account setup and funds their wallets, a set of Keys is generated within their account. These keys can be purchased by other users seeking access to the account creator. It’s important to note that every user account on FriendTech is equipped with these Keys. However, the value of these account Keys is intricately linked to the account owner’s level of influence and the demand for them within the community.
The Rise of FriendTech: Early Traction and Buzz
Within weeks of its launch in August 2023, FriendTech saw staggering adoption. NBA players, esports personalities, and Crypto influencers flocked to the platform, attracted by the potential for monetization and a new social media experience.
In the first two weeks after its launch, the platform reportedly gained more than 100,000 users and made about $25 million. Crypto influencers Jordan Fish (Cobie) and Hsaka Traders reportedly earned $158,600 and $107,600 respectively, within the first month of its public launch. Racer, one of the platform’s co-founders, made more than $117,300 during the same period.
The initial usage statistics from the platform’s early weeks of launch leave no room for doubt – FriendTech managed to create a significant buzz within the Crypto Twitter community. With this in mind, let’s delve into the reasons behind FriendTech’s instant popularity.
What Makes FriendTech Different and Why It Was Successful at First
This meteoric growth can be attributed to a few key factors:
1. Tokenization appeal:
This initial success highlights the platform’s ability to tap into the “attention economy” and incentivize user participation. FriendTech is not the only social media platform built on a decentralized network.
By tokenizing influence, the platform aims (and was able) to incentivize the creation of meaningful communities and enable seamless monetization of social interactions. Creators can finally monetize their followings without relying on ads or brand deals. By selling limited access keys, they earn directly from their most devoted fans.
In essence, it leveraged the allure of cryptocurrency and tokenization to appeal to those seeking financial gain.
2. True Ownership of Social Capital
On FriendTech, each user controls their keys. When their keys become more valuable, users can potentially earn. This system benefits influencers and creators because it allows them to personalize their interactions with their followers and monetize their content in new ways. Additionally, followers can engage with their favourite creators by purchasing special tokens for interactions; creators can also control access levels for key holders.
3. Base and Twitter Integration
Another key factor contributing to FriendTech’s initial popularity is its association with Coinbase’s Layer 2 network and the easy onboarding process it provided for established users of X (formerly Twitter).
Coinbase’s connection lent credibility to the project and attracted significant attention from investors, including the renowned venture capital firm Paradigm. FriendTech is the ninth-largest protocol on Base, with a total value locked of about $30 million, according to DeFiLlama.
4. Points System and Potential Sources of Revenue for User.
Also, beyond the social aspect of FriendTech, the platform introduced a point system and gave points to users based on their interactions every Friday. At that time, these points were said to be useful in the future. This got the attention of airdrop hunters, who wanted to be among the first to get in and have a chance at future rewards.
The Pitfalls – Privacy Breach and Fundamental Challenges
FriendTech’s meteoric rise was cut short by a critical failing: a privacy breach on August 26, 2023, that exposed the sensitive data of over 101,000 users. This event had an immediate impact, with daily revenues plummeting by 87% from a peak of $1.7 million on August 21 to a mere $215,000 just five days later.
Transaction volumes followed a similar trajectory; it declined by 90% from nearly 525,000 on August 21 to only 51,000 by August 27. This dramatic decline prompted some industry experts to outrightly predict the platform’s demise.
However, FriendTech’s woes extend beyond this privacy failure. Several fundamental issues raise red flags around the platform’s long-term viability and ability to achieve sustainable growth:
1. Privacy and Censorship Resistance Concerns
While decentralization is a core tenet, FriendTech’s model of collecting and storing personal data and private chat histories directly contradicts principles of privacy and censorship resistance that are foundational to Web3.
2. Social Graph Centralization Bottlenecks
By porting follower graphs from centralized platforms like Twitter, FriendTech recreates many of the same pitfalls of centralized social media it aims to disrupt, such as the perpetuation of existing power imbalances and social inequities.
3. Risks of Financializing Social Interactions
FriendTech’s pioneering approach to tokenize online influence and monetize social capital is innovative, but explicitly commodifying friendships and creator-fan relationships raises ethical concerns around potential toxicity if not carefully balanced.
4. Pricing Integrity and Manipulation Risks
Concerns exist about the transparency and integrity of FriendTech’s pricing mechanisms, with claims of sudden, irrational price spikes followed by steep declines. This volatility opens the door for potential manipulation by automated trading bots taking advantage of arbitrage opportunities.
5. Doubts Around Creator Monetization
On-chain analysts like Yazan questioned users’ willingness to pay premium fees for limited access to private group chats, especially given reported functionality issues. The ability of creators to genuinely monetize their influence on the platform is still very fuzzy.
6. Long-Term Sustainability Challenges
Compounding these issues, Coinbase’s Lisandro Rodríguez identified FriendTech’s combination of unchecked user greed and lack of a cohesive scaling strategy as the root cause behind its initial public downfall. Unaddressed, these shortcomings around growth planning and aligning incentives could derail FriendTech’s long-term sustainability.
Adapting After the Pitfalls: FriendTech 2.0. New Hope on the Horizon?
Despite its initial stumbles, the FriendTech team has doubled down with an ambitious v2 aiming to address critiques and achieve sustainable growth. In April 2024, FriendTech v2 was unveiled in an attempt to address some of the challenges it faced and reignite user engagement. Some of the key new features include:
Native Token and DEX Integration
FriendTech now has a native token, $FRIEND, that will be used for all platform transactions and fees. This transition from ETH payments could help streamline the user experience. In addition, the platform now hosts a DEX, which allows users to trade this new token, “keys,” and other various digital assets. There is, however, a 1.5% fee on all trades conducted via the platfrom. This move is expected to inject a new layer of utility and potentially incentivize user participation.
Clubs – Community-Owned Social Spaces
Moving beyond just personal influence tokens, FriendTech v2 introduces “Clubs” – collective community spaces where key holders can join together to own and operate a shared social hub. This allows passionate fan groups to self-organize around shared interests, with their own governance and membership control. Keys to these Clubs will be transacted in FRIEND tokens, creating an internal economy within the platform.
User Adoption Incentives
To bootstrap its new token economy, FriendTech conducted an airdrop program rewarding early users with FRIEND tokens. This aims to foster an active community and attract new users seeking to participate in the platform’s growth
The Path to Critical Adoption: Can FriendTech Survive?
While FriendTech’s version 2 overhaul promises promising new features, the lingering question remains: will it be enough for FriendTech to achieve self-sustaining, critical adoption?
For that to be a reality, the platform must overcome its rocky beginnings and the fundamental challenges discussed earlier, particularly regaining user trust after the devastating privacy breach and demonstrating a viable long-term value proposition. Beyond that, it will also need to address certain issues that popped up due to its new direction.
FriendTech’s community-owned “Clubs” unlock a new frontier of decentralized social dynamics. However, they also introduce unprecedented complexities around governance, content moderation, and avoiding the creation of unmoderated toxic environments – issues that centralized incumbents have already struggled with at scale. Plus, the legal frameworks around monetizing online personas, managing decentralized creator funds, and governance of decentralized communities remain highly ambiguous
While transaction fees help bootstrap liquidity, FriendTech must ensure its $FRIEND token has substantial use cases and network demand to evolve into a healthy, self-sustaining economy long-term. A comprehensive token utility roadmap bridging speculation and tangible utility will be critical.
While FriendTech was an early pioneer, it now faces stiff competition from both entrenched centralized platforms and emerging upstarts like Lens are also vying to become the convention for decentralized social media.
Final Thoughts
FriendTech isn’t the first social media platform built on blockchain to face challenges. BitClout, another platform with backing from major venture capitalists, encountered similar issues with privacy and legal hurdles.
However, the FriendTech concept is a bold one as it questions the true value of “social capital” and what the future of online interactions should look like. Its success or failure will offer invaluable insights into the feasibility of decentralizing our digital social lives.
The FriendTech Version 2 is a significant comeback attempt; the FRIEND token, Clubs, and airdrop program offer intriguing possibilities. However, only time will tell if FriendTech can overcome past issues, attract a critical mass of users, and carve out a niche in the ever-evolving social media landscape.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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