friend.tech is so unpopular, why is FRIEND still being promoted?

On May 4, friend.tech officially released version V2 and airdropped FRIEND tokens. One point can be exchanged for one FRIEND. For a time, this "social star" who disappeared for half a year reappeared in people's vision, and its token FRIEND exceeded 100 million US dollars in just a few days.

Both the original and the imitation platforms have ended, and the points trading is "no one cares"

After friend.tech went online in early August last year, celebrities such as ZhuSu and crypto KOL Adam Cochran settled in and started trading. Then on August 19, Paradigm publicly admitted that it participated in the seed round investment of friend.tech. As a result, friend.tech came into the public eye and set a mythical record of 580,000 transactions per day.

Even if friend.tech's data looks good, it can't escape the fate of SocialFi's "flash in the pan".

Only half a month later, the number of transactions completed by friend.tech per day was only 25,000, a decrease of about 95%, and the daily income dropped from US$1.7 million to a minimum of US$170,000. Subsequently, the founders withdrew coins, robot accounts rushed to make profits, and the frequent changes in the points rules made the community user experience unsatisfactory. After a large number of real user accounts were misjudged as robots, friend.tech also began to go downhill.

Related reading: " Friend.Tech users withdrew in large numbers, and the friendship boat of Web3 social networking could not stand the test? "

Previously, various public chains including BTC, Sloana, BNB, Polygon, Mantle, and AVAX rushed to launch their own "FT imitations", and even the Base chain on which FT relies also appeared Words.art and Pal imitation projects. Although each imitation claimed to have made innovative changes to FT, after the "fall" of friend.tech, they also disappeared from the public's view.

In addition, friend.tech points are set to be 100 million in total, 90 million will be allocated during the test period, and the remaining 10 million will be allocated in the v2 version. However, within 2 months after the end of the test phase, friend.tech points have accumulated a total transaction volume of 2.73 million US dollars on Whales Market.

Currently, according to data from Whales Market , the transaction volume of MERL points of Bitcoin L2 protocol Merlin Chain has reached 3.87 million US dollars, the transaction volume of IO points of depin protocol io.net has reached 4.87 million US dollars, the transaction volume of W points of cross-chain interoperability protocol Wormhole has reached 5.5 million US dollars, and the transaction volume of PORTAL points of game Portal has reached 6 million US dollars.

Therefore, for a project that relied on viral marketing to hype up the SocialFi track, 2.73 million is not considered outstanding. It can even be said that at that time, friend.tech points itself was not as eye-catching as this emerging points trading market.

Trading volume exceeded 100 million in a week, what is the charm of FREIND?

If we only look at the data performance, friend.tech is indeed "cool". But what's interesting is that compared to the bleak points market, FRIEND achieved a breakthrough of 100 million US dollars in a week. According to dune data , as of the time of writing, FRIEND's trading volume has exceeded 3.7 billion US dollars, which can be said to be a world of difference.

The most "Base" token

On April 5, Friend.tech's official Twitter announced that "starting next week (April 8), linking Twitter to your Friend.Tech account will become optional. New users will be able to choose any unclaimed username when registering." The official Twitter also explained that this is in preparation for v2, to open Friend.Tech to new audiences outside of Twitter, and allow existing users to link their Twitter to new accounts before v2 is launched.

V2 means that the airdrop is really coming. For a time, friend.tech's net inflow surged. According to Dune data , friend.tech had a net inflow of 1,300 ETH on April 8, the highest net inflow since September 29, 2023; at the same time, trading volume increased to US$7 million. Previously, the average trading volume in 2024 was US$1 million; TVL rebounded to US$42 million.

On May 4, friend.tech officially released the V2 version and airdropped FRIEND tokens. One point can be exchanged for one FRIEND. In addition to the 100 million points initially established, friend.tech said that in the next 12 months, 12 million FRIEND incentives will be allocated to LP providers, that is, the total supply of FRIEND will be at least 112 million.

With tokens, there are more gimmicks to make money. As a social protocol of the Base chain, FRIEND is also known as the most "Base" token. Since Base claims that they will not launch tokens, this may leave room for FRIEND's status to grow.

On the one hand, friend.tech has set up a DEX "Bunnyswap" dedicated to FRIEND transactions, on which FRIEND/ETH liquidity can be provided. Users need to deduct a 1.5% exchange fee for exchanging in the FRIEND/ETH pool, and they also need to pay 1.5% for trading Club Key. These fees will be shared by LP providers (in the form of FRIEND).

Simply put, providing FRIEND/ETH liquidity on friend.tech can obtain three kinds of benefits , including 1.5% exchange fee (current APY is 194.15%), 1.5% Club Key transaction fee (current APY is 21.63%), and sharing 12 million FRIEND incentives (current APY is 66.39%).

Currently, the address that provides the most liquidity on friend.tech is owned by Taiwanese singer Huang Licheng. According to Dune data , he has purchased a total of more than 3.52 million FRIEND. The second is the address starting with 0xe3879b, which provides 650,000 FRIEND in LP. Christian2022.eth, ranked fifth, is a partner of NextGen Digital Venture, which provides 600,000 FRIEND in LP.

On the other hand, SocialFi, as the first coin to issue, is also the first project to airdrop 100% to users, which obviously gives friend.tech more confidence to motivate users. In addition to holding various activities on social media (such as selecting the best analysis copy) to send airdrops to users, they will even "ridicule" other projects that have not issued coins.

Related reading: " "Only rich people can use FT", Friend.tech starts to take the black and red route "

Club gives FRIEND functionality

But just airdropping FRIEND is not enough to support its popularity. After all, the coin is sold as soon as it is received, and no one can force you to continue to participate in the protocol interaction. However, friend.tech did it.

friend.tech is very "smart" in setting limits on the conditions for receiving airdrops. At the beginning, only 10% of FRIEND can be claimed. After that, you must join a Club and follow 10 people before you can claim the remaining 90%. However, these requirements were not prompted in the pop-up window of the application, and many people said that they could not claim the airdrop even if they joined the club.

Club is a new feature of V2. In the past, the room owner could see all the messages sent by other people, but other people could not see each other. Club is similar to a paid group, which is to transfer the 1v1 "chasing star" mode of V1 to 1vN. Each account can create a new Club for free, that is, get the first Club Key for free. People who join the group later need to pay a higher price to buy Club Key, and transactions only support FRIEND tokens.

Key holders can vote for the president of their Club at any time. The president of Clubs is responsible for managing the club and selecting moderators, and friend.tech seems to intend to stimulate the creation of new Clubs or allocate additional rewards to the creators or presidents of Clubs.

In addition, the official created Money Clubs, which enables groups to manage shared treasuries and mint tradable on-chain collectibles, meme coins, and a large number of other media, thereby creating additional income for the group, and all of these assets can be traded on its native DEX.

That is, Club provides functionality for tokens, rather than the "governance voting" use case thrown out at random. In addition to buying and selling Club Keys, creators can also make money by holding them. According to dune data , as of the time of writing, the number of Clubs has reached 223,075, and the total transaction volume of Club Lifetime has reached 25,886,290 FRIEND.

How far can Club take FRIEND?

The first generation of friend.tech focuses on trading the Key of a certain KOL, distributing the Ponzi to each KOL, and limiting the number of people by setting a high purchase price for the Key belonging to the KOL through the model. Compared with the Ponzi projects of thousands or tens of thousands of people, this model is obviously more operational and controllable for a small-scale Ponzi formed with one KOL as the center. In the words of the circle, a small circle is easier to shape "consensus".

To put it simply, V1 is essentially a Ponzi scheme derived from the fan economy, and it has not formed a platform that strongly binds content production and social relationships. What about V2's Club?

Is FRIEND a new Ponzi scheme?

The fundamental reason for V1's failure lies in the price curve, which limits the number of people by setting a high purchase price for the Key to which the KOL belongs through the model, which greatly increases the entry threshold for newcomers. In order to solve this pain point, Club changed the pricing formula of the Key, and launched the standard curve and the leisure curve based on the original dedicated curve.

Under the Standard curve, the price of the next Key is S^2/100 (in FRIEND), where S is the number of current Keys. Among them, the price of the Exclusive curve is 10 times that of the Standard curve. According to the formula, when the number of Club Keys reaches 50, the price of each Key is 250Friend (about 500 US dollars), which is similar to the KOL curve in the V1 version.

The newly launched Casual curve is 100 times cheaper than the standard price curve. In this way, the introduction of the new curve standard can effectively solve the entry threshold problem, and friend.tech officials also encourage users to use the Casual curve to create a Club with more than 1,000 members.

The new curve design is indeed capable of leading friend.tech to continue operating, but the key lies in whether the handling fee can be reduced. Previously, only 20% of the accumulated amount of V1 Key buying and selling flowed into KOL and FT project parties respectively, and the friend.tech protocol took 80%.

According to " Friend.tech Economic Model Expansion: What kind of price curve does SocialFi need ", the "MEV income" earned by Bot and the handling fees earned by the protocol will eventually cause a net outflow of friend.tech funds, and the book rate of return of Key is leveraged, and its book value is three times the real TVL of friend.tech (all from user deposits). Once TVL goes down or even just sideways, the impact will become extremely strong.

However, Club has reduced the protocol commission, and only about 2%-3% of the transaction amount will flow into the friend.tech protocol, which reduces the friction cost of trading keys, and repeated transactions will be much more cost-effective for degen. On May 16, friend.tech officially launched President rewards and Club Key transaction rebates. Both President and Key traders will receive 0.5% of the transaction amount, which can be collected in the wallet. These will be deducted from friend.tech's fee share, so the overall fees and FRIEND ＜＞ ETH LP rewards will not be affected.

It can be seen that whether it is a flatter curve design or a lower protocol commission, V2 has indeed made changes to V1 with the intention of lowering the entry threshold. And in V2, users can also continue the KOL Key trading experience of V1.

According to calculations by friend.tech deep player @0xLuxeCrypto, his personal Key holder will receive 25% of all fees generated by all Clubs he created, and his Club Key holder will obtain a share of the fees generated by Clubs through various distribution channels, that is, the income is relatively reduced, but the group chat function can bring greater network effects to the users themselves.

In addition, some community members observed when using the Base Scan contract interface that some new features that friend.tech is about to launch, such as changeBestFriend and changeBestFriendfee, can be speculated that this feature may be used to allow anyone to add a best friend, so that less or no fees can be paid when trading Keys.

"Club+meme" may be a bullish catalyst

In fact, there is another factor that makes Club bullish - meme.

Another key point for Club to attract users is that Key is transferable, so more gameplay is derived. For example, the room owner can buy a large number of Keys at the beginning, and then transfer their Keys to people in other Clubs. The founder of ArbDoge.AI stated that he would use 20% of his personal income from the project to regularly repurchase his Club key to empower the Key.

In fact, this is the logical development of meme coins. Some community members visualized friend.tech as: participants who were searched by human flesh, indelible meme coins and abundant liquidity.

In addition, friend.tech said it will also launch a new feature called Memeclubs, which, combined with the recent meme hype, is enough to excite and imaginative the community. Currently, many memecoin communities from other chains are trying to enter the Club, such as PUPS, WZRD (community startup), Bobba Oppa (SOL shitter).

And interestingly, during the quiet period of friend.tech activities, memecoins swept the entire industry. After the market pulled back and the bull market led by meme ended, the Friend.tech editor also complained, "It's crazy, we missed the opportunity to deploy v2 in a few weeks of bull market."

Even the editor of friend.tech tried to operate his own community in a meme way. Before the release of V2, he used confusing cx rhetoric to "show his presence" many times, mostly saying things like "friend.tech users are all rich people, poor people should not get involved with friend.tech", and even hinted at and criticized competitors such as Farcast, causing public outrage.

Related reading: " "Only rich people can use FT", Friend.tech starts to take the black and red route "

An article by Bankless believes that each blockchain has fostered its own unique form of SocialFi, such as NFT on Ethereum and meme coins on Solana. For a long time, people have compared meme coins with NFT collections because they all create the same unique social network, such as dogs with hats and the most typical WIF, and their holders appear as a unique population.

But the problem is that they are fragmented, and the lack of a unified platform has hindered a cohesive growth trajectory and caused many people to regard them as separate trends rather than part of SocialFi. friend.tech changed that, and the meme swapped out friend.tech's SocialFi for a sillier, and arguably funnier, kind of thing.

Can FRIEND still rise?

If we only look at the social elements, the chat page of V2 has not changed much, and the administrator function designed for group chat is actually not very innovative.

But from the data, FRIEND transaction volume has shown a significant downward trend, currently about 300,000, which is a significant downward trend from the high of 6.8 million US dollars on the first day. The number of newly created clubs is also declining. Although this may be a sign of the maturity of the club and people's integration into their favorite groups, it is after all the biggest update feature of V2, which may indicate a low demand for this new model.

In addition, FRIEND liquidity has stagnated, and liquidity is crucial to token growth and price trends. Although there are considerable incentives to provide liquidity for FRIEND on friend.tech's native DEX, the token's liquidity appears to have stabilized at present, which may indicate a ceiling for price action.

Conclusion

According to Galaxy statistics , from November 2023 to January 2024, during the quiet time of friend.tech, user trading activity and the number of daily active users of the DeSoc application were also stagnant, and it was not until February that encouraging signs of growth began to appear. The rise in trading activity was partly attributed to the recovery of Farcaster users. In addition to the Frame application, the Meme coin craze brought by DEGEN has also become a major bullish factor for Farcaster.

However, the increase in Farcaster's daily active users is mostly due to their desire to receive airdrops from sub-communities. Similarly, the hype of friend.tech V2 is also due to the FRIEND token. From this, it can be seen that SocialFi is essentially still focused on "Fi", but is issuing tokens really a good way to solve SocialFi's problems?

a16z previously published a series of articles on whether to issue tokens. The article believes that tokens are one of the most powerful tools, but also one of the products with the greatest risk to market. However, launching tokens too early is also the most common mistake made by projects in web3. friend.tech changed the airdrop information many times before issuing the token, and after issuing the token, the backend was overloaded due to technical failures.

Related reading: " How messy is friend.tech's coin issuance process? "

Previously, a VC said that DeSoc may become one of the mainstream narratives this year, and from the current social projects, friend.tech is definitely one of the most noteworthy projects. But whether FRIEND can continue to be hyped depends on how friend.tech ensures that users are motivated and are more willing to choose their applications rather than other applications such as Twitter, Farcaster, Lens, etc.

With the release of FRIEND, friend.tech did not attract the same level of attention as before. Some community members speculated that V2 might just be another careful plan by the team, intending to collect all negative feedback, iterate, and then release a new version of the application.

References:

1. Friend.tech V2 is launched, is there still a chance? ;

2. In-depth interpretation of friend.tech V2: core functions, token allocation and room for growth ;

3. Friend.Tech imitations emerge in endlessly, is it a new business model or Ponzi? ;

　　Disclaimer: Includes third-party opinions. No financial advice. See Risk Warning.