Author: Mia, ChainCatcher
Editor: Marco, ChainCatcher
Friend.tech Protocol Announcement Sparks Market Turmoil
In the perplexing world of Web3 social networks, an announcement from the Friend.tech protocol caused a stir in the market. Recently, the co-founder, known as Racer, posted on social media suggesting the intention to migrate the Friend.tech protocol from its current Base platform. This news immediately led to a significant drop in the price of the protocol’s native token, FRIEND. According to data from CoinGecko, on the day of the announcement, the FRIEND price plummeted to $1.01, with a 24-hour decline of 32.2%.
According to on-chain data, the address associated with “Big Brother Huang” has accumulated a total of 4,873 ETH (approximately $15.35 million) to buy FRIEND tokens, at an average price of $1.9. Currently, they are facing a floating loss of $7.54 million. Projects at risk of being “rekt” like Big Brother Huang’s are in the minority, and the crypto community is also speculating on the demise of Friend.tech. So, what exactly went wrong with Friend.tech, which once dominated the world of SocialFi?
The Migration Controversy
On the afternoon of May 26th, Racer publicly expressed the desire to leave the Base network created by Coinbase in a post. They specifically proposed a “system design bounty” plan, promising to pay up to $200,000 to anyone who could find a way to smoothly migrate the Friend.tech protocol out of Base without causing significant problems for users and ensuring the stable operation of the system.
In another post, Racer explained in detail the underlying tensions between the Friend.tech team and the Base platform. They pointed out that due to misunderstandings and smear campaigns by Farcaster investors against Friend.tech, as well as the pressure they exerted on the team and users, Friend.tech faced exclusion within the Base community. This tense relationship led the Friend.tech team to start considering finding a new platform to support the continued development of their protocol.
Currently, the related posts are inaccessible, and Racer’s X account has been blocked after the post was made.
Regarding this matter, Jesse Pollak, the head of Base at Coinbase, expressed understanding. In the post, Pollak admitted that the Friend.tech team had experienced feelings of isolation and disappointment and stated that he would be sad if the team decided to leave Base, but he also respected and supported any path they chose. Pollak wrote, “If the team decides to leave Base, I would be sad, but I also respect and support any path – that’s the beauty of decentralization and on-chain economics.”
The Rise and Fall of Friend.tech
Since its launch on August 10, 2023, Friend.tech quickly became one of the most anticipated dApps on the base layer, with over 200,000 users and a trading volume of $230 million.
Friend.tech closely integrates with X to acquire users’ Web2 identities, allowing them to gain potential rewards based on this identity. By converting users’ influence into tradable “key” tokens, users can directly obtain the attention or influence of creators. This model attracted a wide range of users, including NBA player Grayson Allen, well-known cryptocurrency tycoons Cobie and Gainzy, and renowned trader RookieXBT, all of whom are members of the Friend.tech community.
As one of the most successful Web3 decentralized applications in SocialFi, Friend.tech generated over $2 million in revenue in its first month, with net deposits reaching $33 million.
However, as the novelty wore off in the past few months, Friend.tech’s daily revenue from the protocol dropped to below $20,000. On-chain data shows that the daily active users of Friend.tech have significantly declined since September 13 last year, when it reached its peak of 539,810 transactions in a single day.
Despite the challenges of declining data, the anticipation of airdrops and the expectations for the V2 version have kept Friend.tech’s popularity on the rise. The native token, FRIEND, was launched on May 3 this year and reached a price of $3.26 on the same day, its all-time high. According to Dune data, the protocol’s daily revenue on May 3 also exceeded $500,000.
However, as the positive news was realized, the on-chain activity calmed down, and the token price continued to decline. Within less than 30 days of its launch, FRIEND has already dropped by 65% from its previous all-time high.
With no vision support from a whitepaper, the FRIEND token went from being a “gem” to being “rekt.” The so-called “buying the dip” has become bottomless, and as the price keeps falling, Friend.tech is being dragged into the abyss.
Blaming Base Chain
After the short-term positive news, Friend.tech once again fell into silence. To bring the project back into the user’s view, a breakthrough is needed, and Racer aimed the blame at the Base chain itself.
Racer stated that Friend.tech was labeled as “negative speculation” within the Base community, leading to the team’s exclusion and isolation from Base. In this way, Racer largely attributed Friend.tech’s development dilemma to Base.
In fact, at the inception of Base, Friend.tech was another veteran project that exploded within the Base ecosystem after Bald. The success of Friend.tech was closely tied to the early hype of the Base network, which provided strong technical support for Friend.tech.
The Base mainnet went live on August 9, 2023, and by August 11 (the day Friend.tech launched), its Total Value Locked (TVL) had reached $180 million. With the release of Friend.tech, the Base TVL increased to $243 million on August 23.
Friend.tech and Base seemed to be complementary partners at the beginning of their existence. Jesse Pollak, the head of Base, also publicly stated that Friend.tech made significant contributions to the on-chain data of Base, and social applications like Friend.tech were an “important component” of Base’s ultimate goal.
The seemingly good cooperation between the two parties started to crack after Farcaster, a new decentralized social network, landed on Base. This year, Farcaster experienced a strong growth due to the explosion of the Base ecosystem, and a large influx of new users brought an increase in protocol revenue.
In contrast, as the heat of Friend.tech’s asset issuance mechanism declined and the activity within its economy continued to decline, many users migrated to Farcaster, which was also on the Base chain. Therefore, the co-founder of Friend.tech blamed the split from Base on the “misunderstandings and smear campaigns” by Farcaster users.
Friend.tech or Racer’s New “Trial and Error”
As a Web3 serial entrepreneur, Racer has been trying to venture into the decentralized social media field since 2022.
TweetDAO
Racer initially gained fame through the decentralized social media project TweetDAO, which was associated with Twitter. It granted users the right to use their Twitter accounts by holding its native NFT, “TweetDAO Egg.”
The “TweetDAO Egg” increased its minting price through an algorithm. The initial batch of Eggs had a minting price of 0.1 ETH, but for every 100 NFTs sold, the price would increase by 0.1 ETH, up to a maximum of 1 ETH. This gave an advantage to the early minters over later buyers, creating more hype.
TweetDAO never promised any financial returns or future utility, but users still spent thousands of dollars to have the opportunity to tweet and engage in speculation. Eventually, many people managed to resell their EGGs for profit, but once their accounts were suspended, they were left holding worthless NFTs.
Due to the unregulated nature of the tweets, NFT holders could post tweets without fear of repercussions, leading to various forms of tweet speculation. Although the project initially achieved viral success similar to Friend.tech, it gradually faded from people’s attention, and currently, its Twitter account and website have been shut down.
Stealcam
After the hype of TweetDAO subsided, Racer teamed up with a developer known as Shrimp/Shrimppepe to create the Web3 decentralized social platform Stealcam. The project was launched on Arbitrum in March 2023 and aimed to reveal the “mysterious veil” of their NFTs by converting users’ selfies and static images into pixelated NFT images, with a fee attached.
“Steal” is like purchasing, but users don’t need the seller’s consent. The first person to “Steal” an NFT can get it for free, but all subsequent stealers must pay to reveal the image. If your NFT is “Stolen,” you suddenly find more ETH in your wallet, but the image disappears.
Unlike “TweetDAO Egg,” Stealcam increased the secondary sale price through an algorithm. Users who “Steal” the image from the original thief have to pay 0.001 ETH, and each subsequent “Steal” of the same image costs 0.001 ETH plus 10% more than the previous steal, with no price cap.
Similar to the profit-sharing model of Friend.tech, the previous NFT holder in Stealcam receives the fee paid by stealers for the image, as well as 45% of the price difference between the new and previous steals, while the remaining 45% goes to the image creator, and the remaining 10% belongs to the protocol.
However, when Stealcam faced a significant decline in creator revenue, the development team decided to make changes, and the mechanism and model of Stealcam became the precursor to Friend.tech.
Friend.tech
After the failure of Stealcam, Racer did not intend to restart the project but renamed the former Stealcam to Friend.tech and launched it on Base in May last year.
To enhance its social attributes, Friend.tech released V2 on March 3, 2024, aiming to strengthen user management and interaction through CLUB, where all transactions within the CLUB use the FRIEND token and charge a 1.5% fee per transaction.
From TweetDAO to Friend.tech, Racer has been enthusiastic about the SocialFi track and preferred to maximize the asset issuance attributes. However, each project seems to be unable to escape the “Ponzi” death cycle of a high opening followed by a decline. Currently, Friend.tech as a whole is on a downward trend.
It is worth noting that since its inception, Friend.tech still does not have a detailed roadmap or whitepaper, which seems too arbitrary for a project that wants long-term development. It is difficult for users not to classify Friend.tech as another “trial and error” by Racer.
Controversial Mechanism of Friend.tech
Racer has always emphasized the “Fi” aspect of SocialFi, rather than genuine social interaction. Therefore, in terms of network construction, Friend.tech is simply a refined and strengthened version of the social network of Twitter, with a centralized structure centered around individual nodes.
Furthermore, Friend.tech’s high registration threshold limits the development of its user base. Currently, Friend.tech adopts an invitation system, where users need to obtain a referral code and deposit at least 0.01 ETH to complete registration. This strategy undoubtedly restricts the participation of ordinary users and gives a feeling of forced buying and selling.
At the same time, the use of the highly volatile and speculative “key” on the platform further increases the risk for users. As pointed out by crypto influencer Yazan, “paying 1 ETH to access a group chat is ‘absurd’.” If creators feel bored and leave the application, the price may quickly drop to zero.
The platform’s sustainability is also being questioned. Initially, Friend.tech achieved rapid growth with its influencer-centric strategy, but as users began to question its long-term viability, the platform’s value could quickly decline once these key figures stop actively participating.
In response to this, Friend.tech made strategic adjustments in the V2 update, shifting from a model centered around influencers to one that focuses more on a broad community. However, there are still doubts about the involvement of influencers and their actual value when they are not active on the platform.
Currently, there are rumors in the crypto community that say “Friend.tech can’t compete with Farcaster” and “Racer is running away again.”
But Racer seems to be unfazed by the controversies. As a Web3 serial entrepreneur, they seem to understand the survival principles. Whenever a new concept emerges, it becomes a new hot topic, and where there’s a hot topic, there’s hot money. It is because of this that Friend.tech secured seed funding from Paradigm with its “new gameplay.”
Furthermore, based on the principle of “charging a 5% protocol fee for each transaction and an additional 5% fee to the stock issuer,” Friend.tech has collected approximately $13.35 million in transaction fees so far, with the Friend.tech team earning around $6.625 million.
According to the Friend.tech-related page, Racer is still active on Friend.tech. Currently, the only way to view their personal comments is by purchasing their personal key, which is priced at 0.94 ETH. Racer’s deletion of their X account and posts may also be a further attempt to hype their personal key.
With the recent post about the split from Base and the hint of migration, it aligns perfectly with Racer’s style of “shooting and switching.” However, Racer did not reveal any further migration plans and deleted the post and X account. So, is this post a new hype or a search for a new path for Friend.tech?
But in terms of the market value of the native token FRIEND, it seems that users are not buying it this time, as the token price remains around $1.17.
