Friend.tech is a hype machine, how long can the “bullet” last?

The hype for Friend.tech is in full swing, attracting the attention of more than 100,000 users in less than a month after its launch, but how long can this "bullet" fly?

What is it?

As a new decentralized social media application, backed by the halo of Paradigm 's investment, Friend.tech has been a hot topic in the crypto community in the past week.

Yuga Cohler, senior software engineer at Coinbase , explained in a tweet that Friend Tech is a decentralized social media platform for crypto people. The core of the innovation is to use "shares" as digital assets. Users can tokenize their "shares" by selling them to fans, who then become "shareholders" and can send messages directly to users. These shares symbolize ownership when interacting with crypto people.

The concept is similar to the ownership principles of the stock market, where owning stocks is equivalent to holding shares in a particular company.

At first glance, the basic functionality of Friend Tech is similar to familiar platforms such as WeChat groups or Telegram groups. However, what is unique is the process of entering and exiting group chats, a feature that defines the essence of Friend Tech.

Users can choose to join certain groups and earn shares of the selected group by paying a base price, which serves as a participation fee. If the user eventually decides to leave the group, they can liquidate their group shares.

Another advantage of Friend Tech is that the registration process is seamless and user-friendly. iOS users can conveniently access the official website on their device and add it to their home screen. Notably, this streamlined approach eliminates the need for third-party downloads, ensuring a smooth entry into the app.

To participate, users must obtain an invitation code and link their Twitter account. Once these initial steps are met, a minimum of 0.01 ETH must be deposited into Coinbase’s new layer 2 network, the Base Network, to access the Friend Tech app and its range of features.

How popular is it?

The Friend.tech beta version was launched on August 10 and witnessed more than 30,000 transactions and 4,400 ETH (8.1 million USD) in trading volume in the first 24 hours. Less than a month after its launch, it has attracted the attention of more than 100,000 users. Well-known KOLs Frank DeGods and Gainzy222, trader RookieXBT, and NBA player Grayson Allen have also joined the trend.

Dune analysis data shows that as of press time, Friend.tech’s total transaction volume exceeded 36,260 ETH, or approximately $60 million, involving 1.29 million transactions.

The platform charges a total of 10% in fees for each transaction, 5% of which goes to Friend.tech and the other 5% to the account holder. According to DefiLlama data, in the past 24 hours, Friend.tech has earned $1.42 million in fees and $709,839 in revenue, making it the third largest source of fees and revenue in the entire cryptocurrency space during that time period, second only to the Ethereum blockchain and staking service project Lido.

dispute

Although the app has received a huge amount of attention in its early days, many people are skeptical about its viability due to its lack of a privacy policy, the need to deposit Ethereum when registering, and an unclear project roadmap. While the app does allow those who have profited from Shares to cash out, the security measures it has in place, its liquidity structure, and other aspects of its operations are less clear.

Friend.tech is also reminiscent of the former BitClout (later renamed DeSo ), a crypto social network that lets people buy and sell tokens based on their reputations. The network launched in 2021, and at its peak, BitClout's token DESO was listed on Coinbase and traded for over $180. However, the app got into legal trouble for preloading users onto its platform without permission, and the value of DESO has since plummeted, with the token currently trading at $8.95.

YazanXBT, a crypto chain detective, said in a tweet that the structure of the Friend.tech application feels a bit strange and the pricing method shows red flags of pump and dump.

Miles Deutscher, another cryptocurrency analyst, shared his opinion, saying that Friend.tech is far from perfect. Deutscher said: I don’t think Friend Tech is a “killer dApp”, it’s a cool concept – but it’s far from perfect, and I think we may see better iterations of social technology in the future. However, the speed at which it has penetrated the market is fascinating and shows how a good idea with a strong product-market fit can quickly rise through the ranks. dApps that combine this element with a sustainable model will be the big winners of the next bull run (crypto gaming projects are an example).

Friend.tech's early success shows how quickly crypto products can penetrate the market when there is a high market fit. However, while the future of Friend.tech and decentralized social media sounds great, there are still regulatory hurdles to overcome. Mitchell Silberberg & Knupp partner Mark Hiraide wrote that the Friend.tech model looks similar to the stock market. Just as shareholders of public companies can receive dividends, crypto influencers can choose to share fees with buyers - many have already offered this benefit to increase trading volume and prices. This provides potential practicality for the application, which is likely to face the risk of being classified as an unregistered security if it is noticed by US securities regulators.

Anonymous Web3 marketer Legendary shared his pessimistic prediction for Friend.tech in a tweet. He said: "I think this platform will collapse like BitClout. We are in a bear market and there is nothing to do. Everyone will jump at the opportunity to make money, but I think the platform will fade in the next few weeks to months."