Author: Mia, ChainCatcher
Editor: Marco, ChainCatcher
In the mysterious world of Web3 social networks, an announcement from Friend.tech protocol has caused a major stir in the market. Recently, the co-founder, known as Racer, posted on social media hinting at the intention to migrate the Friend.tech protocol from the current Base platform. This news immediately led to a significant drop in the price of the protocol’s native token, FRIEND. According to CoinGecko data, on the day of the announcement, the price of FRIEND plummeted to $1.01, with a 24-hour drop of 32.2%.
According to on-chain data, the address associated with “Big Brother Huang” has accumulated a purchase of 4873 ETH (approximately $15.35 million) in FRIEND tokens, with an average price of $1.9. Currently, the investment is at a loss of $7.54 million. Projects facing the risk of being abandoned, like Friend.tech, are in the minority, and the crypto community has also been 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 Base, the network created by Coinbase, in a post. They also outlined a “system design bounty” plan, promising a reward of up to $200,000 to anyone who can find a way to smoothly migrate the Friend.tech protocol from Base, ensuring no major issues for users and guaranteeing the system’s stability.
In another post, Racer explained in detail the root causes of the tension between the Friend.tech team and the Base platform. They pointed out that due to misunderstandings and smear campaigns from Farcaster investors towards Friend.tech, as well as the pressure they exerted on the team and users, Friend.tech faced exclusion within the Base community. This strained relationship led the Friend.tech team to start considering finding a new platform to support the continuous development of their protocol.
Currently, the related posts are no longer accessible, and Racer’s X account has been blocked after the post was made.
In response, Jesse Pollak, the head of Base at Coinbase, expressed understanding. Pollak admitted in the post that the Friend.tech team had experienced isolation and disillusionment and stated that he would be saddened but would respect and support whatever path they choose. Pollak wrote, “If the team decides to leave Base, I will be sad, but I also respect and support any path – that’s the beauty of decentralization and on-chain economy.”
The Rise and Fall of Friend.tech
Since its launch on August 10, 2023, Friend.tech quickly became one of the most prominent dApps on the underlying layer, with over 200,000 users and a trading volume of $230 million.
Friend.tech was closely integrated with X, allowing users to obtain their Web2 identities and gain potential rewards based on these identities. By converting user influence into tradable “key” tokens, users could directly gain attention or influence from 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 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 and had a net deposit of $33 million in its first month.
However, in the past few months, Friend.tech’s daily revenue has dropped to below $20,000, and on-chain data shows a significant decrease in daily activity since its peak on September 13, last year, when it recorded 539,810 transactions in a single day.
Despite the challenges of declining data, the anticipation of airdrops and 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 revenue on that day exceeded $500,000.
However, as the positive news was realized, on-chain activity began to calm down, and the token price continued to fall. In less than 30 days since its launch, FRIEND has already dropped 65% from its previous peak.
Without the support of a whitepaper and a clear vision, the FRIEND token went from being a “gem” to a “dump.” The so-called “buying the dip” has become bottomless, and with the continuous decline in token price, Friend.tech has been dragged into the abyss.
Blaming Base Chain
After short-term positive developments, Friend.tech once again fell into silence. To revive the project and bring it back into the spotlight, a breakthrough was needed. Co-founder Racer turned his attention towards the Base chain itself.
Racer stated that Friend.tech was labeled as “negative speculation” in the Base community, which led to the team’s exclusion and isolation. This indirectly attributed Friend.tech’s development difficulties to Base.
In fact, at the inception of Base, Friend.tech was another veteran project that ignited the Base ecosystem after Bald. The success of Friend.tech was also closely tied to the initial hype around the Base network. Base provided strong technical support for Friend.tech.
Base’s mainnet went live on August 9, 2023, and by August 11 (the day Friend.tech launched), its TVL had reached $180 million. With the release of Friend.tech, Base’s TVL rose to $243 million on August 23.
Friend.tech and Base seemed to have a mutually beneficial partnership at the beginning of their journey. Jesse Pollak, the head of Base, had publicly stated that Friend.tech made significant contributions to the on-chain data of Base, and social applications like Friend.tech were an “important part” of Base’s ultimate goal.
The seemingly good cooperation between the two parties began to crack with the launch of Farcaster on Base, the new decentralized social network.
This year, with the explosion of the Base ecosystem, Farcaster experienced a strong growth wave, and the influx of numerous new users led to an increase in protocol revenue.
On the contrary, with the decline in the popularity of the token issuance mechanism of Friend.tech last year and a continuous decrease in activity within the economy, many users migrated to Farcaster, which is also on the Base chain. Therefore, the co-founder of Friend.tech attributed the reason for the split from Base to the “misunderstandings and smear campaigns” by Farcaster users.
Friend.tech or Racer’s New “Trial and Error”
As a Web3 serial entrepreneur, Racer had already ventured into the decentralized social media field as early as 2022.
TweetDAO
Racer initially gained fame with 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” had an algorithmically increased minting price. The first batch of Egg had a minting price of 0.1 ETH, but for every 100 NFTs sold, the price increased by 0.1 ETH, up to a maximum of 1 ETH. This created an advantage for early minters and sparked more speculation.
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 resold their EGGs to make a profit, but once their accounts were suspended, they were left with valueless NFTs.
Due to the unregulated nature of the tweets, NFT holders could post tweets without worrying about the consequences, 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. Currently, its Twitter account and website have been closed.
Stealcam
After the hype around TweetDAO subsided, Racer partnered with a developer known as Shrimp/Shrimppepe to create the Web3 decentralized social platform, Stealcam. This project was launched on Arbitrum in March 2023 and aimed to reveal the “mysterious veil” of NFTs by converting users’ selfies and static images into pixelated NFT images that could be accessed through payment.
“Steal” was like a purchase, but users did not need the seller’s permission. The first person to “steal” an NFT could get it completely for free, but all subsequent stealers had to pay to view the image. If your NFT was “stolen,” you suddenly found more ETH in your wallet, but the image disappeared.
Unlike “TweetDAO Egg,” Stealcam had an algorithmically increased secondary sale price. Users who “stole” the image from the original thief had to pay 0.001 ETH, and the cost of subsequent “steals” of the same image increased by 0.001 ETH plus 10% each time, with no price limit.
Similar to the profit-sharing model of Friend.tech, previous NFT holders in Stealcam received the fees paid for “stealing” the image and 45% of the price difference between the new and previous “steals,” while the remaining 45% of the price difference went to the image creator, and the remaining 10% belonged 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
Instead of relaunching Stealcam after its failure, Racer renamed it 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, with the aim of strengthening user management and interaction through CLUB. All transactions within CLUB are conducted using the FRIEND token, with a fee of 1.5% per transaction.
From TweetDAO to Friend.tech, Racer has been enthusiastic about the SocialFi track, and they have a preference for maximizing the asset issuance attributes. However, each project seems to be unable to escape the “Ponzi” death cycle of starting high and ending low. Currently, Friend.tech as a whole is in 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 casual for a project that aims for long-term development. Users find it difficult not to categorize Friend.tech as another “trial and error” by Racer.
Controversial Friend.tech Mechanism
Racer has always emphasized the “Fi” in SocialFi rather than genuine social aspects. Therefore, in terms of network construction, Friend.tech has simply purified and enhanced the social network of Twitter, still maintaining a centralized network with a single node at its core.
Additionally, the high registration threshold on Friend.tech 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 the impression of a forced transaction.
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 get bored and leave the application, the price of the key may quickly drop to zero.
The platform’s sustainability is also being questioned. Initially, Friend.tech achieved rapid growth with its influencer-centered strategy. However, as the platform became overly reliant on influencers, its value could rapidly decline if these key figures no longer actively participate.
In response, 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, questions still remain about the level of involvement of influencers and the actual value they bring when they are not active on the platform.
Currently, there are rumors circulating in parts of the crypto community suggesting that “Friend.tech can’t compete with Farcaster” and “Racer is running away again.”
But Racer seems to be indifferent to all the controversies. As a Web3 serial entrepreneur, they seem to understand the survival principles. Any new concept that emerges becomes a new hot topic, and with hot topics, comes hot money. It is because of this that Friend.tech secured seed funding from Paradigm based on its “new gameplay.”
Furthermore, based on the principle of “charging a 5% protocol fee for each transaction, as well as a 5% fee to the issuer of the stock,” Friend.tech has collected approximately $13.35 million in transaction fees so far, with the team earning about $6.625 million.
According to the information displayed on Friend.tech’s website, Racer is still active on the platform, and currently, the only way to access their personal comments is to purchase their personal key, which is priced at a whopping 0.94 ETH. Racer’s deletion of their X account and posts may be a further attempt to hype their personal key.
With the recent post announcing the split from Base and hinting at migration plans, Racer’s style of “shooting one gun and switching to another” is in full display. However, Racer has not revealed any further migration plans and has deleted the post and X account. So, is this post another attempt to create 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. Currently, the token price remains around $1.17.
