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Unlocking Social Capital with Friend.Tech: Is it the Future of Decentralized Social Networks?

When Your Network (Literally) Becomes Your Net Worth

Author

eli5defi
September 15, 2023

Friend.Tech (FT) is becoming extremely popular in the world of cryptocurrency. Since its launch on Base Network, it has gained tremendous popularity and witnessed a large number of transactions. The buzz started when influential individuals in the crypto Twitter community got involved and shared the invitation key. In just one month, FT have over 160,000 accounts created, and the total transaction volume has reached an impressive $9.2 million as of the time of writing.

Now, the question arises: Is this simply a temporary trend, or is it the real deal? In this post, we will delve into this topic and discuss it further.

What is Friend.Tech?

FT is a decentralized social network that allows you to invest in your friends' networks or any user group, thereby transforming social credibility into a digital asset known as a "Key." Unlike traditional social networks that monetize user data, FT empowers users to monetize their own networks and interactions with their Key holders.

How Does Friend.Tech Work?

Participating in FT is quite straightforward. Users can buy digital assets called "Keys" from other users. The term "creator" refers to the key issuer, who can be both the user and the creator, depending on who owns or issues the Key.

Friend.Tech follows a revenue split model. For any transaction involving the transfer of a Key, 5% is allocated to creators and 5% to the platform. This means there is a 10% fee charged for each transaction.

As the name suggests, a Key serves as a pass to access a creator's private chat group. The Key itself holds monetary value. As more people buy the creator's Key, its value increases because of the growing network.

The Key's pricing model works on a bonding curve, where subsequent purchases raise the value of the remaining Keys. Users have the opportunity to trade their Key if they purchased it at a lower price, but this would invalidate their privilege and access to the creator's chat.

For more information about Bonding Curve mechanics, can check in The Graph illustrated guide here.

On the other hand, the creator receives a percentage from their Key transactions. This is where the real driving force comes into play. If a creator can keep their audience engaged in their private FT chat room, it will generate more interest in buying their Key, whether for speculation or to gain value and benefits from the chat.

The Statistics?

Now, let's examine the on-chain statistics to see if they can speak for themselves or not.

Basic Statistics

  • Cumulative Protocol Fees: $9.2m USD/ 5.5k $ETH

  • Cumulative Inflow: $185.3m USD/ 112.2k $ETH

  • Total Volume Bought: $108.8m USD/ 65.9k $ETH

  • Total Volume Sold: $76.5m USD/ 46.2k $ETH

  • Total Unique Subjects: 159.000+

  • Annualized Fees: $187.1m USD

  • Annualized Revenue: $93.55m USD

  • Total Value Locked: $32.34m USD

  • Highest Fees Recorded in a Day: $1.23m USD

  • Highest Volume Recorded in a Day: $12.3m USD

    One-Pager Statistics (15 September 2023)

What makes it popular is that the creator will granted lucrative rewards he top earners receive substantial rewards from the Key transaction. Here are the top 10 highest earners:

FT has definitely made progress towards achieving product-market fit. Despite the pessimistic tone and some issues with the DApp, people continue to register and use FT to trade the Keys. The attractive revenues have also attracted other prominent figures like Steve Aoki to create an account on FT.

Not the top signal (probably)

The Friend.Tech Ecosystem

The success of FT inspires builders to develop projects or tools that utilize its mechanics and derive advantages from them. This establishes an ecosystem where FT serves as the foundation, and other projects are constructed upon it. It is still early in this process, and we can expect numerous projects to launch in the near future. Here are the main categories of these projects:

  • Tools & Analytics

  • Trade & Derivatives

  • Others

  • Aggregators (not listed)

    At the time of writing, there is controversy surrounding the Key Aggregator project. It involves routing private chats, which should only be accessible by purchasing the creator's key, to the public. FT has taken action, leading some aggregators to pause their operations or cease altogether.

These ecosystems add dynamics by allowing users to plan and improve their trading strategies and farming points (explained in the following points). They also increase people's exposure to the FT and create speculation about its value. As a result, more people become interested in joining and setting up an FT account (which has a smooth onboarding process linked to social media accounts).

Is There Going To Be An Airdrop?

As mentioned earlier, FT distributes points to users on a weekly basis based on their activity. Although there is no information about the upcoming airdrop, there is already speculation about its occurrence in the future. This speculation has also led to increased activity and trading volume as users aim to accumulate and farm more points.

There are several methods for users to accumulate points:

  1. Referrals

  2. Increasing one's key values

  3. Holding volume

  4. Trading volume

Airdrop Valuation by @asxn_r

It's impossible to predict how points will be connected to an airdrop or if an airdrop will occur at all. Nevertheless, some people have devised a model that takes into account the quantity of airdropped points and the FDV value. As according to Asxn's model, if 30% of the entire supply is airdropped with an FDV of $200 million, each point would be worth $0.60. User 0xjaypeg also conducted an APY analysis on the airdrop, which projected an APY in the range of 200% to 400%.

Prediction of Airdrop APY by @0xjaypeg

Conclusion

We already know that FT brings a fresh and innovative approach to the world of cryptocurrencies by tokenizing a user's social credibility and network. The general public may be tired of the prolonged bear market and the lack of significant improvements in user experience within the crypto industry. However, the intriguing aspects such as the key mechanics, smooth onboarding process, and the speculation surrounding the possibility of airdrops make it an engaging experience. It is worth noting that during the early phase there is usually a surge in hype as new users join, but historically this has been temporary, inevitably followed by a correction.

Additionally, dApps have internal problems such as frequent crashes and limited availability only on mobile phones. On the external side, there is an issue with key aggregators that discourage FT usage and sharing. These platforms allow entry into the creator's private chat room without requiring a purchased key. Sniping bots and front-running are also significant concerns that threaten the fairness and integrity of the platform. Furthermore, FT needs to be wary of potential new competitors who could offer a comparable or better product.

References:

Snapsh(x)t is the latest visual guide by @eli5_defi. It offers concise and essential information about DeFi protocols, including the latest developments. This guide is designed to complement HomeBrew, which provides a more detailed breakdown.

Disclaimer & Disclosure:

None of the content in this post should be interpreted as financial or tax advice

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