Friend.tech is the crypto’s newest hype 🚀, and its scale is remarkable.
Launched in beta on August 10th, it has already gained over 140’000 users and generated a jaw-dropping $7 million in transaction fees, beating on some days every other web3 DApp.
Let’s take a look at its nature and controversies and try to assess whether there may be a real potential beyond the hype.
Friend. tech is a decentralized social network that allows users tokenize and sell their connections. Influencers or celebrities can sell the ‘keys’ to private chatrooms, where keyholders can send them direct messages. Users can sell their keys if want to leave the group.
The DApp is built on Base, Coinbase’s newly launched Ethereum layer-2.
The keys’ price is set to increase as a group’s size increases. To discourage short-term speculation, the selling price starts at 0 and mirrors the previous, smaller, buying price (when the group had one person less).
The platform charges 10% per transaction, where 5% goes to the key issuer, and 5% – to the company’s treasury.
Friend.tech plans to distribute 100 million ‘points’ to early users over six months to foster adoption. These points are expected to be converted into tokens, but so far nothing is certain.
The platform was built by Racer and Shrimp, pseudonymous web3 developers, previously involved in failed web3 social media projects TweetDAO and Stealcam. Both have exhibited some signs of a Ponzi scheme, where DApps’ monetary systems were overly reliant on the most recent user.
Friend.tech secured financing from Paradigm, a famous crypto VC, which brought its valuation to $50 million. Remarkably, the platform’s adoption exploded after the news of this funding was made public.
Business model is the biggest doubt so far, strengthened by the founders’ dubious experience. Also, key issuers depend on transactions and are therefore motivated to promote keyholder turnover in any possible way, including the artificial FUD.
Other issues include technical readiness, undisclosed privacy policies, and a simplistic user experience (e.g. compared to Discord, which also enables token-gated chats).
For now, the project remains controversial.
Let’s not forget that, as it often happens in the crypto space, the bigger the initial hype 🚀, the bigger the subsequent disappointment 🌠