Since Friend.tech opened its invite-only beta test 11 days ago, the decentralized social-focused app has quickly attracted a lot of users, even catching the attention of big name crypto influencers, NBA players and OnlyFans creators. But can it convert all the early hype to meaningful, lasting traction?
The app, built on Coinbase’s layer-2 blockchain Base, allows users to tokenize their likeness by selling “shares” of themselves to their followers, who then become shareholders and can message the users directly. The app was quickly picked up and popularized by “Crypto Twitter” personalities like Frank DeGods and gainzy222, trading influencer RookieXBT, and NBA player Grayson Allen, to name a few.
Since its launch, Friend.tech has seen total volume of 33,596 ether, or about $55.5 million, across 1.29 million transactions, according to Dune analytics data from Michael Silberling, a data analyst at OP Labs. (Disclosure: Silberling is a sibling of Amanda Silberling, a TechCrunch reporter.)
In the past 24 hours, the platform has brought in $1.42 million in fees and $709,839 in revenue, making it the third-largest fee and revenue generator in the entirety of crypto during that time frame, only trailing the Ethereum blockchain itself and staking service Lido, according to DefiLlama data. The platform charges a total of 10% in fees per transaction, with 5% going to Friend.tech and the other 5% going to the account holder.
But despite the app’s significant early traction, many people are skeptical about its viability due to its lack of a privacy policy, the requirement to deposit ether upon signing up, a reportedly laggy interface, and an unclear roadmap. While the app does allow those profiting from the shares to cash out, there’s little clarity on the security measures in place, the liquidity structure and other aspects of its operations.
Friend.tech is also arguably a newer take of a slightly more controversial attempt by BitClout (later rebranded to DeSo). A crypto social network that let people buy and sell tokens based on people’s reputations, DeSo launched in 2021 to much hype. But traction eventually fizzled, and the app got into legal trouble for preloading users onto its platform without their permission.
Skeptics, spurred by concerns around price manipulation and pump-and-dump schemes, believe Friend.tech’s fate will be similar to DeSo’s. “The way [Friend.tech’s] pricing works is ridiculous and can easily be taken advantage of,” YazanXBT, a self-proclaimed “on-chain sleuth,” tweeted.
The psyop here is most think that friendtech is about getting token gated access to a private chat with an influencer, but it’s actually betting on which account will manipulate their share price. Not everybody is willing to cross that line. But it’s easy and profitable to do so.
— Beanie (@beaniemaxi) August 21, 2023
It makes sense for a big-name influencer to use this platform. Not only is their likeness driving revenue, but it also gives them a way to monetize themselves directly (even if Friend.tech takes a percentage). But each user gets a limited number of shares to sell, and the app incentivizes users to bring in more people in the hopes that fans and friends alike will bid to buy their shares and drive up their value.
If that feels Ponzi-ish to you, do not ever ask a Bitcoin maxi about the hard cap on the cryptocurrency.
Indeed, Friend.tech has potential roadblocks to mass adoption. The service requires you to deposit ether before you start using it, which is a huge barrier for those who don’t have ether readily available (or don’t want to deposit capital immediately). It’s also arguably a red flag. Imagine walking into a restaurant and having to pay before you’re allowed to even see the menu. What’s more, users must use a Base bridge to deposit ether, which adds even more friction to the experience.
The company is also founded by a somewhat anonymous team, and while that’s more common in the web3 space than elsewhere, it’s still not a popular decision, given that you’re required to pay to even access the app. The co-founders go by their X.com (formerly Twitter) usernames “0xRacer” and “shrimppepe,” according to one of their investors, Paradigm general partner Charlie Noyes. But that’s not much to go by, since you can no longer rely on X’s verification system to find out if someone is actually who they’re claiming to be, verify their backgrounds, or if they can be trusted with your money.
Time will tell whether this app can result in a web3 social network, providing a use case not only for the crypto community but also for mainstream users.
As it stands, Friend.tech has a number of obstacles to overcome. Still, the quick growth is proof that there is a market for a decentralized social media platform and that this iteration — or maybe the next one — could grow the industry both internally and externally.
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