In a market that‘s otherwise lukewarm, the crowd of adrenaline-seeking and profit-hungry crypto players has stumbled upon a new toy for speculation. However, we've witnessed on multiple occasions such trends ending badly, with participants of those events swearing that they've learned their lessons. Until the next occurrence, that is. Thus, the question emerges: is this time any different?
The fresh addition to the landscape goes by the name of friend.tech, a blockchain-based social network that’s often referred to as decentralized despite the lack of evidence supporting this claim. Additionally, it operates on the still-centralized Base blockchain developed by the crypto powerhouse Coinbase.
What’s so special about friend.tech, which is still being developed, launched in beta, and can be accessed via invite links only?
Developed by pseudonymous programmers and supported by notable investors in the crypto realm – such as Paradigm – the platform facilitates the tokenization of its users' social profiles. These users are required to be active Twitter (now X) users as well. Essentially, it allows you to acquire "shares" (now called “keys”) in a profile you find appealing, akin to purchasing shares in a company. Conversely, you retain the ability to sell your own "shares."
In return for this ownership, you gain entry to a private chat room shared with your preferred Twitter (X) user. Furthermore, you can engage in speculation regarding these “shares,” potentially yielding profits or incurring losses along the journey. This constitutes the current revenue model of the protocol, as it applies a 5% transaction fee. Simultaneously, an equivalent percentage is allocated to the account holder.
Moreover, there are rumors of forthcoming features that might be revealed in an unspecified future. These features could potentially introduce supplementary revenue streams for the project.
How's it progressing so far?
Within the span of a couple of weeks, the platform exceeded 100,000 accounts. However, it remains uncertain whether all of these accounts belong to unique users. In either scenario, cumulative transactions have surged past 2 million since August 10th, resulting in an influx of over USD 60 million into the protocol. Notable non-crypto figures have also embraced this trend. Among them is Richard Bengtson II, widely known as FaZe Banks, a co-founder of the esports organization FaZe Clan, along with NBA player Grayson Allen.
Source: Dune.com
The platform, which is currently without its privacy policy, has already encountered issues related to the personal data of its users. A situation arose when a database containing public information about friend.tech users, linking their Twitter (X) profiles to their ETH wallets, was made public. Despite friend.tech's attempts to minimize the significance of the incident, Ouriel Ohayon, CEO of the crypto wallet Zengo, stressed that these users, among other potential problems, had "become an ideal target for phishing, scammers, and other bad players to contextually target you *on Twitter*." Moreover, this "privacy policy" could potentially place the platform in the crosshairs of the GDPR (General Data Protection Regulation) in the EU.
Ohayon also warned that X can still cut permissions to friend.tech, which could severely impact the platform.
Now, interest in the new platform seems to have peaked on Google Trends on August 21st. Trading volumes, the count of active sellers and buyers, and protocol inflows in USD have also been decreasing for several consecutive days.
Source: Dune.com
Source: Dune.com
Furthermore, based on the collected fees, there was a point when friend.tech ranked second only to Ethereum (ETH), surpassing several other well-established protocols, including Bitcoin. However, as of the time of writing, it has slipped to the 8th position according to DefiLlama data. This positioning can still be seen as a notable achievement for such a young project.
History doesn’t repeat, but it often rhymes
We've witnessed this scenario many times before. An emerging crypto project will gain incredible popularity, congest the blockchain with wild speculation, and fade away just as swiftly. Among them was a similar social network venture named BitClout, which also facilitated trading in "shares" of various celebrities, albeit without their consent. Following an initial wave of enthusiasm and raising $200 million in funding, BitClout turned out to be primarily “an experiment” involving the DeSo blockchain, launched after raising the mentioned capital. As of now, it appears to be inactive, with its last tweet posted in August 2021, while interest in DeSo has also waned.
Nevertheless, advocates of friend.tech, including Yuga Cohler, a senior staff software engineer at Coinbase (the developer of the Base blockchain that powers friend.tech), assert that friend.tech "is just the beginning" because “we now have on-chain representations of people, and the value of accessing them.” According to Cohler, this concept could find utility in various domains, spanning from decentralized finance (DeFi), identity, gaming, and social networking to artificial intelligence (AI)-related applications.
This could indeed prove accurate, as predicting the future and the trajectory of this project remains uncertain. Particularly so, given that at least one similar and seemingly independent project has already emerged.
Moreover, friend.tech might contribute to the advancement of the so-called progressive web apps (PWAs), which can circumvent app marketplaces like Apple's App Store.
Wice adds, "People shilling it are grifting, and will walk away clean while you end up poorer and reading a dead chat."
Another well-known yet pseudonymous figure in the crypto arena, Autism Capital, also adopts a pessimistic stance:
"There was nothing learned from the last cycle of scammers, shitcoin promoters, and massive founder secondaries. You were all dumped on by these guys, and you’re now allowing yourself to be dumped on again with new bulls**t."
A similarly bleak sentiment is expressed by a prominent crypto venture capitalist, Ari Paul:
However, crypto trader and podcaster Luke Martin also reminds people not to “judge novel ideas in crypto too harshly, or you may miss the big wins that spawn after.”
Nonetheless, considering the crypto realm's history, numerous lessons that remain unheeded, and the rapid ascent (now followed by a decline in usage) of friend.tech, the contrary may hold true – the majority of crypto friends might struggle to evaluate novel concepts with a level-headed approach. It's plausible that, in the grand scheme of things, this is the dynamic in which innovation takes shape, alongside the emergence of scams and Ponzi schemes.
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