Friend.tech becomes explosively popular, how much longer can the bullet fly?

Friend.tech's explosive popularity, how much longer can it last?

The hype around Friend.tech is in full swing, attracting over 100,000 users within a month of its launch. But how long can this “bullet” fly?

What is it?

As a new decentralized social media application, backed by the aura of LianGuairadigm’s investment, Friend.tech has been trending in the crypto community in the past week.

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Yuga Cohler, a senior software engineer at Coinbase, explained in a tweet that Friend Tech is a decentralized social media platform for crypto enthusiasts. Its innovative core lies in the use of “shares” as digital assets. Users can tokenize themselves by selling their “shares” to fans, who then become “shareholders” and can directly message the users. These shares represent ownership in interactions with crypto enthusiasts.

This concept is similar to the ownership principle in the stock market, where owning shares is equivalent to holding shares in a specific company.

At first glance, Friend Tech’s basic functionality is similar to familiar platforms like WeChat or Telegram groups. However, the uniqueness lies in the process of joining and leaving group chats, which defines the essence of Friend Tech.

Users can choose to join certain groups and earn shares of the selected group by paying a base amount as participation fee. If users decide to leave the group, they can liquidate their shares in the group.

Another advantage of Friend Tech is its seamless and user-friendly registration process. iOS users can easily access the official website on their devices and add it to their home screens. It’s worth noting that this simplified approach eliminates the need for third-party downloads, ensuring smooth entry into the application.

To participate, users must obtain an invitation code and link their Twitter accounts. After completing these initial steps, they also need to deposit at least 0.01 ETH into Coinbase’s new Layer 2 network Base network to access the Friend Tech application and its range of features.

How hot is it?

Friend.tech’s beta version was launched on August 10th and witnessed over 30,000 transactions and a trading volume of 4,400 ETH ($8.1 million) in the first 24 hours. Within less than a month since its launch, it has attracted over 100,000 users, with notable KOLs like Frank DeGods and Gainzy222, trader RookieXBT, and NBA player Grayson Allen joining the trend.

According to data from Dune Analytics, as of the time of writing, Friend.tech’s total trading volume has exceeded 36,260 ETH, equivalent to around $60 million, involving 1.29 million transactions.

The platform charges a total fee of 10% for each transaction, with 5% going to Friend.tech and the other 5% going to account holders. According to DefiLlama data, Friend.tech has earned $1.42 million in fees and $709,839 in revenue in the past 24 hours, making it the third-largest source of fees and revenue in the entire cryptocurrency field during that period, only behind the Ethereum blockchain and the staking service project Lido.

Controversy

Although the application received a lot of attention in the early stages, many people have doubts about its feasibility because it lacks a privacy policy, requires the deposit of Ethereum upon registration, and has an unclear project roadmap. While the application does allow those who profit from Shares to cash out, the security measures, liquidity structure, and other aspects of its operation are not very clear.

Friend.tech also brings to mind the former BitClout (later renamed DeSo), a cryptocurrency social network that allows people to buy and sell tokens based on people’s reputations. The network was launched in 2021, and at its peak, the token DESO of BitClout was listed on Coinbase with a trading price exceeding $180. However, the application got into legal trouble for preloading users onto its platform without permission, and the value of DESO subsequently plummeted. The current trading price of the token is $8.95.

Crypto detective YazanXBT expressed in a tweet that the structure of the Friend.tech application feels somewhat strange, and the pricing method shows dangerous signals of pumping and dumping.

Another cryptocurrency analyst, Miles Deutscher, shared his views, stating that Friend.tech is far from being perfected. Deutscher said, “I don’t think Friend Tech is a ‘killer dApp’. It’s a cool concept – but far from being perfected. I think we may see better social tech iterations in the future. However, the speed at which it is penetrating the market is fascinating and demonstrates how a good idea with a strong product-market fit can quickly rise in rankings. A dApp that combines this element with a sustainable model will be the big winner of the next bull market (cryptogame projects are an example).”

The early success of Friend.tech indicates that when there is a high product-market fit, crypto products can penetrate the market at a fast pace. However, despite the promising future of Friend.tech and decentralized social media, there are still regulatory barriers that need to be overcome. Mark Hiraide, partner at Mitchell Silberberg & Knupp, wrote that the Friend.tech model appears similar to the stock market. Just as stockholders of listed companies can receive dividends, crypto influencers can choose to share fees with buyers – many have already offered this benefit to increase trading volume and price. This provides potential utility for the application, but if it catches the attention of US securities regulators, it may face the risk of being classified as an unregistered security.

Legendary, an anonymous Web3 marketer, shared his pessimistic prediction of Friend.tech in a tweet. He said, “I think this platform will collapse like BitClout. We are in a bear market, and there is nothing to do. Everyone will grab the opportunity to make money, but I think the hype around this platform will fade in the coming weeks to months.”

Author: LianGuaiBitpushNews Mary Liu

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