How far can the new favorite of Web3 social, Friend.tech, go in the future?

Author: Daniel Li, CoinVoice

Friend.tech, as one of the most notable projects on the current Base chain, has shown tremendous potential. In less than two weeks, its trading volume has surpassed 25,633 ETH, attracting numerous celebrities and venture capital firms to join. These additions have injected more exposure, social influence, and trust support into Friend.tech, making it a popular new darling in the Web3 social space.

However, behind the booming success of Friend.tech, people are more concerned about its future direction. Past SocialFi applications like BitClout have proven that early product popularity does not guarantee long-term success. Although Friend.tech is exceptional, it is still in its early development stage and has not yet matured. Therefore, we need to analyze Friend.tech's innovative features, competitive advantages, and current drawbacks in depth to help us more accurately assess its future development potential.

What is Friend.tech and why is it popular?

Friend.tech is a DApp based on the Base ecosystem that allows users to buy and sell shares (Share) of users on Friend.tech through Ethereum on the Base chain, with a strong tie to Twitter. Its main functionality is similar to WeChat groups and Telegram groups, but its core lies in the organic entry and exit of group chats. Users can choose to join a group chat and pay a base price to acquire shares in that group; if they want to exit the group chat, they can sell their shares.

Joining a group chat not only satisfies social needs but also has investment potential. As more people join a group chat, the total number of shares increases, and the base price of each share also rises. This means that joining a group chat not only fulfills social needs but also allows users to enjoy investment returns. Therefore, speculative users often buy shares in other groups they believe have potential or in their own group early on.

According to data from Dune Analytics, within less than 24 hours of Friend.tech's beta launch, it attracted 7,860 users and a trading volume of 4,400 ETH (equivalent to $8.1 million), with over 126,000 transactions. This far exceeds the trading volume of OpenSea during the same period. As of now, Friend.tech has attracted the attention of over 100,000 users, including well-known KOLs like Frank DeGods and Gainzy222, trader RookieXBT, and NBA player Grayson Allen, among others.

The popularity of Friend.tech can be attributed to both market opportunities and marketing strategies. After the GameFi craze, the entire industry has been searching for the next application that can break traditional boundaries. SocialFi, as a field that combines traffic and crypto attributes, is seen as one of the most promising directions for breakthroughs. For a long time, people have been trying to use blockchain to create decentralized versions of Facebook (Meta) or Twitter (X), allowing users to own their data and create an on-chain reputation system for social use cases. Friend.tech has emerged to meet this market opportunity and demand.

Secondly, as a decentralized social application, Friend.tech has also excelled in project marketing. Its marketing strategy incorporates the strengths of various approaches, focusing on short-term, high-frequency public relations strategies. Whether in content techniques, timing choices, or community strategies, they are all exemplary. In the early stages, they emphasized creating a sense of mystery, which sparked user curiosity. Then, they relied on well-known KOLs for cold starts, using these influential figures to promote the product and attract more users. Additionally, they cleverly utilized invitation codes for hunger marketing, stimulating users' desire to participate and guiding more people to join. Furthermore, with backing from top VCs, the clever application of all these strategies has led to the current popularity of Friend.tech.

Friend.tech: Product Features and Gameplay

Friend.tech is an innovative Web3 application leading the transformation in the social domain. It not only has advantages in marketing but also showcases its unique charm through meticulously crafted product features. In implementing KOL monetization schemes, Friend.tech has learned valuable lessons from BitClout. Unlike BitClout, which faced community resistance due to forced launches and ultimately integrated into the Deso project, Friend.tech has innovated with a focus on protecting user rights and optimizing user experience. It adopts an active invitation approach for KOLs to join and significantly enhances user experience through Base chain L2 technology.

Friend.tech also demonstrates innovative charm in product features and gameplay. The four major innovative functions launched include "social tokenization," "share trading," "fan economy," and "influence games," providing users with a new social interaction experience. These features are built on a decentralized foundation, quantifying and releasing social value through algorithms and market mechanisms, creating new opportunities for users.

• Social Tokenization: Friend.tech quantifies users' popularity and interaction on Twitter into social tokens by linking to their Twitter accounts. This social tokenization mechanism makes users' influence a measurable and tradable asset, providing users with a way to directly participate and benefit from their influence. Users can turn their influence into valuable tradable assets through the social tokenization mechanism, further expanding the reach of their social influence.
• Share Trading: Friend.tech allows users to use ETH to purchase shares of other users' social tokens, which represent equity in users' popularity and interactions on Twitter. Users can freely decide when to buy or sell shares based on market supply and demand, profiting from these transactions. This share trading mechanism provides users with a way to invest in and trade social influence, enabling them to participate in the economic system of social networks and share in the growth value of their social influence.
• Fan Economy and Influence Games: Centered around the fan economy, Friend.tech creates a unique influence game. Users can use ETH to purchase shares of other users, thereby gaining the right to converse with the purchased user, known as a friend position. Buyers can chat one-on-one with the purchased user, supporting and engaging with their favorite social influencers. This design stimulates active user participation in social network interactions and development, transforming social influence into actual social interactions and enhancing connections and activity among users.
• Transaction Fees and Revenue Sharing: Friend.tech charges additional transaction fees during the trading process, with a portion going to the protocol and another portion to the shareholders involved in the transaction. For social influencers (KOLs) whose shares are purchased, each transaction can yield a certain percentage of transaction fees. This design encourages KOLs to increase transaction frequency for higher earnings and promotes the overall activity and liquidity of the social network.

Friend.tech: Glimpses of the Future

Friend.tech, with its innovative social + economic model, brings users a new experience of participation and value realization, sparking a disruptive new wave in the Web3 social field. It opens up a vibrant and opportunity-filled new social world for users, allowing both KOLs and ordinary users to gain richer social experiences and economic benefits through the platform.

However, beyond the surface prosperity of Friend.tech, we see that its development path is still fraught with challenges. Returning to the product itself, Friend.tech still has many issues that need to be addressed: its sustainability is in doubt, its business model needs verification, and it lacks appeal to top KOLs. These issues will affect whether Friend.tech can go further in the short term amidst its current popularity.

Firstly, many people are skeptical about the sustainability of Friend.tech. Questions raised include the lack of a clear privacy policy, the requirement to deposit Ethereum upon registration, and an unclear project roadmap. Due to these factors, there are concerns about the safety and long-term development of Friend.tech. Particularly, the absence of clear privacy terms has raised worries about personal information security, making users hesitant to provide personal information to Friend.tech.

Secondly, the business model of Friend.tech needs further validation. The application monetizes through economic interactions between KOLs and fans, where fans can gain the right to converse with KOLs after purchasing shares. However, the problem is that shares do not guarantee a response from KOLs, as it entirely depends on their personal willingness. In this model, KOLs have no obligation to respond to fans. Therefore, Friend.tech faces the dilemma of "paying to message without guaranteed replies," similar to sending private messages on Twitter without any responsibility for a response. This makes the functionality of Friend.tech seem more like a facade, where fans can only realize benefits by continuously purchasing new shares and waiting for others to take over, raising doubts about the sustainability of the entire monetization model.

Additionally, there are significant doubts about whether Friend.tech can attract enough KOLs to join. Currently, many KOLs on Twitter are sharing Friend.tech invitation codes, but for top KOLs in the industry, they do not lack monetization channels. They are more concerned about the potential volatility of tokens after joining Friend.tech, which may lead to dissatisfaction among fans and affect their influence on other platforms (like Twitter). For mid-sized and small KOLs, their limited influence makes it difficult to achieve substantial earnings through the platform even if they join Friend.tech.

Beyond the aforementioned issues, Friend.tech also has a potential hidden danger:

• Lack of Competitive Product Features: Friend.tech suffers from serious interface malfunctions and insufficient features, directly impacting user experience. For example, issues with loading chat content and the absence of common features (like photo sharing) limit users' ability to have a complete social experience on Friend.tech. Although Friend.tech has since expanded community features and provided exclusive VIP content for KOLs, traditional platforms like Telegram, WeChat, and Discord already meet these needs and have more mature and comprehensive functionalities, making users more loyal to them. Compared to these platforms, Friend.tech does not have a clear advantage.
• Lack of Transparency and Planning: Friend.tech has been live for nearly two weeks, yet the project team has not released a white paper or roadmap. This leaves a vague and opaque impression, undermining confidence in Friend.tech's future development. Users and investors hope to clearly understand Friend.tech's vision, plans, and development direction; the lack of this information raises doubts and uncertainty.
• Compliance Risks: With the rapid development of Web3, regulatory scrutiny of cryptocurrencies and blockchain technology is increasing. The business model of Friend.tech is somewhat similar to the stock market, where crypto influencers can share profits with buyers to boost trading volume and prices. This may expose Friend.tech to compliance risks of being viewed as unregistered securities by the SEC in the future.

In summary, as a Web3 social application, Friend.tech's pricing model for personal influence tokens exhibits a trend of FOMO. With good airdrop expectations and KOL marketing promotions, Friend.tech may maintain a certain level of popularity in the short term. However, in the long run, this trend driven solely by emotions is unsustainable. Once the hype cools down, users will return to focus on the product itself and begin to notice the flaws within Friend.tech. If Friend.tech fails to establish a genuine connection between fans and KOLs and optimize its product structure and business model, its future growth potential will be significantly limited. In the future, Friend.tech may repeat the fate of BitClout, failing to achieve lasting development.