The Predicament of Friend.tech and the Rise of Imitative Projects: Who Can Lead the New Wave of SocialFi?

Author: veDAO Research Institute

Friend.Tech can be said to be the hottest project in the crypto space recently, with a trading volume exceeding 25,633 ETH within two weeks of its launch. It subsequently received seed round investment from Paradigm, and its total value locked (TVL) has shown exponential growth. However, on October 4, Friend.Tech experienced a net outflow of 2,100 ETH, the largest daily withdrawal since its launch, with a single-day TVL drop of 7.8%.

Analyst Tom Wan stated that the decline in TVL is mainly due to the large holder Hanwei Chang selling 43 of his own Keys, profiting a total of 140 ETH. This also caused the price of his own Keys to plummet from 3.89 ETH each to 2.64 ETH. This selling pressure led to a price crash, allowing Chang to repurchase 15 of his own Keys at a lower price. However, Friend.Tech's reserves remain at around 10,510 ETH (approximately 17 million USD), indicating that the large holder has only realized profits but has not withdrawn the funds, and could re-enter the market at any time; as of the 11th, the TVL has not returned to the level it was on the 4th.

On the other hand, the explosive popularity of Friend.Tech has led to many similar clones emerging across various chains, including the much-anticipated social platform Stars Arena launched on Avalanche, as well as HUB3 and Friendzy on the Solana chain. In this article, the veDAO Research Institute will sort out the current situation and development context of Friend.Tech, while also providing introductions and analyses of related clones.

Friend.Tech

For an introduction and background on Friend.Tech, please refer to previous articles from the veDAO Research Institute.

Recent Developments of Friend.Tech

Recently, Friend.Tech has fallen victim to a series of SIM swap attacks. This has not only shaken the trust of its user base but has also attracted attention from the cryptocurrency community. On September 30, a user named "froggie.eth" reported a SIM swap incident affecting his Friend.Tech account on X (Twitter), resulting in a loss of over 20 ETH. Following this, user Daren Broxmeyer revealed on October 3 that he had suffered a SIM swap attack, losing 22 ETH. By October 5, a total of 234 ETH had been stolen from just four different Friend.Tech users.

Cryptocurrency investment firm Manifold indicated that Friend.Tech has potential risks; considering that one-third of Friend.Tech accounts may be linked to phone numbers, approximately 20 million USD could be threatened by targeted attacks on users within the Friend.Tech network. Additionally, Manifold emphasized that, theoretically, the entire Friend.Tech platform is at risk due to the way its security is configured, making it crucial to prioritize resolving these issues.

In response to these attacks, Friend.Tech introduced a new feature on October 5, allowing users to change their login methods; at the same time, Friend.Tech clarified the issue regarding the unactivated two-factor authentication (2FA) feature from Privy.

Future Prospects of Friend.Tech

Due to a series of SIM swap attacks and the large holder sell-off mentioned at the beginning of the article, Friend.Tech's popularity has sharply declined, leading many to question whether it is a "pump and dump" scheme. Some users pointed out that the project's developers have previously been involved in controversial projects, such as Tweet DAO and Kosetto. In both cases, the project team initially flooded social media with promises of more exciting news, only to suddenly disappear.

Another major concern for investors is that Friend.Tech lacks an official roadmap or white paper. To date, there are no documents regarding the project's progress or goals. The only information users have is that the project is currently in beta release and that the developers hope to enter a wide release phase in six months. The Friend.Tech team has not mentioned whether any new features are under development.

Overall, Friend.Tech is still considered an excellent SocialFi project. Its innovative approach combines social interaction with crypto, generating significant buzz and discussion, along with a high TVL and profitability level. Undoubtedly, Friend.Tech holds significant importance in the SocialFi space; it effectively facilitates the monetization of existing social media brands, filling a gap in the current DeFi world.

At the same time, Friend.Tech has plenty of room for improvement. First, many users are complaining about the high transaction fees and bots, which has led to the majority of profits being taken by top KOLs, project teams, and scientists, making it a reason most retail investors are reluctant to participate deeply. Second, there is a lack of features; not only has the UI been continuously criticized by users since its launch, but its current social activities are limited to text and image exchanges in Rooms. The various innovations proposed by room owners require the use of other platforms or tools, and even basic functions like lotteries and voting are absent in Rooms. If SocialFi only focuses on finance while failing to retain users with the product itself, it will ultimately face the risk of failure once the economic model collapses.

Clones

On August 29, Friend.Tech tweeted, stating, "To ensure that loyal users receive fair rewards during our testing period, users who switch to forks and clones will automatically be opted out of earning points and will forfeit their existing points. They will still be able to use the application normally." This statement clearly means that users can use various clones, but once they do, they will not be able to earn points rewards on Friend.Tech. Ultimately, just five hours after Friend.Tech released this statement, its founder Racer issued an apology, admitting that the previous comments about restricting users from using clone and imitation applications were made out of fear and a zero-sum mentality.

From this operation by Friend.Tech, it can be seen that in the social space, the value of clones is still very high, even the leading players in the field feel threatened by the emergence of clones; of course, friends who have experienced the early prosperity of Web2 will feel this more deeply, having witnessed how social platforms like Facebook and Twitter ultimately triumphed in the social arena. Now, let's take a look at some notable Friend.Tech clones:

Stars Arena

Stars Arena is the clone of Friend.Tech on the Avalanche chain. Stars Arena has changed the term "Keys" to "Tickets," and unlike Friend.Tech, which requires an invitation code, Stars Arena only requires users to link their Twitter accounts to trade Tickets on the platform; as long as you purchase someone else's Ticket, you can enter their private chat room. This private chat room is somewhat different from Friend.Tech; in Friend.Tech, if the room owner does not choose to reply to members, other members cannot see each other's messages, while in Stars Arena, both the owner and members can see each other's messages.

In addition, a significant change from Friend.Tech is that Stars Arena has added a public information stream feature, allowing users to post Twitter-like posts and receive retweets, likes, and tips. Furthermore, it has adjusted the revenue-sharing mechanism, with 7% of transaction fees going to creators, 2% to the platform, and 1% to referrers.

Data from Dune shows that since October 2, Stars Arena's daily TVL has seen significant growth, peaking at around 1.45 million USD on the 6th. Currently, both Avalanche officials and founder Emin Gün Sirer are involved, and other large holders from Friend.Tech have also entered.

However, on October 6, Stars Arena experienced a major security breach, resulting in nearly 3 million USD in losses for Avalanche. On the 9th, Stars Arena announced that it had successfully secured the necessary funds to cover the 3 million USD loss. The Stars Arena team also stated that they would only reactivate the smart contract after conducting a comprehensive security audit. As of the time of writing, Stars Arena remains in maintenance mode.

Fan.Tech

Fan.Tech is also a SocialFi project centered around the tokenization of social value, where "Keys" are referred to as "Shares." Unlike Friend.Tech, Fan.Tech has a smoother UI/UX, allowing for public/private posts, viewing accounts you follow on X, a statistics page, and a dark mode toggle, making it much more mature in terms of the program itself; additionally, Fan.Tech has a roadmap and white paper.

Its features also include Share Generation Events (SGE), which can introduce bidding activities for new accounts to prevent bots; and a referral system that allows users to earn 1% of the tax from Shares transactions made by invitees and a share of their Shares.

CipherRIP

CipherRIP, previously known by the domain cipher.fan, launched on Arbitrum. Users can buy and sell Cores, equivalent to Friend.Tech's Keys. By using CipherRIP, users can earn points and receive a CIPHER airdrop scheduled for October 15; the total airdrop amount is 100 million CIPHER, accounting for 10% of the total token supply. To publish content on the platform, users need to hold 5 Cores or have their Core value exceed 0.01 $ETH. Notably, the project's launch announcement was retweeted by Arbitrum's official account.

After being retweeted by Arbitrum's official account, CipherRIP saw an influx of 14,468 new users on October 10, accounting for approximately 75.6% of the current total user base. Data from DeFiLlama shows that on the same day, CipherRIP captured approximately 215,000 USD in fees; currently, CipherRIP's TVL exceeds 320 ETH, continuously setting new highs.

HUB3

HUB3 is a social project built on the Solana chain, with rules similar to Friend.Tech. The difference is that HUB3 displays a world map in its interface. When users register in a location, the corresponding position is shown on the map, and they can interact by clicking on the map.

Conclusion

From the above image, it is not difficult to see that Friend.Tech still firmly holds the top position in the SocialFi space, but other high-quality clones are also emerging one after another. These clones have optimized and innovated in terms of on-chain selection, economic models, and functional design. Various participants may jointly promote the maturity and prosperity of this space, with product quality continuously improving and user satisfaction steadily increasing.

The essence of SocialFi remains P2E; compared to other P2E models, users can not only receive token rewards but also gain traffic and influence. More fundamentally, the situation where platforms exploit the value brought by KOL influence without compensation will improve, allowing creators to reclaim the value of their influence.

We have reason to believe that this wave of ongoing enthusiasm will usher the SocialFi space into a new phase of rapid development, changing our social interactions and reshaping relationships in new ways, becoming a new growth point in the crypto world.