friend.tech soft rug? Where is Web3 social?

Author: Karen, Foresight News

The glory of the past reflects the desolation of today. The rise and fall of friend.tech resembles a dramatic reversal, leaving people sighing.

On September 8, Beijing time, friend.tech's official Twitter account released a significant announcement, setting its management and ownership parameters to 0x000…000. Ostensibly, this was to prevent any future changes to its fees or functions, but in reality, it was a complete relinquishment of control over the smart contract. Some community users interpreted this as a sign of stagnation and the end of the project.

Although friend.tech attempted to soothe market sentiments, emphasizing that this change would not affect the normal operation of the web client and that the development team would not extract any fees from the smart contract or platform, sentiments on social media such as "friend.tech is dead" and "soft rug" spread, revealing users' concerns and disappointments about the future of friend.tech.

Notably, since August, the content of friend.tech's official Twitter has become unusually monotonous and mechanical, posting only the top 5 Clubs information of the day, with no other fresh content or interaction. This change not only conveys a sense of fatigue and helplessness from the project team but may also be a precursor to the internal struggles of the friend.tech team and their eventual decision to give up control over the smart contract.

Once a Leader, Now Desolate

Looking back, the rise of friend.tech was once glorious. Initially, thanks to the support of Paradigm, active participation from heavyweight KOLs, a design that was hard to come by, expectations of potential airdrops, and innovative ways to monetize KOL value and IP, friend.tech achieved remarkable results, growing from 0 to over 100,000 users in just two weeks, with a cumulative user base exceeding 910,000.

However, times have changed, and today friend.tech is no longer in its prime. The daily active user count has dropped to single and double digits in the past two months, and the daily trading volume of Keys has plummeted from a previous high of $20 million to just a few thousand dollars, as the once prosperous scene seems to have evaporated in just a few months.

Even more lamentable is the price of the FRIEND token, which has experienced a cliff-like decline. From a nearly $3 peak in May, it has fallen to the current $0.06, a drop of over 98%, with a market cap of only $5 million. Huang Licheng once spent a fortune acquiring FRIEND tokens, but now faces significant losses; the FRIEND he bought for $15.6 million is now worth only $570,000, resulting in at least a $15 million loss. This has become a microcosm of friend.tech's decline.

Reflecting on the development of friend.tech, the uncertainty in both internal team dynamics and external collaborations has sown the seeds of its decline. From the subtle changes in its relationship with Base to the premature demise of the Friendchain vision, and finally the decision to abandon the migration of FRIEND tokens to other chains, friend.tech's strategic indecision has further exacerbated its predicament.

At the end of May, friend.tech co-founder Racer hinted at the team's unstable relationship with Base and the intention to migrate out of the protocol. In June, friend.tech announced a partnership with Conduit to develop a social-specific chain based on Base, named Friendchain, with FRIEND as the gas token. Subsequently, friend.tech deleted this tweet, abandoned the Friendchain vision, and decided not to migrate FRIEND to other chains based on community feedback.

At the same time, friend.tech closed all protocol fees for BunnySwap (built-in Swap), Clubs, and v1 smart contracts, with 100% of the fees going to traders, liquidity providers, and Club Chairs within the community. Previously, in friend.tech V1, a 10% fee was charged on each transaction, half of which was protocol revenue.

Data from DefiLlama shows that as of today, friend.tech has generated $63.38 million in fees, with revenue reaching $31.66 million. As shown in the chart below, friend.tech set a record of over $1 million in fees in a single day during its glorious period in October last year, while after the release of version V2, fee growth has basically stagnated, with daily fees in the last month amounting to only a few hundred dollars.

Source: DefiLlama

Why Has friend.tech Fallen Silent?

The rise and fall of friend.tech serves as a mirror, reflecting that while Web3 social platforms pursue rapid expansion, they must also be wary of bubble risks.

Behind the silence of friend.tech lies a complex web of reasons. Foremost is the high speculation inherent in its product, which has attracted a large number of investors seeking short-term gains but has made it difficult to build a solid long-term user base, resulting in low user loyalty. Secondly, in exploring its market positioning, friend.tech seems to have failed to accurately identify a niche market that aligns with its core value, leading to a disconnect between the product and user needs. Additionally, the previous excessive PUA strategies have somewhat tarnished friend.tech's reputation, significantly reducing user trust. In terms of team building and external collaborations, friend.tech also faces numerous uncertainties, which not only affect the project's execution efficiency but also heighten market concerns about its prospects. More critically, the frequent strategic indecision of friend.tech has led to constant adjustments in project direction, making it difficult to form effective market influence and user stickiness.

Where Is Web3 Social Heading?

On the other hand, the leading project in the Web3 social space, Farcaster, has recently encountered dual challenges of user growth and platform activity. At mid-year, Farcaster's daily post and interaction counts exceeded 140,000, but this positive momentum has significantly slowed in the past month, with DAU dropping to around 100,000, marking a weakening of Farcaster's growth momentum.

Source: Dune ( @pixelhack* )*

Even more critically, Farcaster has also hit a bottleneck in user acquisition. Since early February, the daily new user growth for Farcaster has plummeted from a peak of 15,366 to an average of five to six hundred in the past two weeks. This change not only reveals a significant decline in the attractiveness of new users but also reflects the severe challenges the platform faces in maintaining user growth momentum. Furthermore, the Meme within the Farcaster ecosystem has also suffered greatly, with Degen's value dropping over 95% since reaching its historical high at the end of May.

Source: Dune (@filarm)

These data not only reveal a shake in market confidence but also indicate that the Farcaster ecosystem is undergoing unprecedented pressure and adjustment.

In contrast, Telegram has become increasingly prominent in the Web3 social space through its synergistic development with the TON ecosystem and the explosion of mini-program games. For Web3 native social projects to scale effectively, they need to focus more on precise positioning, reducing the migration costs from Web2 to Web3 social, optimizing user experience, and enhancing user experience and trust-building efforts.