friend.tech ignites the community, decentralized social networking surges again

Original Title: What is friend tech? What does Paradigm's backing mean for the resurgence of decentralized social?

Original Author: defioasis, Wu Says Blockchain

On August 10, the social application friend tech on the Base chain exploded in the community, with users scrambling for invitation codes to join, and tens of thousands of users flocking into this new L2 network. However, the good times did not last long, as the enthusiasm waned in less than three days, and friend tech's activity plummeted. Just when it seemed poised to quietly exit the historical stage, friend tech made a high-profile return with news of seed funding from leading crypto venture capital firm Paradigm, coupled with the distribution of its first points, causing previously exited users to quickly return and once again create a wave on social media, attracting even more new users.

According to the CryptoKoryo data panel, as of August 19 at 20:30, in about 10 days since its inception, friend tech's trading volume has exceeded 11,000 ETH, with over 39,000 unique users and more than 518,000 transactions completed. The Paradigm effect was also strong enough; after the funding news was announced, the number of active users on friend tech surged, with over 1.7k buyers in a single hour, setting a new historical high.

Data Source: https://dune.com/cryptokoryo/friendtech

Background

According to yuga.eth, a senior software engineer at Coinbase, friend tech was built by Racer (@0xRacerAlt), the chief developer of TweetDAO and Stealcam. This claim has also been reported by CoinDesk.

Both TweetDAO and Stealcam are explorations of decentralized social, and they share design similarities, making them predecessors to friend tech.

TweetDAO was created around April 2022, and its basic principle is that the DAO creator sells NFTs called Eggs, allowing holders to post one tweet per day from the DAO's Twitter account without any restrictions on the text content. As more NFTs are sold, the floor price of the NFTs also rises. Currently, the official TweetDAO account has been deactivated, and there is little information available on the website.

After TweetDAO, Racer sought another developer, shrimp (@shrimppepe, also a co-founder of friend tech), and together they built Stealcam in March of this year. Stealcam is an image social application based on Arbitrum, where users can take photos and upload them as NFTs, but the images are hidden and need to be stolen before they can be revealed; other users must pay a fee (steal) to gain the right to reveal the image, and only the latest payer can enjoy the reveal right, meaning that the reveal right has a time limit and there is a possibility of having paid the fee but not being able to reveal the image, as others may pay fees in the meantime. The number of times a fee can be paid for the same NFT is unlimited, and as the number of steals increases, the floor price of the NFT will also rise, with the price difference distributed among creators, users, and the protocol. Currently, the official Stealcam account has been deactivated, but the website is still in use.

It is not difficult to see that the social products built by Racer have a strong financial attribute and are structured with a Ponzi-like push. Additionally, after Stealcam launched, it received high praise from Base core developer Jesse Pollak, which may have laid the groundwork for friend tech's choice of Base.

Introduction

friend tech appears very straightforward to access; iOS users can open the official website on their phones and add it to their home screen without relying on any third-party downloads. Users need to obtain an invitation code, bind their Twitter account, and inject at least 0.01 ETH into the Base network to enter the application. The functionality of friend tech is essentially no different from WeChat groups and Telegram groups, but the organic entry and exit from group chats is the core of friend tech. Users can choose to join a group by paying a base price to acquire shares in the group; if they want to exit the group, they can sell their shares. As the number of people choosing to join a group gradually increases, the total number of group shares grows, and the base price of each share will also increase, meaning that joining a group not only fulfills social needs but also has investment potential. From an investment perspective, joining a group is an investment in the group and its owner, so speculative users often choose to buy more shares in other groups or their own group that they believe have potential in the early stages.

Economic Model

The economic model of friend tech mainly includes a group share growth model, fee structure, and point incentives.

The shares of friend tech start growing from 0, and the only variable affecting the price of each share is the number of shares issued.

Price in ETH = supply^2 / 16000, i.e., the price per share (ETH) = (total shares^2) / 16000

(Data Source: https://1drv.ms/x/s!AkA_OhBaQXjAiEbRNPrKm-YQH7Yi?e=vVne4E)

As the total number of issued shares continues to grow, the net value of the price difference between buying and selling shares will become larger, but the price difference rate (price difference / selling price) will become smaller. The reason for the existence of the price difference is not complicated; the growth of shares starts from 0, so there must be buying before selling, and sellers will always lag behind buyers. At the Nth share, the selling price is the buying price of the N-1th share, such as:

At the 1st share, the buying price is 0.0000625 ETH, and the selling price is 0 ETH. At the 2nd share, the buying price is 0.00025 ETH, and the selling price is 0.0000625 ETH, with a price difference rate of -300%. At the 3rd share, the buying price is 0.0005625 ETH, and the selling price is 0.00025 ETH, with a price difference rate of -125%.

At the 4th share, the buying price is 0.001 ETH, and the selling price is 0.0005625 ETH, with a price difference rate of -77.78%.

And so on.

(Data Source: https://1drv.ms/x/s!AkA_OhBaQXjAiEbRNPrKm-YQH7Yi?e=vVne4E)

friend tech charges a 10% fee on each transaction of group shares, with 5% allocated to holders of group shares and the remaining 5% going to the treasury. As of August 19 at 20:30, in ten days, the friend tech treasury (0xdd…f742) has recorded an income of 579 ETH, worth approximately $960,000.

Point incentives are an important means for friend tech to convert Twitter users into core users of the application, utilizing the expectation of potential token airdrops and providing tangible points to incentivize users. friend tech will distribute a total of 100 million points during a six-month testing period, with distributions every Friday, and the points will not be recorded on-chain. On August 19, friend tech completed its first point airdrop; although the specific rules for the points are unclear, trading volume is expected to be the most important indicator. Additionally, the community speculates that the points are related to airdrops, as Paradigm's other successfully invested project, Blur, is a master of point games.

Future and Challenges

At the end of July, Paradigm released its latest top ten areas of focus, with decentralized social prominently listed. However, due to the high cost of social migration and the strong first-mover advantage of centralized social, there are almost no successful projects in this space. Whether it is Lenster or friend tech, it is evident that the influence of financial attributes such as airdrops, incentives, and funding far outweighs the application as a social attribute itself.

However, I believe that the private group chat scenario represented by friend tech has certain objective conditions for success. A good example is the Alpha community represented by the LaserCat community, where purchasing group shares with ETH is quite similar to purchasing NFT Pass cards with ETH. From a pathway perspective, both lead to joining a specific community; the difference is that friend tech combines the actions of purchasing and joining a group chat into one, while the NFT format separates the two unrelated actions, with purchases made through NFT marketplaces like OpenSea and Blur, and group chats primarily relying on Discord or others. Theoretically, the shares of friend tech could also take the form of NFTs. The demand for NFT Alpha communities genuinely exists; friend tech's development direction is not to attract dispersed users but to attract users with long-term bonds. Therefore, from this perspective, friend tech attracting Discord community users may be of higher quality than directly acquiring users from Twitter. Of course, compared to Discord's comprehensive features and powerful plugin system, friend tech's offerings are still too singular; if a group faces multiple complex issues, it may lead to inefficiencies in daily communication. The next step for friend tech is to enhance functionality for user experience within groups.

Another point that has both advantages and disadvantages is that friend tech has greater limitations on group size expansion compared to NFTs with a total cap. Taking the total number of LaserCat NFTs (520) and the floor price (3.66 ETH) as a comparison for friend tech, when the LaserCat group in friend tech has 520 shares, the buying price for the LaserCat group will be 16.9 ETH; when the buying price for LaserCat is 3.66 ETH, the LaserCat group has 242 shares, with a maximum of 242 people. On the positive side, this raises a thought-provoking point: if PFP NFTs or NFT Passes are indeed friend tech shares, the cultural attributes of the group can be conveyed through NFTs to non-holders, and through established algorithms, if the community being joined truly possesses corresponding value, this provides a basic floor price for NFTs, which may drive NFT price discovery.

References:

https://www.coindesk.com/web3/2023/08/11/is-friendtech-a-friend-or-foe-a-dive-into-the-new-social-app-driving-millions-in-trading-volume/

https://www.panewslab.com/zh/articledetails/5upll7es.html

https://www.asxn.xyz/p/friendtech