Reviewing Friend.tech's launch after 20 days: 0 cost to gain approximately 2500 ETH, was the explosive success premeditated?

Author: Xiyou, ChainCatcher

In just 20 days since its launch, Friend.tech has become a Web3 social application that encompasses numerous hot topics.

"Hard to get an invite, backed by investment firm Paradigm, protocol fee revenue surpassing Uniswap to rank first in DApps, user count exceeding 100,000+, a well-known KOL has joined, user points controversy…" Regardless of which of these hot topics is singled out, they are all sufficient to become front-page content in the crypto community or media, but now these contents are used to describe the same application, Friend.tech.

Friend.tech allows users to bind their accounts with Twitter, enabling the tokenization of their account's (KOL) popularity (also referred to as "shares" which were later changed to "Keys"). Ordinary fans can become shareholders by purchasing shares (Keys) issued by KOLs, gaining the right to chat privately and view specific content. Additionally, users can buy and sell shares Keys to profit from price differences.

From a product design perspective, Friend.tech's model of social reputation tokenization is not new. Back in 2021, the once-popular Bitclout did something similar, helping celebrities issue social tokens, including those of Elon Musk, Vitalik, CZ, and others. The biggest difference between the two is that Bitclout issued tokens without the consent of the celebrities, facing community backlash and ultimately declining, while Friend.tech requires Twitter users to actively join.

This seemingly innovative yet essentially old wine in a new bottle product, Friend.tech, has become popular in a somewhat inexplicable manner. It appears that its explosive popularity is not a spontaneous result of the product itself, but rather a carefully orchestrated plan.

The Three Steps of Friend.tech's Explosive Popularity: Airdrop Expectations, Capital Backing, Invitation Codes, and Token Price Surge Mechanism

Since its launch on August 10, the social application Friend.tech has been nothing short of spectacular. It first announced receiving seed round investment from top VC Paradigm, followed by multiple well-known KOLs such as Y Combinator President Garry Tan, DeGods NFT project founder Frank DeGods, renowned trader Gainzy222, and NBA player Grayson Allen announcing their participation. According to Dune data, as of August 29, Friend.tech's trading volume reached 51,853 ETH, with protocol fees captured amounting to 2,478 ETH, approximately 4.2 million USD.

For a new application, the rapid acquisition of such high attention and excellent data performance by Friend.tech in a short time is indeed intriguing. It is worth noting that Friend.tech had no announcements, explanations, or product introductions at the time of its initial launch, and even now, it is impossible to accurately verify the specific date of Friend.tech's launch. Yet, this so-called "three-no" product has officially surpassed 100,000 users.

Perhaps we can find some clues about its explosive popularity from the product's development timeline?

According to Dune's recorded data, FriendTech first launched on August 10, but there was no official announcement on that day, and there was virtually no information introduction about the product. Prior to this, its official social media had also made no statements regarding the product. Although the official Twitter and Telegram channels began their first updates on July 4, there were only two announcement channel introductions created on the day of launch before August 10, and after this announcement, Telegram has not been updated again.

In summary, the launch of FriendTech on August 10 was limited to a small circle of users, but which specific users were involved is hard to determine.

Although FriendTech had no launch time explanation or product introduction in its early days, from the interactions on its co-founder shrimp's Twitter account, it can be seen that as early as August 11, well-known figures such as ZhuSu and crypto KOL Adam Cochran had already joined and started trading shares. Among them, Adam Cochran's share (Share) trading amount in FriendTech had already reached 30 ETH.

As for how these early KOLs joined, many users speculate that the official may have invited a batch of well-known KOLs in advance for internal testing to attract user attention.

Then, on August 13, former Paradigm researcher Anish Agnihotri announced on Twitter the launch of Friend.tech's professional interface FriendMEX, which does not require an invitation code and provides real-time tracking of share trading dynamics and leaderboards. This tweet was retweeted and supported by shrimp. It was precisely because of the emergence of this analytical tool that the community speculated that Friend.tech had Paradigm's backing.

Subsequently, on August 15, Friend.tech officially announced that it would start airdropping reward points to app testers on August 18, distributing 100 million points over the next six months, stating that there would be special uses for these points after the app's official release. Some users viewed this statement as an official hint of an airdrop. Additionally, since Friend.tech is built on the Base chain, there is also potential for an airdrop expectation, making the trial of Friend.tech products likely to achieve two goals with one action.

However, the initial series of operations such as "celebrity participation + airdrop hints + speculation about Paradigm's endorsement" did not lead to a significant increase in users for Friend.tech. It wasn't until August 19, when Paradigm publicly acknowledged its investment in Friend.tech's seed round, and Paradigm partner Charlie Noyes and other related staff began to like and retweet, that the enthusiasm of the crypto community was fully ignited.

Under Paradigm's public endorsement, Friend.tech users began to experience explosive growth. Subsequently, we saw a series of KOLs actively marketing for it. On August 21, Garry Tan, President of the famous American startup incubator Y Combinator, announced his participation in Friend.tech and shared his invitation code; Multicoin Capital co-founder expressed that Friend.tech is an interesting experiment with rapid iteration, believing that Paradigm is helping the Friend.tech team think about product iteration directions; the crypto data analysis site CoinGecko announced that it had added a section for Friend.tech-related tokens, etc. This day also marked the peak moment for Friend.tech, with related user data reaching a high point, and the protocol captured a single-day fee of 503 ETH (approximately 840,000 USD), with daily transaction volume reaching 520,000.

From this perspective, Paradigm's public support for Friend.tech is the main reason for its explosive popularity.

However, within three days of Friend.tech's launch, former Paradigm researcher Anish Agnihotri publicly launched the related professional product FriendMax, followed by Paradigm's public acknowledgment of investment and collective likes and retweets from staff. This series of promotional operations was so well-timed that users couldn't help but suspect that Friend.tech's explosive popularity might have been planned long in advance, already under Paradigm's control.

Many users lamented: Friend.tech is a premeditated explosion, and Paradigm's manipulation of Friend.tech is truly superb. Just by relying on airdrop points, it attracted over 100,000 users and generated over 4 million USD in ETH revenue, equivalent to "zero-cost profiting over 2,500 ETH," which is truly remarkable.

Of course, aside from the commendable marketing rhythm, Friend.tech's design of the invitation code point system and share token price trend also adds significant value.

Firstly, regarding the invitation code points, Friend.tech clearly stipulates that new users need an invitation code to register, and old users who send invitation codes can earn points. Many users have expressed that the points they earn may be an important measure for future airdrops.

Therefore, during Friend.tech's explosive popularity, we saw various crypto communities seeking to purchase Friend.tech invitation codes, and some users were sharing invitation codes in community groups. The invitation code mechanism undoubtedly provided free marketing for Friend.tech and created a scene of high demand for invitation codes. Some users even stated that in order to obtain more invitation points, they would actively leave comments under well-known KOLs' posts asking for FT invitation codes or create FT invitation code Telegram sharing groups to attract users to participate, willingly doing free marketing.

Additionally, Friend.tech's share token price increases exponentially with the number of holders. Thus, we saw users in the community stating that after buying xx shares, the price had multiplied several times. This mechanism means that users who buy shares of well-known KOLs early on can achieve significant profits in a short time, creating a wealth effect that can quickly attract user attention and spread.

In summary, Friend.tech's meteoric rise can be attributed to three aspects: first, airdrop expectations: expectations of airdrops for the Base chain and Friend.tech; second, Paradigm's endorsement and collective support from staff; third, the product's invitation mechanism and innovative token price mechanism.

Friend.tech's Trading Volume Drops Over 90%, Platform Becomes a Social Casino

Despite numerous accolades, Friend.tech also cannot escape the fate of being a fleeting Web3 social application. Since the user count peaked on August 21, Friend.tech's data has entered a downward trend. Currently, user data has decreased by over 90% compared to its peak.

According to Dune data, Friend.tech's daily trading volume has dropped over 90% since reaching a peak of 16.9 million USD on August 21, with the daily trading volume on August 29 falling to just 1.29 million USD; the number of daily completed transactions decreased by about 93%, from 520,000 during the peak to only 36,000 on August 29. Additionally, Friend.tech's daily revenue has decreased by over 95%, from 1.7 million USD on August 21 to 170,000 USD on August 29.

Although the cancellation of user points on August 29 was reported by the community and media, the data shows that it did not lead to user growth, and even saw a decline compared to the previous day.

In fact, controversies surrounding Friend.tech have been ongoing, but during its explosive growth, some product flaws seemed to be overshadowed.

First is the privacy issue. Registering for Friend.tech not only requires binding a Twitter account but also requires an email and wallet address to deposit 0.01 ETH to activate, which means that the association between the wallet address and the public Twitter username is essentially disclosed.

On August 21, Yearn core developer banteg tweeted a warning that information from about 100,000 authorized Friend.tech Twitter accounts had been leaked. SlowMist's Yu Xian stated that the wallet addresses corresponding to over 100,000 Twitter accounts had been exposed, and by associating these wallet addresses with another layer, more privacy information could be revealed. The official response from Friend.tech was simply, "The claim of data leakage is like saying someone can attack users by looking at their public Twitter information, which is irresponsible reporting," and it ended there.

At that time, most users were immersed in the frenzy of Friend.tech's growth and paid little attention to this. However, more and more users are beginning to question whether it was worth it to trade their real information, such as phone numbers, real-name email addresses, Twitter accounts, and wallet addresses, for a few dollars in airdrop.

Additionally, the current version of Friend.tech has made the speculation of KOL share KEY price increases the main theme of the platform. Users can only buy and sell shares; there seems to be no other social scenarios to engage in, and there is nothing valuable or fun to do. It is neither a communication application nor a content payment tool, and the function of chatting privately with KOLs to gain Alpha has not been realized.

Moreover, there are many unspoken rules in buying and selling shares on Friend.tech. For instance, most early shares were bought by the issuers themselves, sold to later buyers after the price skyrocketed, leaving later buyers as the "greater fool." Additionally, many shares have prices but lack a market, resulting in extremely poor liquidity. Furthermore, every share transaction on the Friend.tech platform incurs a 10% fee, with 5% going to the Friend.tech platform and the remaining 5% to the share issuer, meaning users incur a loss of over 20% upon purchase.

As a result, Friend.tech has been jokingly referred to by users as a "social casino"—it opened a casino, invited people to issue social tokens, and it takes a 5% fee, ensuring profit without loss.

Currently, Friend.tech users are still primarily focused on speculating on share prices, and its founder Racer has hidden all content from his Twitter account after issuing an apology for canceling user points.

From Bitclout, Damus to Friend.tech, Why is the Heat of Web3 Social Applications Difficult to Sustain?

"The high-rise is seen to rise, the guests are seen to feast, and the building collapses" aptly describes the brief life of Web3 social applications. Whether it is the currently popular Friend.tech, the once-trending Damus earlier this year, or the early Bitclout, the ultimate trajectory is rapid rise followed by silence. This leads users to question why the popularity of these applications often does not last beyond two weeks. What conditions must be met for Web3 social applications to explode?

ALEX, a crypto user studying the Web3 social track, stated that first, the current Web3 social applications have a high entry barrier, making it very difficult for ordinary users to get started. Take Friend.tech for example; users not only need to register with an email, but also require an invitation code, Twitter authorization, and a deposit of 0.01 ETH to the Base network to activate. This means that not only is the process complicated, but using this product also requires a cost of about 20 USD. If it weren't for the potential airdrop from Base and its products, most people would not use this product. Similarly, for Damus, which made waves earlier this year, users needed to understand the distinction between public and private keys, which is a difficult concept even for those in the crypto space, making it even harder for ordinary users.

Secondly, the lack of playability and valuable content in the product leads to early speculation being the main focus. While this may attract a large number of users in a short time, the subsequent updates in functionality or content do not keep pace, resulting in the product becoming a fleeting phenomenon.

Additionally, whether it is the breakout Damus, Friend.tech, or the latest popular TG Bot, they are essentially chain-modified products built around existing Web2 social products (like Twitter), and many are merely plugins for Web2.

These products may address certain needs (for example, Friend.tech can be seen as a plugin for Twitter, helping KOLs issue social tokens or build paid communities), but the user experience of these applications is far from the smoothness of the original products. The high entry barrier is one aspect, and many of the developed features are merely supplements to the original applications, making them dispensable and not significantly impactful. Before Friend.tech's explosive popularity, many users had expressed that many so-called Web3 social application scenarios are perceived needs by the project parties, which are actually false needs.

However, ALEX also added that Web3 social applications are still in their early stages. For a new track, continuous trial and error and iteration are needed to find out what kind of products will suit users. The products in the Web3 social track are still worth looking forward to. Just like DeFi applications, before the DeFi Summer of 2020, although there were products like DEX and on-chain lending, they were not as widely adopted as they are now and remained in the conceptual stage until the emergence of products like Uniswap, which truly allowed users to experience grassroots DeFi, moving beyond mere concepts to real applications.

As Web3 social products continue to innovate and iterate, it is believed that there will be long-lasting applications like Uniswap that will not be just a flash in the pan. In fact, even the Web2 social track is a process of continuous trial and error. In 2021, Clubhouse was once all the rage globally, and at its peak, some people spent hundreds of dollars to buy an invitation code, with its valuation once soaring to 4 billion USD. However, Clubhouse's ultimate application scenario was merely live audio, eventually being replaced by Twitter's Spaces. This July, Meta's launch of "text-based Instagram, targeting Twitter" social application Threads is yet another new attempt.

But regardless of the ultimate outcome of Friend.tech, it has provided a valuable experimental reference sample for the exploration of Web3 social applications.