The friend.tech airdrop has sparked controversy; can SocialFi tell a new story?

Author: Wu Tianyi, DeThings

According to CMC market data, the friend.tech token FRIEND briefly reached 2.74 USDT, currently priced at 2.48 USDT, with a 24-hour increase of 79.62%.

Although it experienced a brief surge, according to DLNEWS, FRIEND has fallen over 9% since its launch. Last Friday, friend.tech distributed 13,349,967 FRIEND tokens to early users.

Due to users rushing to buy the new tokens, the trading price of the token soared to 169 USD shortly after its launch.

By midnight, the token had significantly dropped, trading at only 2.02 USD.

According to Nftevening, the decentralized social network friend.tech is built on Ethereum's Layer 2 scaling network Base, allowing users to buy and sell "keys" linked to Twitter accounts, which provide access to private chat rooms and exclusive content directly linked to creators' social media accounts (e.g., X (Twitter)).

As a result, creators can receive private messages from fans holding the "keys." The platform launched in August 2023, achieving a trading volume of approximately 4,400 ETH (about 8.1 million USD) on its first day. Ten days later, it generated around 709,000 USD in Ether revenue, second only to the Ethereum blockchain (which charged 3.33 million USD in fees) and staking service Lido (which charged 1.54 million USD in fees).

However, friend.tech's decline was also rapid; just three weeks after its launch, the platform saw a significant drop in activity, capital inflow, and trading volume. Capital inflow decreased by nearly 90.5%, from 16.8 million USD on August 21 to 1.6 million USD on August 27. Concerns over privacy policies and regulatory issues have also plagued Friend.tech.

Recently, Friend.tech returned with its native token and V2 version, but users still seem unimpressed.

Controversial Token Airdrop and New Version

According to TheBlock, the token airdrop coincided with the release of the new version of FriendTech, which offers users new features. These include "clubs," community spaces owned and operated by key holders. The keys for the clubs will be traded in Friend tokens, with a 1.5% fee charged for each transaction to liquidity providers on its DEX. Users must follow at least 10 users on FriendTech and join 1 club to qualify for the airdrop tokens.

However, many actions by friend.tech have left users dissatisfied. Decrypt reported that the originally scheduled release of the token and v2 on April 29 was postponed to May 3.

FRIEND tokens were supposed to be airdropped to users who participated in the April snapshot, but many users encountered difficulties claiming their tokens.

"All my friend.tech points have disappeared, and I now have 0 friends to claim," one Twitter user stated. "I won't sell my friends' airdrop because I can't even claim it," another user said.

Even those who successfully claimed their tokens were not satisfied, as the price dropped from 2.78 USD to 1.49 USD in less than four hours, a 46% plunge. The community believes that the developers' mere addition of 0.01 USD in liquidity is the main factor behind the rapid decline in value.

Moreover, participating in the new version's club feature is a key step to qualify for the airdrop, but this feature seems not to be functioning as planned. Users reported that the platform did not register their club memberships, or that newly created clubs did not appear on the platform.

"This terrible SocialFi app still hasn't verified the steps to join a club," one Twitter user complained. "I hate friend.tech."

Some threatened to sell their tokens as soon as they received the airdrop.

"I had high hopes for friend.tech V2," Twitter user mcSleuth said. "But the app still looks terrible, slow as hell, and the only update we've gotten in 8 months is 'clubs,' which people are just using to claim airdrops."

BSC reported that after the launch, the largest Friendtech whale (known as "Murphys1d") sold its 55,000 newly issued FRIEND tokens, causing the price to plummet over 60%, with the token price dropping to just 0.99 USD. Blockchain expert Anndy Lian stated that the short-term price drop caused by the sell-off could disrupt the market and lead to a more decentralized distribution of the tokens. He emphasized that the long-term value of FRIEND will largely depend on community trust and the management's strategies to address these early challenges.

How Far is SocialFi from Mass Adoption?

CoinDesk stated that Web2 platforms are highly centralized, with all data stored on a single server. Large tech companies monopolize these platforms and ultimately control users' data, privacy, engagement, interaction, and monetization.

SocialFi eliminates these intermediaries, allowing users to have complete control over fees through their networks. The decentralized nature of SocialFi means users can better control their monetized content and data.

Additionally, like centralized servers, distributing data across various network nodes reduces privacy breaches by eliminating single points of failure.

Previously, CoinDesk mentioned that many people outside the cryptocurrency circle on X joined Friend.tech, with some believing this opened the door for the general public to adopt cryptocurrency.

However, recently, Friendtech's poor performance has led to doubts about whether it can truly achieve "Massive adoption." According to bitcoinist, Dogecoin founder Billy Markus recently candidly responded to the enthusiastic support for SocialFi:

"I find it interesting when I make money from it; otherwise, it's very boring."

bitcoinist stated that Markus's comments highlight a key issue surrounding SocialFi: user engagement. Can these platforms offer more than just novelty appeal? Will they provide tangible benefits that bring users back for more than just quick profits?

Despite Ethereum's Vitalik Buterin being a vocal supporter of decentralized social networks, others share Markus's cautious optimism. The success of SocialFi depends not only on the technology itself but also on its ability to address the issues plaguing traditional social media—data privacy concerns, lack of content ownership, and creators struggling to receive a fair share of platform revenue.

nftnow noted that the uncertainty surrounding Friend.tech exists in several areas, including its privacy policy or lack thereof, potential regulatory issues, and the public release of data from 100,000 accounts (some media referred to it as a leak).

When navigating to the app's privacy policy, a pop-up appears stating "Coming Soon." Given that the financial system is linked to this app, this is understandably off-putting for various users.

Many artists and well-known community figures have expressed reluctance to join Friend.tech. Despite the platform's popularity, it has yet to capture the interest of these key participants. Their hesitation raises questions about the platform's potential for mainstream adoption or whether they are simply fatigued by other decentralized platforms like BitClout, Mastodon, and Bluesky, which have had short lifespans in the community.