Everything you need to know about friend.tech V2

Author: Karen, Foresight News

The once wildly popular Web3 social trading protocol friend.tech launched its V2 version during the May Day holiday. Despite its token experiencing a rollercoaster of high openings, declines, and rebounds, friend.tech has once again become a hot topic thanks to new features like the paid group Club, a unique fee design mechanism, and an LP APY close to 600% (which even reached 1400% yesterday).

The friend.tech V2 page continues the minimalist design style. Taking the official website as an example, the top features a Club and creator search box, while the left navigation bar includes wallet, activity, and Chat modules in order. The wallet displays holdings of ETH, FRIEND, Keys, and mining rewards; the activity page lists Key trading activities of followed creators; and the Chat page aggregates Clubs and creators holding Keys, facilitating user interaction.

friend.tech V2 Core Feature: Paid Group Club

The paid group Club is the biggest highlight of friend.tech V2. Building on the monetization of KOLs and creators in V1, it adds Clubs, which function like paid groups. However, new members must pay a higher price to join, and transactions only support the friend.tech platform token FRIEND, with a 1.5% fee charged on each transaction (which will be discussed later). Key holders can also vote to elect the president of their Club at any time, and the Clubs' president is responsible for managing the club and selecting moderators.

The price of Club Keys follows a specific formula, where the price of the next Key is S^2/100 (priced in FRIEND), with S being the current number of Keys. The table below shows the price chart at the S-th Key for reference.

Anyone can create a Club on any topic. When creating, they can choose a standard curve (according to the formula above) or a dedicated curve priced at 10 times the standard curve price. If the standard curve is chosen, when a Club reaches 50 members, the Key price will be 25 FRIEND; if the dedicated curve is chosen, the Key price will be 250 FRIEND. It is important to note that different Clubs can have the same name, so extra caution is needed during transactions.

According to Dune data, as of May 6, when this article was written, the number of Clubs on the friend.tech platform had exceeded 110,000, with Club members exceeding 61,592 and over 450,000 transactions, totaling nearly 17 million FRIEND in Club trading volume. The total fees generated by friend.tech in 24 hours had reached $820,000.

Source: Dune

In terms of Club market value, the top two friend.tech Clubs are "Ansem's Army," created by trader Ansem: ID #59528, with a Key price of 2766 FRIEND and 371 members, and "Fight Club," created by friend.tech founder Racer: ID #1, with a Key price of 2371 FRIEND and 125 members.

In addition to Clubs, friend.tech also plans to launch new features such as Keydrops, Memeclubs, and Pinned Rooms to provide users with a more diverse social experience. Just the Memeclubs alone are enough to excite and inspire the community.

Platform Economy and Token Distribution

When friend.tech launched the V2 airdrop, each point could be exchanged for 1 FRIEND, but initially, only 10% of FRIEND could be claimed. After joining a Club and following 10 people, users could claim the remaining 90%. This helps significantly incentivize platform activity in the short term, but it has also drawn complaints from community users.

friend.tech has not enabled token transferability; currently, token exchange and FRIEND/ETH liquidity provision services are only available on its own platform (DEX "Bunnyswap" https://www.friend.tech/lp). Due to the extremely high returns from liquidity provision on the friend.tech platform (currently close to 600%), the liquidity for FRIEND/ETH is nearly $47 million.

On friend.tech, users incur a 1.5% exchange fee when exchanging in the FRIEND/ETH pool, and trading Club Keys also requires a 1.5% fee. These fees are shared among LP providers (in FRIEND form). Additionally, over the next 12 months, friend.tech will allocate a total of 12 million FRIEND as incentives to LP providers.

Thus, providing FRIEND/ETH liquidity on friend.tech can yield three types of returns: a 1.5% exchange fee (current APY is 1071%), a 1.5% Club Key trading fee (current APY is 202%), and a share of the 12 million FRIEND incentives (current APY is 135%).

Regarding token distribution, friend.tech has stated that its investors have agreed to forgo the right to sell tokens to users, and the tokens will be controlled by users, with points for venture capitalists including Paradigm distributed to users.

However, friend.tech has not disclosed detailed information about the token supply, which has raised questions in the community. According to the BaseScan page, the current maximum total supply is 91,082,420 tokens, and the contract details show no upper limit. The circulating supply displayed on the friend.tech official LP page is 79.1 million FRIEND (combined with Dune data, this circulating supply includes claimed token airdrops and token incentive releases), with a circulating market value of $204 million (calculated based on the FRIEND price of $2.65 at the time of writing).

However, last August, when friend.tech first launched the platform, it stated that it planned to distribute 100 million points over 6 months (every Friday). Based on the current exchange rate of one point for one FRIEND, the airdrop volume would be 100 million, plus the 12 million FRIEND incentives allocated to LP providers over the next 12 months, bringing the total supply to at least 112 million.

Who are the FRIEND Holders and LP Providers?

According to Dune data created by @willprice, the address providing the most liquidity on friend.tech belongs to Taiwanese singer Huang Licheng, who has provided 1.7588 million FRIEND in liquidity (on May 7, he purchased nearly 800,000 FRIEND for 661 ETH at a unit price of 2.57); the second is an address starting with 0xe3879b, which has provided 625,500 FRIEND in LP, while also providing 263 ETH and 42,552 PRIME liquidity in Aerodrome ETH/PRIME. The fourth, fifth, and sixth ranked users are @bitgoten, Christian2022.eth (partner at NextGen Digital Venture), and Cryptoyieldinfo. NFT KOL dingaling also holds over 410,000 FRIEND but has not yet staked.

What is the Potential for FRIEND?

In the context of recent controversies surrounding token airdrops, I believe that friend.tech's 100% distribution to the community has been relatively successful, granting FRIEND practical utility for payments within Clubs. It can be imagined that as the number of Clubs increases and develops, the amount of FRIEND tokens users pay will also rise, effectively locking these tokens within the system and forming a stable value support. Furthermore, friend.tech offers generous rewards to LP providers, which will attract more liquidity locking for FRIEND tokens.

As previously mentioned, friend.tech has not yet enabled token transferability, meaning that CEXs cannot list FRIEND tokens. The only ways to obtain FRIEND are through claiming airdrops or purchasing FRIEND with ETH on the friend.tech platform. Users can also combine FRIEND and ETH to provide liquidity as LP to earn rewards.

So what would happen if friend.tech enabled token transferability? I believe this would greatly enhance the liquidity of FRIEND, further driving it into a price discovery phase. However, this could also lead to the cancellation of the original 1.5% exchange fee mechanism set by the platform, thereby reducing LP rewards. Nevertheless, in the long run, widespread circulation of the token will help improve its market recognition and value stability.

DeFi researcher Ignas has proposed an interesting perspective, hoping that FRIEND will not enable transferability. Instead, he suggests creating a wrapped version of FRIEND, namely wFRIEND, which exchanges could list without affecting the functionality of the original token. However, I personally believe there would not be much difference in essence, as once wFRIEND is listed on exchanges, on-chain traders could still buy wFRIEND from exchanges and then unwrap it to provide liquidity. Therefore, the key lies in how friend.tech balances token liquidity, transferability, and platform functionality stability to achieve long-term value growth for the FRIEND token.

Of course, while observing FRIEND transaction data, I noticed an interesting phenomenon: in the first two or three days after the token launch, although the total amount of buy orders significantly exceeded that of sell orders, the number of buy orders was far lower than that of sell orders. Transactions with single buy orders amounting to thousands or even tens of thousands of dollars were common. For instance, based on the data from a specific moment on May 5, although the total transaction amount of buy orders was 15% higher than that of sell orders, the number of buy orders was 70% lower than that of sell orders. However, starting yesterday, there have been multiple buy orders of very small amounts, even less than $0.01, which have balanced the number of buy and sell orders. These transactions are likely executed by bots, and the motivation behind them remains unclear; it is difficult to determine whether this is an operation conducted for a specific purpose. This phenomenon undoubtedly adds a touch of mystery and uncertainty to FRIEND. However, as of May 7 at 17:15, the number of buyers for FRIEND continues to decrease, only one-tenth of the number of sellers, while the transaction amounts show little difference.