Threads

Bitcoin

Base

Polygon

<div class="textg" style="text-align: justify; font-weight: lighter; line-height: 1.3em; font-size: 15px; border-radius: 3px; color: #80909a; padding: 10px; background-color: #F4F6F9; margin-bottom: 15px;">
 Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noreferrer noopener" class="deco-link">website policy</a>&nbsp;prior to making financial decisions.
</div> 
<div class="tve_content_lock tve_lock_hide tve_lead_lock"> 
 <div class="tve_lead_lock_shortcode"></div> 
 <div class="tve_lead_locked_content">
  <div class="tve_lead_locked_overlay"></div> 
  <p class="has-drop-cap">Launched on August 10th, Base’s rising social media network seems to be already fizzling out. Friend Tech started by allowing social media influencers on the platform formerly known as Twitter to tokenize their clout. People who buy shares of their tokenized personalities gain access, such as access to a private chat through the Friend Tech app.</p> 
  <p>Leaving some <a href="https://tokenist.com/friend-tech-climbs-defi-charts-but-has-some-massive-red-flags/" rel="dofollow" class="deco-link">red flags</a> aside, people could sell their shares if the demand for personalities exceeds the profit range. Influencers themselves gain 5% of their shares’ trading volume.</p> 
  <p>Within a week, this concept proved fruitful, racking up 259.53k transactions among 23.72k unique buyers. However, as August closes, Friend Tech activity has dried up. Since the peak at 39k transactions on August 21st, the app barely touches the 2k transaction threshold.</p> 
  <div class="wp-block-image"> 
   <figure class="aligncenter size-large">
    <img decoding="async" width="1024" height="573" src="https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719-1024x573.png" alt="" class="wp-image-169162" srcset="https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719-1024x573.png 1024w, https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719-300x168.png 300w, https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719-768x430.png 768w, https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719-650x364.png 650w, https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719-646x360.png 646w, https://tokenist.com/wp-content/uploads/2023/08/Screenshot-2023-08-28-170719.png 1302w" sizes="(max-width: 1024px) 100vw, 1024px">
    <figcaption class="wp-element-caption">
     <em>Image courtesy of Dune analytics via @cryptokoryo&nbsp;</em>
    </figcaption>
   </figure>
  </div> 
  <p>Likewise, Friend Tech protocol inflows are now hovering under 30 ETH, far below last week’s 500 ETH range. Friend Tech accrued 2,386 ETH ($4M) in <a aria-label=" (opens in a new tab)" href="https://dune.com/queries/2945343/4883770" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">fees</a> from the hype, taking in 47,749 ETH ($81M) inflows across 2.4 million cumulative transactions.</p> 
  <p>Since last week’s peak of $1.68 million in fees, the protocol is now attracting only $161k as of August 27th, according to <a aria-label=" (opens in a new tab)" href="https://defillama.com/fees/friend.tech" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">DeFiLlama data</a>. Although the present $80k revenue is still solid considering the single-digit developer count, the over-90% drop in protocol fees does not bode well for Friend Tech’s future.</p> 
  <h3 id="tokenized-clout-faulty-concept">Tokenized Clout: Faulty Concept?</h3> 
  <p>Friend Tech’s high-mid charts are reminiscent of NFT speculation sprees. This is no coincidence, as the concept is the same. In both cases, they rely on the initial speculation drive. Instead of unique artwork, Friend Tech tokenizes hype around unique subjects – influencers.</p> 
  <p>In total, <a aria-label=" (opens in a new tab)" href="https://dune.com/queries/2922914/4854159" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">123.5k</a> unique subjects have come on board. But only a tiny percentage have enough Twitter followers to make it count.</p> 
  <div class="wp-block-image"> 
   <figure class="aligncenter size-large">
    <img decoding="async" width="1024" height="370" src="https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter-1024x370.png" alt="" class="wp-image-169149" srcset="https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter-1024x370.png 1024w, https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter-300x108.png 300w, https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter-768x277.png 768w, https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter-650x235.png 650w, https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter-1200x434.png 1200w, https://tokenist.com/wp-content/uploads/2023/08/friendtechtwitter.png 1202w" sizes="(max-width: 1024px) 100vw, 1024px">
    <figcaption class="wp-element-caption">
     <em>Top 10 Friend Tech earners. Image courtesy of Dune analytics via @cryptokoryo&nbsp;</em>
    </figcaption>
   </figure>
  </div> 
  <p>Moreover, the purported reason for buying shares, private access, becomes secondary to later selling shares at a higher price. This speculation itself is unsustainable. And as the surge wanes, the shares of tokenized personalities drop in value, just as we’ve seen with NFT collections.</p> 
  <h3 id="racer-s-third-major-project">Racer’s Third Major Project</h3> 
  <p>Interestingly, the second-highest earner on the Friend Tech list is Racer, the originator of the protocol under oxRacerAlt Twitter handle. His previous project, TweetDAO, had also died out. The concept was similar, except that tweets were tokenized as tradable NFTs.</p> 
  <p>This drew much criticism as only the NFT holders could influence the public forum. Alongside TweetDAO, Racer co-founded <a aria-label=" (opens in a new tab)" href="https://www.stealcam.com/" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">Stealcam</a>. The project tokenizes private photos and videos but is pixelated. Through an auction mechanism to “steal” the content, buyers then remove pixelation to reveal the content.</p> 
  <div class="cta-referral"> 
   <img src="https://tokenist.com/wp-content/themes/thetokenist/assets/img/del/cta-referral-1.png" alt="" class="cta-referral__img" loading="lazy" decoding="async"> 
   <div class="cta-referral__text"> 
    <p>Join our&nbsp;<a href="https://t.me/thetokenist" target="_blank" rel="noreferrer noopener nofollow">Telegram group</a>&nbsp;and never miss a breaking digital asset story.</p> 
   </div> 
  </div> 
  <h3 id="bots-confound-value">Bots Confound Value</h3> 
  <p>As decentralized layer 2 on top of Ethereum, Brian Armstrong’s Base network has seen no shortage of hype-bound tokens. At the end of July, the <a href="https://tokenist.com/bases-tvl-surges-exponentially-as-memecoin-frenzy-takes-over/" rel="dofollow" class="deco-link">surge from memecoins</a> alone was tremendous, skyrocketing Base’s total value locked (TVL) by 3,000%.</p> 
  <p>Friend Tech is Base’s largest single mover, pushing Base TVL to a new peak of $225.3 million last Friday. <a aria-label=" (opens in a new tab)" href="https://twitter.com/brian_armstrong/status/1694130549403607041" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">Brian Armstrong admitted</a> it was mainly from Friend Tech. The problem is, just as with NFT speculation, much of the activity is driven by bots.</p> 
  <p>This is a bigger problem for Friend Tech as it disincentivizes influencers. Known to manipulate the order of transactions, bots can buy shares (now renamed to “keys”) from the creators at a cheaper price. In turn, influencers have to buy their keys at a higher price.</p> 
  <p>Regular users on the secondary market face the same disincentives. On the flip side, as Friend Tech activity collapsed, MEV (Maximal Extractable Value) bots have equally dropped, now accounting for <a href="https://dune.com/queries/2965795/4915922" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">0.7% of transactions</a>.</p> 
  <p>So far, Base is not experiencing the same wind down as Friend Tech, having a stable TVL at around $201 million.</p> 
  <h3 id="another-failed-social-media-experiment">Another Failed Social Media Experiment?</h3> 
  <p>The most exciting aspect of Friend Tech is that it treats Twitter as social media’s base layer. This is quite similar to how Bitcoin acts as the base layer for the crypto market, underpinning all cryptocurrencies.</p> 
  <p>In both cases, the entrenched network effect is in play. This externality makes the underlying asset more valuable the more people use it. This is why Friend Tech centered around Twitter. Even Meta’s Threads engagement <a href="https://www.forbes.com/sites/rogerdooley/2023/07/25/threads-engagement-drop-not-shocking/" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">dropped 70%</a> after the launch.</p> 
  <blockquote class="wp-block-quote"> 
   <p><em>“In its current form you’re basically looking at an unintended ponzi w/ first in/first out because there isn’t any product feature depth to create stickiness or retention, so creators will churn quickly, users will be left exiting creators, etc.”</em></p> <cite><a href="https://twitter.com/Fwiz/status/1693639239521489289" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">Ryan Wyatt</a>, former Polygon Labs president</cite>
  </blockquote> 
  <p>The way Friend Tech was executed, reminiscent of NFT Ponzi schemes, makes it even less likely to provide a proper engagement alternative. Extending what Ryan Wyatt noted, one has to ask if social media engagement is already mentally taxing enough without additional layers.</p> 
  <div class="cta-sub js__cta-sub"> 
   <div class="cta-sub__start" data-step="1"> 
    <div class="cta-sub__title">
     <strong>Finance is changing.</strong>
    </div> 
    <div class="cta-sub__subtitle">
     Learn how, with Five Minute Finance.
    </div> 
    <div class="cta-sub__excerpt">
     A weekly newsletter that covers the big trends in FinTech and Decentralized Finance.
    </div> <button type="button" class="btn">Try it out (for free)</button> 
   </div> 
   <div class="cta-sub__form" data-step="2" style="display: none;"> 
    <script type="text/javascript" src="https://app.getresponse.com/view_webform_v2.js?u=QcLhh&amp;webforms_id=hpcwd"></script> 
   </div> 
   <div class="cta-sub__result" data-step="3" style="display: none;"> 
    <div class="cta-sub__title">
     Awesome
    </div> 
    <div class="cta-sub__caption">
     You’ve subscribed.
    </div> 
    <div class="cta-sub__greeting">
     You’re well on your way to being in the know.
    </div> 
   </div> 
  </div> 
  <p><strong><em>Do you think social media could be improved with tokenized assets, or are these efforts bound to fail? Let us know in the comments below.</em></strong></p> 
  <p></p>
 </div> 
</div> 
<p>The post <a rel="nofollow" href="https://tokenist.com/on-chain-data-shows-friend-techs-hype-was-short-lived/">On-Chain Data Shows Friend.Tech’s Hype Was Short Lived</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

On-Chain Data Shows Friend.Tech’s Hype Was Short Lived

Table of Contents

Tokenist

Other articles published on Aug 28, 2023

New Thai Prime Minister with Crypto Interests Elected

ETH Price Falls on Vitalik’s Transfers – Approaching $1500?

PM Modi Proposes International Framework for Crypto Regulation and Ethical AI during B20 Summit

Crypto Lawyer Sheds More Light on Crucial Secret XRP Memo

Low Bitcoin Earnings per Terahash as Hashrate Increases

Laos Suspends Electricity for Crypto Miners Amid Drought, Missed Payments

Join our free newsletter for daily crypto updates!