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FriendTech: The Good, The Bad & The $
Trends come and go. The attention span in this industry is as low as it comes. People move on to the next thing faster than you can imagine. FriendTech is the latest. Is it worth it?
If you’ve been in Crypto for a long time, you understand how fast trends come and go. Whether it’s NFTs, products, chains, etc. The attention span in this industry is as low as it comes. People move on to the next thing faster than you can imagine.
The latest trend now is something called FriendTech.
From my perspective, I will explain in this article what I think about the platform. If I think it has any longevity, how I would trade it with a small portfolio and a large one.
Friend.Tech is a decentralized social network where “friends” become Keys. You can invest in your friend’s keys to access their private group chat. When you sign up to the platform, you are prompted to buy one key for yourself which initiates the process where anyone can now freely purchase your keys. The price of keys is based on a bonding curve and every purchase/sale has a 10% fee attached to it (5% going to the protocol, and 5% going to the creator of the key).
As I write this, the protocol has earned 6,615 ETH in fees and seen over 132,000+ ETH enter the ecosystem.
So, what do I think about the platform?
The platform is really buggy and not up to Web2 standards
It’s not really decentralised
The current onboarding process will not attract retail
Bonding curve prices a lot of people out
Most activity is farming and speculation
“Woah! Loop, are you saying to avoid it at all costs?”
No. But let’s get the “bad” out of the way first before talking about if I think this platform has any longevity.
The core of it is unlocking a private group chat with someone else, the creator benefits from royalties and the purchaser from the content provided with the additional benefit of being able to exit whenever they want.
We’ve seen OnlyFans bringing in $5,500,000,000+ of revenue in 2022 alone and the rise of the creator economy in the last few years that this industry has a ridiculous TAM.
It’s a startup with a small team that focused on shipping first, so bugs will naturally be fixed and the platform will improve as time passes
In my personal opinion, you can never truly have a decentralised social media platform, and I am sure most people understand that — it’s still a cool idea
The current onboarding flow is still better than 99% of Crypto platforms, and this once again can be improved
Depending on how you look at the bonding curve, it’s a pro, not a con, as it limits the number of people that can join the chat
Now, the most pressing issue is definitely farming and speculation. When you tokenize something, this is simply what happens. It inflates the stats like crazy… but it doesn’t take away from the core idea. If you think the idea is cool but you view participating in a platform that has this insane speculation as evil — I would say don’t hate the player, hate the game. Be sceptical when you hear overly bullish takes on FriendTech! — Because a majority of people are speaking from a financial perspective, and not a product one.
To be frank, I can’t imagine any product in Crypto that has any elements of tokenization NOT having speculation. With speculation comes shillers, scammers and eventually people who will lose a lot of money. Yes. That is bad and no one wants that except influencers who get rich from it.
But if you draw the line at excessive speculation to the point where you don’t care about the product and hate anyone who uses it — that is your decision at the end of the day.
And, from the financial perspective, there’s no doubt that people are! Here is why.
Trading & Farming Airdrop
With the TVL increasing rapidly in the last month, it reflected in the price of keys. As an example, 20 days ago, a user called Levi was at a price of 0.89 ETH and now sits at 3.844 ETH! Even more so when people are buying cheaper keys and seeing crazy ROI because of the number of people rushing to the platform.
If you haven't used the platform, you might mistakenly believe that only influencers have high-value keys. While it's true that those with significant social capital often have pricier keys, there are currently users on the platform whose keys are valued much higher than those of well-known influencers. Just look for yourself.
Some users are getting actual benefit in the form of alpha, giveaways and more to the point where they prefer to keep the key! (This is where I mention the core use case unrelated to speculation)
And then every Friday, points are distributed to all users mainly based on the portfolio value with 1 ETH currently equaling 100 points. Based on the TVL, this seems to change and not everyone has the same multiplier. This will happen every week until 6 months have passed (it’s already been 1 month). The consensus is that these points will equal the airdrop that eventually happens which at the current rate of growth will land at a high FDV.
Token? Why does it need a token? I don’t know! Just like most things in Crypto, they don’t need a token and that means it eventually goes to 0. We are yet to know what the token will be, so I won’t assume too much, but I wouldn’t suggest anyone buy either.
Post airdrop, I do believe FriendTech will see a significant reduction in basically every metric. It’s hard for me to predict if the platform sticks at that point, it really depends on the features they continue to develop. The core utility of the product does not disappear after the airdrop.
Now I will quickly go over what I see as the best strategy for people with small portfolios and those with large ones. This is general for a reason!
Small Portfolio ($)
Without a large portfolio, it’s hard to farm with it being worth your time. You are better off trading up. The assumption is that TVL will increase before the airdrop. With TVL increasing, money will continue to flow in.
A common strategy is (3,3)ing others at low prices. What is that? In short, you buy their key and they will buy yours. (oh god, crypto is really shameless)
Not only does this mean you have more buyers of your own key, but you also buy into others who are most likely going around doing the same thing.
Large Portfolio ($$$)
The biggest similarity between those with high-priced keys and large portfolios is they are maximising the amount of points they get every week. Optimising for the airdrop, rather than trading.
The most successful strategy is buying as many of your own keys as early as possible (Manifold allows you to front-run bots) so you can’t get dumped on. Some people dislike this as it’s blatant farming. But at the same time, if the team were to nerf this, it would affect their metrics like TVL.
The other is (3,3)ing smaller holders. This is the most common strategy and it works at scale. It is cheap, they buy you and you benefit from the trading fees whilst increasing your exposure to others and increasing your portfolio size.
The combination of both seems to be working out the best right now. Be wary as many large holders will dump before the airdrop to maximise the amount of ETH they can secure from the platform when they are happy with the points they acquired. And assume that the devs can nerf self-buying whenever they want.
*important to note, bridging out from the Base network takes 7 days right now
And I am sure I don’t need to say this but if you are depositing money onto this platform, do not assume you will get rich. This is not financial advice. Do your own research and come to your own conclusion! Participate, or don’t.