Written by: Karen, Foresight News

The once popular Web3 social trading protocol friend.tech launched its V2 version during the May Day holiday. Despite the twists and turns of its token experiencing a high opening, a low walk, and then a rebound, friend.tech has once again become a hot topic with the introduction of new features such as the paid group "Club," a unique fee design mechanism, and an LP APY approaching 600% (even reaching 1400% yesterday).

The V2 page of friend.tech continues the simple design style. Taking the official website as an example, the top features a Club and creator search box. The left navigation bar includes wallet, activity, and Chat modules. The wallet displays holdings of ETH, FRIEND, Keys, and mining rewards, among others. The activity page lists the key trading activities of followed creators. The Chat page aggregates Club and creator holders, making it convenient for users to socialize.

Core feature of friend.tech V2: Paid group "Club"

The paid group "Club" is the highlight of friend.tech V2. Building on the monetization of the value of KOLs and creators in V1, it adds Club spaces, which are similar to paid groups. However, those who join the group later need to pay a higher price, and transactions are only supported by the friend.tech platform token FRIEND. Additionally, a 1.5% fee is charged for each transaction (more on this later). Key holders can also vote at any time to elect the chairman of their Club, who 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 (valued in FRIEND), with S representing the current quantity of Keys. The table below shows the price chart when the S-th Key is counted, for readers' reference.

Anyone can create a Club on any topic. When creating a Club, one can choose the standard curve (according to the above formula) or a dedicated curve equivalent to 10 times the standard curve price. If the standard curve is chosen, when a Club's membership reaches 50, the Key price is 25 FRIEND. If the dedicated curve is chosen, the Key price at this point is 250 FRIEND. It is worth noting that different Clubs can have the same name, so extra attention is needed during transactions.

According to Dune data, as of the drafting on May 6th, the number of Clubs on the friend.tech platform has exceeded 110,000, with over 61,592 Club members, over 450,000 transactions, and a total Club trading volume close to 17 million FRIEND. Within 24 hours, friend.tech has generated a total fee of $820,000.

Source: Dune

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

In addition to Clubs, friend.tech has announced the upcoming launch of new features such as Keydrops, Memeclubs, and Pinned Rooms, providing users with a more diverse social experience. The introduction of Memeclubs alone is enough to excite and stimulate the community's imagination.

Platform economy and token distribution

At the time of the V2 airdrop, friend.tech allowed each point to be exchanged for 1 FRIEND. However, initially only 10% of FRIEND could be claimed, with the remaining 90% available after joining a Club and following 10 people. This greatly incentivizes platform activity in the short term, but has also drawn criticism from the community.

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

On friend.tech, users need to deduct a 1.5% exchange fee when exchanging in the FRIEND/ETH pool, and also need to pay 1.5% when trading Club Keys. These fees are shared by LP providers (in the form of FRIEND). In addition, within the next 12 months, friend.tech will allocate 12 million FRIEND as incentives to LP providers.

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

Regarding token distribution, friend.tech has stated that its investors have agreed to waive the right to sell tokens to users, and the tokens will be controlled by users. This will include the distribution of points from venture capitalists such as Paradigm to users.

However, friend.tech has not disclosed detailed token supply details, which has also raised questions in the community. According to the BaseScan page, the current maximum total supply is 91,082,420 FRIEND, and the contract details show that the token has no upper limit. The official LP page of friend.tech shows a circulating supply of 79.1 million FRIEND (combining claimed airdropped tokens and token incentive releases), with a circulating market value of $204 million (calculated based on a FRIEND price of $2.65 at the time of drafting).

However, in August of last year, 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 1 point for 1 FRIEND, the airdrop amount is 100 million, plus an additional 12 million FRIEND incentives for LP providers over the next 12 months, resulting in a total supply of at least 112 million FRIEND.

Who are the FRIEND holders and LP providers?

According to the Dune data compiled 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 (purchasing nearly 800,000 FRIEND on May 7th for 661 ETH at a price of 2.57). The next address starting with 0xe3879b provides 625,500 FRIEND in LP and also provides 263 ETH and 42,552 PRIME in liquidity for Aerodrome ETH/PRIME. Ranking fourth, fifth, and sixth are users @bitgoten, Christian2022.eth (partner at NextGen Digital Venture), and Cryptoyieldinfo, respectively. NFT KOL dingaling also holds over 410,000 FRIEND, but has not yet staked it.

What is the upside potential for FRIEND?

In the context of the recent controversy surrounding token airdrops, friend.tech's 100% distribution to the community has been relatively successful, giving FRIEND practical utility for payments within Clubs. It can be imagined that as Clubs increase and develop, the amount of FRIEND tokens paid by users will also increase. These tokens are essentially locked in the system, forming a stable value support. Additionally, friend.tech provides generous rewards for LP, which will attract more FRIEND token liquidity locking.

As mentioned earlier, friend.tech has not enabled token transferability, meaning that CEXs have no way to list the FRIEND token. The only ways to obtain FRIEND are through claiming airdrops or buying FRIEND with ETH on the friend.tech platform. Users can also combine FRIEND and ETH to provide LP and earn rewards.

What would happen if friend.tech enabled token transferability? This would greatly increase the circulation of FRIEND and further drive FRIEND into a price discovery phase. However, this could also lead to the cancellation of the platform's original 1.5% exchange fee mechanism, thereby reducing LP rewards. However, in the long run, widespread token circulation will help increase its market awareness and value stability.

DeFi researcher Ignas has proposed an interesting viewpoint, hoping that FRIEND will not enable transferability, but instead create a wrapped FRIEND, wFRIEND, which exchanges can list while not affecting the functionality of the original token. However, personally, there may not be much difference in essence, as once wFRIEND is listed on an exchange, on-chain traders can still purchase wFRIEND from the exchange and then unwrap it to provide liquidity. Therefore, the key is how friend.tech balances the circulation, transferability of tokens, and the stability of platform functionality to achieve long-term value growth for the FRIEND token.

Of course, while observing the trading data for FRIEND, an interesting sign was noticed. In the first two to three days after the token was listed, although the amount of buy orders was significantly higher than sell orders, the number of buy orders was much lower than the number of sell orders, with individual buy orders reaching thousands or even tens of thousands of dollars. Calculating the data for a specific moment on May 5th over the past 24 hours, although the total transaction amount for buy orders was 15% higher than sell orders, the number of buy orders was 70% lower than sell orders. However, starting from yesterday, there were multiple buy orders with extremely small amounts, even less than $0.01, which balanced the number of buy and sell orders. These trades are likely to be wash trading executed by bots, and the motive behind them is unclear. It is difficult to determine if this is for a specific purpose. This phenomenon undoubtedly adds a hint of mystery and uncertainty to FRIEND. However, as of 17:15 on May 7th, the number of buy orders for FRIEND continues to decrease, being only 1/10 of the number of sell orders, with no significant difference in transaction volume.

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