Once all the rage, now almost back to zero. How did Friend.tech rise rapidly back then, and why is it declining now?

Author: Xiaochu

Once all the rage, now almost back to zero. How did Friend.tech rise rapidly back then, and why is it declining now? A bold experiment in monetizing social influence, ultimately making the founder earn 50 million, with a large number of retail investors footing the bill. Reviewing all this, we should learn from the lessons of failure.

How did Friend.tech come into being?

Imagine if you could invest in your favorite internet celebrities or opinion leaders just like investing in stocks. This is exactly the disruptive innovation brought by Friend.tech. In August 2023, this decentralized social media app built on the Base blockchain emerged like a bomb exploding in the crypto world, redefining our understanding of social influence.

The birth of Friend.tech is comparable to a Silicon Valley startup script. The two protagonists - 0xracerAlt and Shrimppepe - are both "internet celebrities" in the cryptocurrency and social media fields. Racer had previously participated in TweetDAO, a crazy experiment that turned Twitter accounts into decentralized autonomous organizations. Shrimppepe, on the other hand, showcased his skills in the Stealcam project, turning "stealing" NFTs into an art form. The background of this duo is a perfect combination of innovation and rebellion, injecting Friend.tech with an unrestrained soul.

Monetization attempt of social influence

The core idea of Friend.tech can be called genius: turning social influence into tradable "Keys." Imagine not only being able to follow your favorite creators, but also "buying into" a part of their influence. These "Keys" are like VIP passes to the creator's private world, allowing you to enter their private chat rooms and enjoy exclusive content.

What's even more wonderful is that the prices of these "Keys" are not fixed. They follow a pricing mechanism called "bonding curve," similar to a small stock market. As more fans purchase a creator's "Key," its price will rise. This not only provides creators with a continuous source of income, but also gives early supporters the opportunity to profit from it. This mechanism cleverly integrates social interaction, investment, and gamification elements, creating a brand new "attention economy" ecosystem.

Key events in development

• August 10, 2023: Friend.tech launched on the Base chain, with 136,000 daily active users on the first day.
• August 15, 2023: Friend.tech announced airdropping rewards points to app test users.
• August 19, 2023: Friend.tech completed seed round financing, with participation from Paradigm.
• August 30, 2023: Friend.tech disclosed platform data, with next-day retention rate exceeding 75% and weekly retention rate exceeding 50%.
• September 14, 2023: Friend.tech protocol fees exceeded 5000 ETH, with a total of 4,597,737 transactions.
• November 26, 2023: Friend.tech founder Racer's Twitter account @0xRacerAlt can no longer be displayed.
• May 3, 2024: Friend.tech opened airdrop token FRIEND for claiming.
• May 4, 2024: Friend.tech officially released V2 version.
• June 11, 2024: Friend.Tech's multi-signature address transferred 2809 ETH to Coinbase.
• June 20, 2024: Friend.Tech announced the preparation to launch Friend Chain, but later deleted this tweet.
• July 9, 2024: Friend.Tech's daily active user count hit a historic low.
• September 8, 2024: Friend.Tech announced that project management and ownership parameters have been set to the Ethereum null address 0x000…000, effectively locking the current system and preventing further changes, indicating that Friend.Tech has relinquished control of the smart contract, and the platform has been essentially shut down.

Reasons for popularity

Several factors contributed to the initial popularity of Friend.tech:

1) Innovative monetization model *

The token design of friend.tech was its most significant success factor. As mentioned earlier, users purchasing a KOL's key could gain access to the KOL's private chat rooms and exclusive content, creating a sense of scarcity. And as the influence of the KOL increased and more users purchased, the price of the key would also increase, creating a money-making effect.

The money-making effect and the large airdrop expectation early on attracted a large number of users.

2) Capturing the core points of traffic

Friend.tech strategically attracted KOLs who had influence on Twitter. Friend.tech strategically attracted social media influencers, especially in the cryptocurrency and esports fields. By allowing these influencers to monetize their presence on the platform, the growth of keys for KOLs could bring users and revenue to themselves.

Friend.tech created a strong reason for these celebrities to join and promote the app to their fans. The influx of these well-known figures not only attracted their existing fan base, but also enhanced Friend.tech's credibility and appeal as a new social media space.

3) Traffic boost from the early days of Base

As a new app on the Base network, Friend.tech benefited from the existing user base associated with Coinbase and the interest in decentralized applications, further enhancing its visibility and appeal.

Main reasons for failure

As the saying goes, "what goes up must come down," Friend.tech also suffered from the backlash of its token economic model.

First, the key can be seen as a low-circulation token. This attracted a large number of speculators to grab KOL's keys early on, and as the price continued to rise after genuine KOL users purchased, investors profited from the price difference, which could be as high as tens of times.

Second, for stable KOLs, the price of the key is often hyped up, which limited the entry of a large number of users later on.

Furthermore, some KOLs who were just in it for the novelty found it difficult to have the motivation to maintain users, leading to user attrition.

The second major reason for failure is that the project team made too much money.

A project making a lot of money early on is often not a good thing. Just a month after its launch, Friend.tech's protocol fees exceeded 5000 ETH, and eventually reached as high as 50 million USD, not including the sale of their tokens. So as early as November 23, founder Racer's Twitter account @0xRacerAlt was no longer displayed.

Making too much money early on often leads the team to lose motivation and enjoy life too early.

In summary, Friend.tech, as an innovative decentralized social media platform, was a bold attempt that, with its unique monetization model and redefinition of social influence, attracted a lot of attention from users and investors in a short period of time. However, as the platform rapidly developed, the drawbacks of its token economic model gradually became apparent, with speculation and high entry barriers leading to user attrition. At the same time, the early profits of the project weakened the team's sustained motivation, ultimately leading to the platform's closure. The rise and fall of Friend.tech provides valuable experience and lessons for the future of decentralized social platforms, reminding us how to balance user experience, economic models, and long-term development strategies while innovating.

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