Friend.tech Deep-Dive: Explanation, Analysis and Ecosystem

8 min read
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What is Friend.tech? Why it is getting huge traction recently and how to navigate around its ecosystem. Let us walk you through the ins and outs.

Base is a blockchain layer developed by the Coinbase team that recently went live on the mainnet. It has received significant support from both the community and developers. One of the most notable projects on it is Friend.tech, which has attracted a large user base. So, what exactly is Friend.tech? Let’s dive into it with us in this article.

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Table of Contents

  1. What is Friend.tech?
  2. Main Features on Friend.tech
  3. How does Friend.tech work?
  4. Friend.tech Key Stats
  5. Why is Friend.tech Gaining Traction?
  6. Any Risks Around Friend.tech?
  7. Friend.tech Ecosystem

1. What is Friend.tech?

The landscape of social media has undergone significant transformations, with Elon Musk rebranding Twitter as X and SocialFi and DeSocial platforms like Lens Protocol and Galxe. Yet, in 2023, it was the emergence of Friend.tech on the new Base Layer-2 blockchain that truly garnered mass interest.

Discover: Top 8 Popular SocialFi Projects You Should Not Miss in 2023

Friend.tech presents a unique twist to the typical creator-user engagement observed on numerous platforms. Rather than adhering to conventional dynamics, this platform introduces a mechanism where users have the opportunity to purchase and trade “keys” linked to X accounts.

These “keys” grant entry to private groups tied to each account. This framework appears to emphasize a mutual value exchange, presenting content creators with potential monetary rewards while users receive a more intimate avenue to connect with these creators.

2. Main Features on Friend.tech

Currently, friend.tech has 4 main features:

  • Home: This is where notifications about buying and selling activity related to your keys and others are displayed. Here, users can also check their account profile, asset value, and earned fees.
  • Chats: This is where users can find chat rooms they’ve joined.
  • Explore: This is where keys from other users are aggregated.
  • Airdrop: This is where users can track their points, rankings, and 3 invite codes. friend.tech runs a weekly airdrop program for users every Friday, although they haven’t announced specific functionality for these points yet, the project has stated that they will have specific use cases in the future.

3. How does Friend.tech work?

Friend.tech provides each user with a unique key and private chat groups similar to those on Telegram. To join any chat group, users need to purchase the key from the creator who owns that chat group. Each key is a form of social token tied to the creator’s identity, so the key’s price fluctuates depending on the strength of the community. Users can:

  • Trade keys in the short term to make a profit.
  • Hold onto keys if they believe in the community’s growth potential and the key’s price appreciation.

Additionally, users who buy a creator’s key gain access to private chat rooms for conversations, exclusive content, and various other benefits, depending on the creator. If they wish to leave a group, users can simply sell their key as a means of exit.

The key’s price is adjusted flexibly based on its circulating supply and can be determined using the bonding curve formula as follows:

y = (x^2) / 16000

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Where:

  • y: Key price in ETH units.
  • x: Total circulating supply of keys (x increases when people buy and decreases when people sell).

The price of keys is directly proportional to the square root of the circulating supply. Put simply, friend.tech operates on a game theory-based model. As more people buy keys, the supply increases, and the price rises exponentially. Consequently, many individuals seize the opportunity to speculate and make a profit by trading keys.

Furthermore, the circulating supply of keys (y) can be easily determined using the square root function since the price (x) is known beforehand (the application displays the price of each key right below the profile). Users can easily calculate how much the price will increase when they buy more keys and what the resulting profit will be.

An example

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In the case of Ignas’s account on friend.tech, the key price is currently 0.196 ETH, and the current supply is calculated using the formula: sqrt(0.196 * 16000) = 56.

So, if a user buys an additional 3 keys from Ignas, the new key price will be: (59^2) / 16000 = 0.217 ETH.

This results in a profit of 0.217 – 0.196 = 0.021 ETH.

When trading (buying or selling) keys, users will be charged a 10% fee:

  • 5% for the friend.tech protocol’s treasury.
  • 5% for the key issuer.

4. Friend.tech Key Stats

Friend.tech stands out for its innovative use case on Coinbase’s new Layer2 called Base. At the core of its financial framework lies a unique fee structure that boosts user incentives and drives platform growth. The platform charges a 10% fee on transaction volumes, with 5% of this fee thoughtfully directed to the individual who owns the friend share.

Analyzing data from the Base chain through Duneanalytics, we can see that the friend.tech treasury has already accumulated an impressive 13,300 ETH, equivalent to around $21.79 million.

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The economic story becomes clearer when we examine the protocol statistics.

Currently, friend.tech has a total ETH volume of 146,000 ETH, has nurtured a community of over 700k users, and has facilitated nearly 11 million transactions. So far, this social network has generated nearly $40 million in fee revenue. Half of the total fees are allocated to the project team as revenue, while the remaining half is distributed to users whose keys are traded.

Friend.tech’s growth foundation can be intriguingly traced back to a simple action: the “buy share” function, which costs users nothing. Each time a user creates their own share, the platform welcomes a new member. This surge in users owes much to the platform’s presence on X (Twitter).

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When you invest in someone’s account on friend.tech, the rewards go beyond financial gains; they unlock a private space where ideas, insights, and strategies flow freely. The native bonding curve system fosters a dynamic market where share prices fluctuate based on trading activity, showcasing the platform’s adaptability.

Notably, on a single day, August 19, friend.tech achieved a remarkable milestone by accumulating over $1 million in charges. This amount surpasses the earnings of some major players in the field, such as Uniswap and Bitcoin.

Why is Friend.tech Gaining Traction?

Friend.tech is not the only decentralized social networking app in the crypto market. However, what sets it apart and grabs attention is its ability to transform social networks into money-making opportunities based on game theory.

Each user controls their own key and directly benefits from the growth of that key. Consequently, friend.tech becomes more appealing to creators such as Key Opinion Leaders (KOLs), celebrities, and idols because it offers them a new way to earn money. Here’s how it works:

  • Creators join friend.tech and encourage their followers from platform X to use the platform and buy their keys. They then profit from the transaction fees that users have to pay.
  • Followers join friend.tech and purchase keys to engage in conversations with their favorite creators. They also earn additional profits when the key prices rise.
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Friend.tech’s appeal has been further enhanced by its recent feature updates. The platform allows KOLs to post pictures in their private chat groups. This new feature has been particularly enticing for many KOLs, especially those producing adult content on platforms like OnlyFans. As these KOLs migrate to Friend.tech, they bring along their substantial fanbase, further amplifying the platform’s user base and reach.

Friend.tech is gaining significant traction for several reasons. Another of the primary drivers is the anticipation of airdrops. The platform has been hinting at points airdrop to its users every Friday. While the exact purpose of these points remains undisclosed, there’s widespread speculation within the community that they might serve as criteria for future token airdrop.

Another significant boost to its popularity is the investment from Paradigm in its seed round. Although there hasn’t been an official announcement regarding this, some members of the investment fund have indirectly confirmed the collaboration.

Any Risks Around Friend.tech?

Personal Information Leak

The biggest concern regarding friend.tech relates to user privacy and the ability to safeguard personal information.

On August 21, 2023, The Block shared an article (here) about a database leak containing 101,000 user profiles from friend.tech linked to their X accounts and ETH wallet addresses. Although the project quickly confirmed that no actual leak had occurred, it raised concerns about whether such incidents might happen in the future.

Several factors contribute to user privacy concerns on friend.tech:

  • Users are required to provide their phone number, email, and link to their X account to register.
  • No privacy policy has been disclosed, making it unclear how the project uses and manages user data.

Therefore, users should be aware of the potential risk of personal information leaks when using the platform and take steps to protect themselves, such as:

  • Using a secondary email and a separate wallet address for linking to the platform.
  • After successfully registering an account, unlinking friend.tech from the X account by following these steps: Settings → Security → Apps & Sessions → Connected apps → friend.tech → Revoke app permissions.

In response, the Friend.tech development team argued that the exposed details were basic public information. They likened it to anyone accessing a random Twitter profile and viewing its bio and posts.

Sim Attacks

Recently, on October 4th, some friend.tech users reported that they were the victims of SIM swap attacks over the weekend, with the attackers successfully draining thousands of dollars worth of tokens. At least two users claimed that they were targeted in a SIM swap attack, which allowed exploiters to drain over 42 ETH, worth nearly $70,000 at current prices, over separate attacks.

Commenting on the incident, the founder of SlowMist pointed out that Friend.tech offers centralized services and allows users to register via phone number, email, or Apple account without two-factor authentication (2FA). Such applications are highly susceptible to data breaches, and hackers are keenly targeting this vulnerability.

In response, Friend.tech introduced a new feature, allowing users to remove specific login methods, specifically phone numbers, to counter the increasing incidents of SIM swap attacks.

7. Friend.tech Ecosystem

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Friend.tech Ecosystem. Souce: Coin98 Analytics

An ecosystem called Friend Finance (FriendFi) is taking shape around friend.tech. As friend.tech keeps growing, the FriendFi ecosystem will expand further, with some intriguing pieces coming together.

FriendMEX is an exchange that allows everyone to trade their keys without the need for registration. It also provides charts to make it easy for users to observe key prices over longer timeframes, helping them make informed decisions. This project was founded by former developers at Paradigm and Polychain Capital.

Some other projects being developed based on Friend.tech include:

  1. Frenbot.tech: A Telegram bot to track popular, new profiles based on their followers, price and more.
  2. Friend Lend: Allows users to participate in lending and borrowing using Key Friend.tech.
  3. Hyperliquid: A perpetual trading DEX allows users to trade a friend.tech index contract, FRIEND-USD, which tracks the sum of purchase prices of all outstanding friend.tech shares.

Conclusions

Friend.tech’s brilliance isn’t just in its valuation method but also in its knack for distilling insights from the chaos of multiple platforms. It offers a democratic evaluation through its curated approach.

What makes friend.tech unique is its seamless integration with X (Twitter), making it accessible to both crypto natives and newcomers. Its browser-based mobile app sidesteps centralized app stores, ensuring easy access for all.

The secret sauce? A blend of innovative elements. Leveraging Layer 2 tech, progressive web apps, and integrated wallets, friend.tech stands out as a groundbreaking fusion.

By incorporating a reward system, friend.tech becomes a meritocracy hub. Crypto enthusiasts who provide valuable insights gain paying subscribers, prioritizing quality content over popularity.

Keep in mind that this app is still in its early stages, and some details are unclear. Our goal is to highlight its potential, provide knowledge, and grow the user base. Market dynamics and future algorithms will ultimately determine its real value, reflected in share price fluctuations.

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Disclaimer: This article serves informational purposes only and does not constitute financial advice. Conduct your own research before making investmendecisions.