The decentralized social platform friend.tech, which was previously booming, is now facing a crisis. The founder’s withdrawals, a large number of profit-seeking from robot accounts, and frequent changes in the point rules have led to a less-than-satisfactory user experience in the community.
Three months ago, friend.tech was hot, but now it seems to have reached a deadlock and is facing a crisis. On August 10, 2023, friend.tech officially launched, and two months later, friend.tech TVL exceeded $50 million. However, on November 19, its TVL dropped to $33.98 million, a 19.5% decline in the past two days compared to $42.25 million on November 18.
The crypto community, after going crazy for nearly three months, is now experiencing a cold sentiment. Despite the stable update frequency maintained by the friend.tech team, the founder’s withdrawals, a large number of profit-seeking from robot accounts, and frequent changes in the point rules have led to an unsatisfactory user experience. With a large number of real user accounts mistakenly identified as robots recently, friend.tech’s data reflects that the platform is going through a crisis.
On November 17, friend.tech introduced the friend.tech feed, which allows users to control post rankings through voting. Users with higher Key prices will be allocated more votes. However, BlockBeats observed that there are currently a large number of real friend.tech accounts mistakenly identified as robot accounts, resulting in these accounts not being allocated points this week. Some users have reported that if a Twitter account uses a default username or a combination of letters and numbers, friend.tech identifies it as a robot.
On November 18, friend.tech stated on social platforms that it had identified and removed 600,000 accounts identified as robots from the feed’s voting distribution. It also stated that if a user account is mistakenly identified as a robot, they can contact friend.tech customer service and provide their Twitter username.
Users on X are requesting to unlock their accounts from @friend.tech.
In terms of data, this past weekend, friend.tech’s total trading volume exceeded $10 million, reaching a new high in over half a month. However, this may be a form of exit behavior. From November 18 to 19, friend.tech withdrew a total of 4,420 ETH, and its TVL dropped by about 21%, reaching its lowest level in the past two months.
On November 20, there are still many users selling keys and fleeing from friend.tech, causing a trust crisis within the holder community.
The behavior of identifying real users as robots has led to many negative evaluations of friend.tech within the community. Crypto researcher @Loki_Zeng posted that all of friend.tech’s strategies are transaction and fee-oriented, and not very user-friendly.
In addition, this wave of sell-offs has also brought a crisis of trust among the holder community. Christian, co-founder of crypto fund NDV and NFT whale, expressed on social media that selling keys without the homeowner’s knowledge is not friendly behavior.
User @defi_goddess also suggested sending a private message to those who have recently used the “3,3” strategy before choosing to exit, so that they can sell first, calling it “basic ethics and common sense.”
After the community sentiment intensified, friend.tech founder Racer released a Chinese message on the platform saying, “Family, who understands?”. Some platform users expressed that this shows the unprofessionalism of the friend.tech team.
When friend.tech first launched, there were many articles analyzing its economic model in the crypto field. Coupled with the continuous product updates by the friend.tech team, users’ expectations and FOMO sentiment towards it were increasing. However, as the market has calmed down recently, it seems necessary to take a look at the other side of friend.tech that was once overlooked by the public.
The “3,3” mentioned earlier is a classic Ponzi game strategy. In friend.tech, the goal of the “3,3” strategy is to climb the rankings and send signals to other accounts that you are a holder who will not sell their key, achieving a win-win effect.
Assuming your Key is worth 0.1 ETH and you have a friend whose Key is also worth 0.1 ETH. If you both buy each other’s Keys, you will both receive a 5% fee, and according to the bonding curve, your value will increase from 0.10 ETH to 0.12 ETH. In reality, your value has increased by about 0.02 ETH. Then you can repeat the same operation with another friend to further increase your value. By repeating this action 100 times, your key will become very valuable.
As a result, the social aspect of friend.tech’s SocialFi label has become smaller and smaller, while the Fi attribute has allowed traders and profit-seeking robots to gain higher profits.
Friend.tech itself is not a platform with content production and strong social connections. It is simply a financial product derived from Twitter, rather than a social product. This is also the key to friend.tech’s huge profits. The friend.tech protocol does not require KOLs to produce content, and users who come to buy keys are not here to consume content. It seems that KOLs themselves do not need to be responsible for users’ keys. The seemingly weak social relationship is completely overshadowed by friend.tech’s financial attributes.
Christian mentioned his own friend.tech trading strategy when participating in the program “Wang Feng’s Ten Questions Live/Web Trio.” He mentioned that when constructing a portfolio, he would choose more stable users based on their good character, vision, and strength.
However, looking at the current ecosystem of friend.tech, this friendship boat is turning over quickly. More importantly, friend.tech represents the endgame of the classic Ponzi game strategy. In a desperate situation, the prisoner who escapes the fastest will be the one who survives.
Friend.tech’s user count and price soared in the early stages, thanks to its excellent economic model. However, in the later stages, it could not “stay alive” continuously. Apart from this economic model, what other solutions can Web3 social have and where will it go? This is a question for all relevant practitioners to ponder.