The social media industry is booming, and the decentralized platform Friend.tech is rising rapidly.

The 2024 Global Social Market Report shows that the social media industry is experiencing significant expansion. The market value is expected to increase from $219.06 billion in 2023 to $251.45 billion in 2024, with an annual growth rate of 14.8%. Approximately 62.3% of the global population uses social media, with an average daily usage time of over two hours.

Decentralized social media (DeSoc) provides new ideas for creators to monetize content and manage online relationships. It promises to improve privacy, security, and gives creators complete control over their data and monetization.

Although the concept of decentralized social networks is not new, it only gained significant attention in 2023 with the advancements in Web3 technology. Friend.tech emerged as a decentralized blockchain social network, aiming to explore this emerging market. The platform stands out by addressing common issues of centralized networks, such as user data ownership, limited privacy options, and content censorship risks.

In 2023, Friend.tech not only achieved significant growth, but its revenue even rivaled top protocols, providing creators the freedom to monetize on their own terms.

This article will delve into the platform, examine its controversial token issuance, compare it with competitors, and assess its potential and associated risks for 2024.

Project Overview

Friend.tech is a decentralized social platform built on the Base chain. It is closely integrated with a certain social platform to acquire users' Web2 identities, allowing users to potentially profit based on this identity. On this platform, each user can be tokenized, and their influence can be directly priced by the market.

As one of the most successful Web3 applications in the SocialFi space, Friend.tech achieved over $2 million in revenue and net deposits of $33 million in its first month.

The core of this project is based on the concept of fan economy. Users need an invitation code and to deposit 0.01 ETH to start using it, which serves as the main currency for in-app purchases of shares from other users. These shares represent a portion of the user's influence. After purchasing shares, buyers can chat one-on-one with the investors. This setup allows users to connect directly with their favorite influencers. Additionally, these tokens referred to as "keys" or "shares" can be traded, giving users the opportunity to profit from the growing popularity of content creators.

For key opinion leaders (KOLs), they earn a 5% fee every time someone buys or sells their shares, which provides a financial incentive. To increase revenue, KOLs need to enhance their share trading activities. An additional 5% belongs to the platform, with a total fee of 10% charged for each related transaction.

The decentralized social media protocol garnered significant attention last year but has recently experienced a decline. On-chain data shows that daily activity on the platform has significantly decreased since peaking on September 13, when 539,810 transactions were recorded.

However, despite the decline and some criticism, there is still discussion among Friend.tech users about a potential revival. This anticipation stems from the upcoming airdrop, the announcement that users will have complete control over their tokens, and the soon-to-be-released V2 version, all of which have received a positive response from the community.

Comparison of Friend Tech V1 and V2

Introduction to Friend Tech V1:

Friend Tech V1 is an innovative Decentralization social platform that connects crypto influencers with followers. Users can create their own Keys and potentially profit by buying and selling KOL's "Keys". This model has been particularly popular during market downturns, driving significant growth in platform users and activity. The platform generated about $13 million in fees from $130 million in trading volume and paid out approximately $6 million in revenue to users.

However, this model also has drawbacks, mainly high fees. Since buying and selling shares incurs a 10% fee, it is difficult to make a profit unless users sell at a price significantly higher than the purchase price. This high turnover demand leads to inconsistent user experiences, ultimately becoming a barrier for new users to join.

Introduction and Features of Friend Tech V2:

Friend Tech V2 was released on March 3, 2024, introducing several new features and changes. Notably, users can now obtain $FRIEND tokens, which is an important update. However, the release has been criticized due to a lack of clear information and guidance, especially regarding new elements such as "Club".

Club is the main new feature of V2, a group space owned and managed by key holders. The club has its own governance mechanism, including the election of a president to manage the club and appoint moderators. All transactions within the club use the $FRIEND token, with a fee of 1.5% for each transaction. This creates the possibility of introducing referral fees and more flexible transaction terms among club members.

However, the implementation process and user experience are not smooth. Users are confused about how to claim airdrops, join clubs, or find established clubs, as the platform does not provide clear instructions or interface prompts.

In summary, V1 focuses on achieving rapid growth and revenue through high fees, while V2 aims to enhance user governance and interaction through a club, but faces challenges in execution and clarity, which may affect its long-term viability.

Team, Basic Support and Strategic Cooperation

Friend.Tech was developed in August 2023 by two anonymous individuals with a controversial history in the crypto community. Community members pointed out that these developers were also involved in an unsuccessful NFT project. Further investigation revealed that one of the developers deleted several posts linking to this NFT project and had held an official position in a certain Discord community. These findings raised concerns about their reliability.

In August 2023, Friend.tech received seed funding from a venture capital firm, although the amount was not disclosed, and collaborated with the company to create an online social interaction tool.

There are rumors that Friend.tech has completed its Series A financing, with a valuation of $50 million. This round of financing includes token certification, suggesting the possibility of them eventually issuing their own token, which has indeed happened.

Controversy

Friend.tech originated from a decentralized social media project called TweetDAO. The project allowed users to post from a shared account by holding a native NFT called "TweetDAO Egg." Although the project achieved viral success in its early stages, it eventually faded away, leading to the closure of its main social accounts and website.

After that, the developers launched Stealcam, a Web3 platform where users can mint and purchase images as NFTs, which remain hidden before purchase. However, due to the difficulty in maintaining profitable returns for creators, the developers eventually renamed Stealcam to Friend.tech. Friend.tech was launched in May 2023, aimed at attracting Web3 influencers and creators seeking more effective monetization of content, adopting a supply-demand driven economic model.

However, Friend.tech initially sparked controversy due to its vague privacy and data security issues. The platform requires users to download an application that does not have an easily accessible privacy policy. This lack of transparency raised concerns among users about how their personal data was being handled, but this has since been partially addressed.

Moreover, the sustainability of the platform has faced serious criticism. Initially, Friend.tech grew rapidly due to its influencer-centric strategy, but as the initial excitement waned, doubts about its long-term viability deepened. Critics point out that the platform's over-reliance on influencers is a key vulnerability. Without the active participation of key figures, the platform's value may decline.

This is the reason for the strategic shift in the V2 update, moving from a KOL-centered model to one that focuses more on a broader community model. Nevertheless, questions remain regarding the level of participation of influential users and the actual value they bring when they are inactive.

Friend.tech is striving to differentiate itself and retain users in competition with other social platforms and decentralized competitors.

On the positive side, Friend.tech now has its own token, creating opportunities for trading and speculation. The project has over 160,000 followers on a certain social platform, and it is actively promoted by some influential figures who encourage others to try the application. This promotion clearly has economic benefits for them, but it also indicates that the project has potential upside.

Currently, Friend.tech has a market capitalization of $184 million, with a fully diluted valuation matching that. Compared to other DeFi protocols or meme coins with higher valuations, $FRIEND is seen by many on-chain traders as an attractive risk-reward investment, considering the project's profitability on a fundamental level. The involvement of certain well-known investors further enhances the project's credibility.

Competitive Analysis: Friend.tech vs Farcaster

Friend.tech has gained strong support by charging high fees and offering special club features, initially finding great success. However, its popularity has declined, raising concerns about how to maintain long-term user interest. In contrast, Farcaster does not have its own token, utilizing the DEGEN token widely accepted by many in its ecosystem. This approach has helped Farcaster build a loyal community similar to traditional internet forums, resulting in a steady increase in user numbers and daily activities.

In conclusion, although Friend.tech made a lot of money in its early days, its fluctuating user numbers make its future uncertain. Farcaster focuses on building a strong community with the DEGEN token, which seems to promise more lasting success. This is due to its loyal users and various use cases within the ecosystem. As both platforms continue to evolve and respond to user needs, their success in the competitive SocialFi market will depend on their adaptability.

Token Economics

$FRIEND token is at the core of Friend.Tech V2, serving not only as a currency but also as a key to attract community participation. Its current market cap and fully diluted valuation is $185.26 million. A total of 92.63 million tokens were fully allocated to the community during the token generation event.

Token economics aims to promote participation; users can claim tokens by interacting with the platform------follow ten people to receive 10%, the remaining 90% requires joining a club. This ensures that token distribution supports active ecosystem participation.

$FRIEND can only be traded within the Friend.Tech system itself, which features a local exchange function with a 1.5% fee. This promotes liquidity and ensures that the platform benefits from fee revenue, but it also requires users to trust the platform's stability.

The Club feature on Friend.Tech is similar to a micro-government, allowing users to manage and customize their clubs, from setting names to economic parameters. This structure supports Decentralization governance, where club leaders and moderators are elected by key holders, reflecting a DAO-like transparency.

Despite maintaining a user interface similar to V1, the introduction of the $FRIEND token and club adds a new layer of engagement and monetization. Transactions within the club are subject to a 1.5% fee, which is distributed between liquidity providers and the platform, helping to maintain the financial health of the ecosystem and reward active participants.

Bullish Fundamentals

• Data shows that Friend Tech has seen a surge in user adoption and activity following the recent airdrop and v2 upgrade.
• Despite having a lower market cap, especially compared to other projects and meme coins that generate less revenue, $FRIEND is significant for potential price appreciation for on-chain traders.