Written by Kaori
Editors: Jack, Jaleel
Friend.tech, which was very popular three months ago, now seems to have reached the end of the game and is facing a critical moment.
On August 10, 2023, friend.tech was officially launched. On October 2, friend.tech’s TVL exceeded 50 million US dollars. On November 19, its TVL fell to 33.98 million US dollars, a 19.5% drop from 42.25 million US dollars on November 18. After nearly three months of craziness, the crypto community has now been met with a cold reception.
Although the friend.tech team maintains a stable update frequency, the founder's withdrawals, the large number of robot accounts rushing to make profits, and the frequent changes in the points rules have made the community user experience unsatisfactory. With a large number of real user accounts being misidentified as robots recently, the data performance of friend.tech reflects that the platform is experiencing a crisis.
A large number of user accounts were mistakenly identified as robots. Is friend.tech facing a wave of withdrawals?
On November 17, friend.tech launched the post stream friend.tech feed, allowing users to control the ranking of posts through voting. Users with higher key prices will be allocated more votes.
BlockBeats observed that a large number of friend.tech real accounts were mistakenly identified as robot accounts, resulting in these accounts not being allocated points this week. According to some users, if a Twitter account uses a registered default username or a combination of letters and numbers, this type of account is identified as a robot by friend.tech.
friend.tech said on the social platform on November 18 that it had identified and removed 600,000 accounts identified as robots from the voting distribution of the feed, and stated that if a user account was mistakenly identified as a robot, they could contact friend.tech customer service and provide their Twitter username.
User @friend.tech on X requested to unlock his account
In terms of data, this past weekend, the total transaction volume of friend.tech exceeded 10 million US dollars, a record high in more than half a month, but this may be an exit behavior. From November 18 to 19, friend.tech withdrew a total of 4,420 ETH, and its TVL fell by about 21%, the lowest level in nearly two months.
On November 20, a large number of users were still selling their keys and fleeing friend.tech; Image source: Community
The behavior of judging real users as robots has caused a lot of negative comments from the community about friend.tech. Crypto researcher @Loki_Zeng posted that all strategies of friend.tech are oriented towards trading and creating handling fees, which is not very user-friendly. "Let's not talk about how many real accounts were accidentally damaged. If you think that some user behaviors should not receive points, then should the 5% handling fee be returned as well?
And why didn’t you care when the bots were making a lot of MEV income? A bot that harms users but can generate income for you is not a bot? The points rules have been changed 800 times. Every time they are changed, many people need to reconfigure, and the project owner can earn a commission. Is this really encouraging Holders? "
In addition, this wave of selling has also brought a crisis of trust among users who hold keys. Christian, co-founder of crypto fund NDV and NFT giant, said on his social account that it is not friendly for holders to sell keys without the knowledge of the homeowner. Community user @defi_goddess also said that before choosing to exit, you should send a private message to tell you who has recently used the "3, 3" strategy so that they can sell first, saying "this is basic morality and common sense."
After the community sentiment fermented, friend.tech founder Racer posted in Chinese on the platform: "Family, who understands?" Some platform users said that this made the friend.tech team seem very unprofessional.
On the FT, friendships can quickly capsize
When friend.tech was first launched, there were many articles analyzing its economic model in the crypto space. In addition, the friend.tech team has been updating product features, and users' expectations for airdrops and FOMO sentiment have been growing. However, as the market has calmed down recently, it seems that it is time to look back at the other side of friend.tech that was once ignored by the public.
The "3, 3" mentioned above is a classic Ponzi scheme. In friend.tech, the goal of the "3, 3" strategy is to climb the leaderboard and signal to other accounts that you are a holder and will not sell their keys, achieving a win-win effect.
Suppose your Key is worth 0.1 ETH and you have a friend who also has 0.1 ETH. If you buy each other's Key, both of you will get a 5% fee, and according to the bonding curve, your value will increase from 0.10 ETH to 0.12 ETH, which actually increases your value by about 0.02 ETH. Then you can repeat the same operation with another friend, increasing your value again, repeat this action 100 times, and your key will become very valuable.
As a result, the proportion of "Social" in friend.tech's SocialFi label is getting smaller and smaller, and the attributes of Fi have enabled a group of traders and profit-making robots to earn higher value profits.
friend.tech itself is not a platform that strongly binds content production and social relationships. It is just a financial product derived from Twitter, not a social product. This is also the key to friend.tech's huge profits. The friend.tech agreement does not require KOLs to produce content, and users who buy keys are not here to consume content. KOLs themselves do not seem to be responsible for users' keys. The seemingly weak social relationship is actually completely covered up by friend.tech's financial attributes.
Christian mentioned his friend.tech trading strategy when participating in the "Wang Feng 10 Questions Live/Web Threesome" column. When building a portfolio, he would choose more stable users, and the criteria for judgment are good character, vision, and strength. "The secret is to choose people with vision when making friends, and do well yourself. Don't give up your reputation and accumulated things for a little immediate profit. I said from the beginning that I would not sell my keys in advance, and I would definitely leave time for everyone to sell first when I leave."
friend.tech user Christian expresses his attitude; Image source: @Christianeth
But judging from the current friend.tech ecosystem, this friendship boat capsized very quickly. More importantly, friend.tech shows that "3, 3" is the final outcome of a classic Ponzi scheme. The prisoner trapped in a desperate situation must be the one who runs the fastest.
Success is due to "3, 3", and failure is also due to "3, 3". The crazy increase in the number of users and prices of friend.tech in the early stage was due to its excellent economic model, but in the later stage, it could not "keep alive". In addition to such an economic model, what other solutions can Web3 social networking have, and where will it go? This is a question for all relevant practitioners to think about.
